"501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign"
By Rik Keller
In return for tax-exempt status, a 501(c)(3) nonprofit organization like the Vanguard promises the federal government that it will not engage in “political campaign activity.” If it does, IRS regulations mandate that the nonprofit lose its tax-exempt status and will be subject to other financial penalties [my emphasis]:
“All section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity. Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.
The same IRS guidance goes onto state that
“Certain activities or expenditures may not be prohibited depending on the facts and circumstances. For example, certain voter education activities (including presenting public forums and publishing voter education guides) conducted in a non-partisan manner do not constitute prohibited political campaign activity. In addition, other activities intended to encourage people to participate in the electoral process, such as voter registration and get-out-the-vote drives, would not be prohibited political campaign activity if conducted in a non-partisan manner.
On the other hand, voter education or registration activities with evidence of bias that (a) would favor one candidate over another; (b) oppose a candidate in some manner; or (c) have the effect of favoring a candidate or group of candidates, will constitute prohibited participation or intervention.”
For a list of examples of the types of political campaign activities by nonprofit organizations that are banned by federal law, see: https://www.nolo.com/legal-encyclopedia/limits-political-campaigning-501c3-nonprofits-29982.html
- “criticizing or supporting a candidate on the organization's website”
- Publishing “materials that support (or oppose) a candidate”
Even publishing statements supporting or opposing candidates for office written by others is a violation: Federal code states that nonprofits may not “participate in, or intervene in (including publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for political office.” (see 26 U.S.C. Section 501(c)(3)) https://www.councilofnonprofits.org/tools-resources/political-campaign-activities-risks-tax-exempt-status
It is important to note that this prohibition against partisan political campaign activity is defined as “supporting or opposing a candidate for public office” and is considered different from lobbying or legislative activities. The Vanguard has conducted such political campaign activity against Jim Provenza and supporting Linda Deos on multiple occasions. And it is not the first instance of this type of violation of federal law by the Vanguard:
The situation gets even more shady when one considers the Vanguard’s advocating and support for such issues as the SB50 real estate bill at the state level and the proposed ARC project locally which will be on the ballot in November. In this case, the Vanguard has strongly advocated for this proposed legislation and intertwined this with commentary about candidates for public office like SB50 author California State Senator Scott Wiener and the candidates for the Yolo County Board of Supervisors. The IRS can find that “even an unbiased, neutral questionnaire to be problematic if an organization posts the candidates’ responses on its website, and other sections of the organization’s website advocate for a particular position on the issues mentioned in the questionnaire… by including the organization’s own viewpoint on the website, the organization is telling readers the “correct” position on each issue, and from that readers could then infer which candidates the organization would support.” https://bolderadvocacy.org/advocacy-defined/you-have-questions-we-have-answers/
Finally, while federal tax law prohibits 501(c)(3) nonprofit organizations from supporting or opposing candidates for public office, they may--to a very limited degree--support and oppose ballot measures and other legislation under the federal tax law definition of “lobbying.” However, the Vanguard is doping this to a degree far beyond what is allowable under federal law. The following is a description of the types of activities that fall under the definition of “lobbying”
“for IRS purposes, your nonprofit engages in lobbying anytime it attempts to persuade members of a legislative body to propose, support, oppose, amend, or repeal legislation. "Legislation" means anything a legislative body must vote to adopt or reject--whether a law, resolution, proposal, nomination, treaty, zoning rule, or anything else. It also includes things like referendums, initiatives, and constitutional amendments that must be placed on the ballot and voted on by the general public. Lobbying, then, means trying to persuade a member of Congress, state legislator, city council member, county board of supervisors member, and even a member of a foreign legislature or parliament, to vote in a certain way. It also means trying to help to enact or oppose a law or other item that would have to be voted on to take effect.
However, there does not have to be a specific law pending in a legislative body for lobbying to occur. Lobbying includes support or opposition for proposed laws that are a long way from actually being voted on…”
Under IRS rules, a nonprofit qualifies for tax-exempt status as long as no “substantial part” of its overall activities relates to influencing legislation or carrying on propaganda. While there is no objective standard, the IRS has previously found that if as little as 5% of an organization’ time is spent on lobbying that meets the “substantial part” threshold and is a violation that can result in stripping the nonprofit tax status. Considering Greenwald is listed as the only author on pro development City of Davis land use stories that are run in the Vanguard daily he is clearly spending a significant amount of his time lobbying the Davis City Council.
In conclusion, the Vanguard has violated federal nonprofit law in multiple ways: by conducting partisan campaign activities both directly and indirectly, and by tying issue advocacy to political candidates. It has also violated the prohibition against using a substantial part of its time/energy/expenditures for issue lobbying.