- Abuse of 501(c)(3) tax exempt status by electioneering (endorsing or campaigning for political candidates)
- 501(c)(3) tax exempt religious and educational organizations cannot electioneer. If they do, they can be reported to the Internal Revenue Service and Federal Election Commission.
- Legislative Activity by 501(c)(3) tax exempt organizations
- "it may not attempt to influence legislation as a substantial part of its activities and it may not participate at all in campaign activity for or against political candidates."
- Abuse of 501(c)(3) tax exempt status as an educational organization for distribution of propaganda that is "non-educational." Such organizations are allowed to advocate political positions, but they must not distribute false and misleading information.
- Where to complain to the IRS about possible violations
- Use of corporate donations for electioneering is illegal.
- This can be reported to the Federal Election Commission.
- Fundraising fraud; soliciting money from donors while making misleading and deceptive statements.
- This can be reported to the Federal Trade Commission and other agencies.
Electioneering by Tax Exempt Organizations
The IRS page at http://www.irs.gov/exempt/charitable/display/0,,i1%3D3%26i2%3D18%26genericId%3D6869,00.html#12 [link updated 3/11/02] says,Can tax-exempt organizations endorse candidates for public office?Where to complain:Whether a tax-exempt organization may endorse candidates for public office without jeopardizing its tax-exempt status depends upon the type of tax-exempt organization it is. For example, § 501(c)(3) organizations may not engage in political activity, including endorsing candidates, but other organizations, such as §501(c)(4) organizations, may engage in political activity so long as that is not their primary activity. However, § 501(c) organizations that make expenditures for political activity may be subject to tax under § 527(f). For more information, download Election Year Issues.
You may contact IRS Customer Service operations concerning tax-exempt organizations at (877) 829-5500 (toll-free number). The call center is open 8:00am to 9:30pm Eastern Time. Or you may write to us at the following address:Complaints filed against the Bell Campaign/ Million Mom March for promoting House candidates Carolyn McCarthy (D-NY), Joe Hoeffel (D-PA), and Connie Morella (R-MD) with their Apple Pie Award page, and for attacking Tom DeLay (R-TX) on their Time Out page. Followup complaints based on alleged "campaign rally" at their Mother's Day event, with evidence conveniently provided by their own Web site.Internal Revenue Service
TE/GE Division, Customer Service
P.O. Box 2508
Cincinnati, OH 45201
Legislative Activity by 501(c)(3) organizations
Per the IRS page at http://www.irs.gov/exempt/charitable/display/0,,i1%3D3%26i2%3D18%26genericId%3D6874,00.html [link updated 3/11/022],To be tax-exempt as an organization described in § 501(c)(3) of the Code, an organization must be organized and operated exclusively for one or more of the purposes set forth in § 501(c)(3) and none of the earnings of the organization may inure to any private shareholder or individual. In addition, it may not attempt to influence legislation as a substantial part of its activities and it may not participate at all in campaign activity for or against political candidates.
Abuse of 501(c)(3) tax exempt Educational Status
IRS Publication 557, "Tax Exempt Status for Your Organization" http://www.irs.gov/pub/irs-pdf/p557.pdfAdvocacy of a position. Advocacy of a particular position or viewpoint may be educational if there is a sufficiently full and fair exposition of pertinent facts to permit an individual or the public to form an independent opinion or conclusion. The mere presentation of unsupported opinion is not educational.Where to complain: See the TE/GE customer service division above.Method not educational.
The method used by an organization to develop and present its views is a factor in determining if an organization qualifies as educational within the meaning of section 501(c)(3). The following factors may indicate that the method is not educational.
Exceptional circumstances, however, may exist where an organization's advocacy may be educational even if one or more of the factors listed above are present.The presentation of viewpoints unsupported by facts is a significant part of the organization's communications. The facts that purport to support the viewpoint are distorted. The organization's presentations make substantial use of inflammatory and disparaging terms and express conclusions more on the basis of emotion than of objective evaluations. The approach used is not aimed at developing an understanding on the part of the audience because it does not consider their background or training.
Use of corporate or tax-exempt money to influence Federal elections
See the Federal Election Commission's page at http://www.fec.gov/pages/fecfeca.htm#anchor257909. Corporate donations may not be used to influence Federal elections. For example, it might have been inappropriate for the Million Mom March to solicit and accept donations from Stride-Rite, Guess, and other corporations, and endorse candidates on their Apple Pie Award page.Complaints to the FEC must be notarized. See their page on filing complaints, http://www.fec.gov/pages/complain.htm. Excerpts:
Any person may file a complaint if he or she believes a violation of the Federal Election Campaign Laws or Commission regulations has occurred or is about to occur. The complaint must be made in writing, and sent to the Office of General Counsel, Federal Election Commission, 999 E Street, N.W., Washington, D.C. 20463. The original must be submitted along with three copies, if possible. Facsimile transmissions are not acceptable.Complaints filed against the Bell Campaign/ Million Mom March for the aboveFor more information on how to file a complaint, call the Information Division (202/694-1100). All media inquiries and questions concerning the status of a complaint should be directed to the Press Office (202/694-1220). Both offices can also be reached, toll free, at 800/424-9530.
Fundraising Fraud
- Better Business Bureau standards for charities (HCI is not a charity, but it is a nonprofit organization)
- C1. Solicitations and informational materials, distributed by any means, shall be accurate, truthful and not misleading, both in whole and in part.
- C2. Soliciting organizations shall substantiate on request that solicitations and informational materials, distributed by any means, are accurate, truthful and not misleading, in whole and in part.
- Philanthropic Advisory Service Charity Complaint Form (where to complain)
- Philanthropic Advisory Service, Council of Better Business Bureaus, Inc., 4200 Wilson Blvd., Suite 800 Arlington, VA 22203
- Solicitation of Funds for Charitable Purpose Act (Pennsylvania) (emphasis is mine)
- Section 162.2. Legislative intent
- Section 162.15. Prohibited acts
- Commonwealth of Pennsylvania, Office of Attorney General, Charitable Trusts and Organization Section, 14th Floor, Strawberry Square, Harrisburg, PA 17120
- Federal Trade Commission
- Laws Enforced by the FTC: Under Section 5, the Commission has determined that a representation, omission, or practice is deceptive if: (1) it is likely to mislead consumers acting reasonably under the circumstances; and (2) it is material, that is, likely to affect consumers' conduct or decisions with respect to the product at issue.
- Consumer Response Center, Federal Trade Commission, 600 Pennsylvania Ave, NW, Washington, DC 20580
It is the intention of the General Assembly that this act shall not merely require proper registration of charitable organizations, professional fundraisers and professional solicitors, but shall protect the citizens of this Commonwealth by requiring full public disclosure of the identity of persons who solicit contributions from the public, the purposes for which such contributions are solicited and the manner in which they are actually used, by promoting consumer education about charitable concerns, by providing civil and criminal penalties for deception and dishonest statements and conduct in the solicitation and reporting of contributions for or in the name of charitable purposes and by publicizing matters relating to fraud, deception and misrepresentation perpetrated in the name of charity.
(a) General rule.--Regardless of a person's intent or the lack of injury, the following acts and practices are prohibited in the planning, conduct or execution of any solicitation or charitable sales promotion: ...
(2) Utilizing any unfair or deceptive acts or practices or engaging in any fraudulent conduct which creates a likelihood of confusion or of misunderstanding.
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