The "Citizens United" Decision: Forget For-profits, Charitable Organizations are Corporations Too. How Are They Affected?
The proverbial ripple effect from the Supreme Court’s landmark First Amendment decision in Citizens United v. Federal Election Commission is sure to be felt among corporate entities that now have additional freedom in the areas of political and election spending. Does this include charitable organizations with 501(c)(3) tax exemptions?
A National Journal blog post today (“Brave New World of Political Spending for Nonprofits”) explores this question. Quite aside from pre-Citizens United campaign finance laws, IRS rules govern many tax-exempt organizations with respect to political activities. 501(c)(3) organizations are essentially barred from participating in partisan electioneering activities. But will (or must?) things change in light of Citizens United?
Associations and advocacy groups can be expected to ramp up their political activities, election lawyers say. At the same time, the ruling — by equating corporate and individual First Amendment rights — could trigger sweeping changes in IRS law as it applies to political activity, some tax experts say. All this could thrust 501(c)3 charities, which are now barred from engaging in partisan political activities, into an uncomfortable spot.
“Potentially, it’s going to profoundly change nonprofit tax law,” said Frances R. Hill, a professor at the University of Miami School of Law. Questions raised by the ruling include: Is the ban on partisan political activity for 501(c)3 charities now vulnerable to constitutional challenge? What about the ban on charities making political contributions? It’s only a matter of time before these questions land before the high court, Hill argued.
“Their general constitutional principle is that corporations are persons, and we can’t distinguish among them,” Hill said of the Supreme Court. “So I would regard it as a sweeping case that has the potential for changing the entire landscape for exemption in the area of political involvement.”
More immediately, the ruling dramatically frees up nonprofit associations and social welfare groups to spend money directly on elections, not just through ads but through voter guides, registration drives, get-out-the-vote activities, sponsoring candidate debates, and other activities.