Thursday, January 7, 2021
There are no indications that any nonprofits, including 501(c)(3)s, were involved in yesterday's shocking riot at the Capital Building. (UPDATE: But nonprofits were apparently involved in supporting the Save America March that turned into the riot.) This is not surprising, in part because of the longstanding prohibition on 501(c)(3)s and other types of tax-exempt nonprofits promoting illegal activity of any type. But a number of 501(c)(3)s have been involved in the legal challenges to the election of President Biden and Vice President Harris, raising questions about if and when such post-election activity constitutes prohibited political campaign intervention.
For example, the Washington Post reported that the 501(c)(3) Thomas More Society recent expanded its religious liberty mission to include "election integrity" work and launched "the Amistad Project" to file lawsuits alleging election problems in several battleground states both before and after the election. Its role came to light in part because of its ties to President Trump's legal adviser Jenna Ellis, who is special counsel to the organization. Fellow blogger Philip Hackney is cited as noting that the Society was "putting its tax-exempt status at risk" by working with partisan figures on these activities, although he also cautioned that the IRS would find it difficult to challenge the Society's claims that it was acting in the wider public interest and so not attempting to intervene in a political campaign.
In another example, the Houston Chronicle reported that a prominent donor to President Trump's campaign is now suing 501(c)(3) True the Vote for allegedly promising to use $2.5 million in donations to expose election fraud only to drop its post-election lawsuits after consulting with counsel for the Trump campaign. While the success of the lawsuit will turn on Texas law relating to charitable gifts, the alleged coordination with the Trump campaign raises questions about whether True the Vote engaged in political campaign intervention by seeking to support President Trump's reelection. (It also could raise questions about whether True the Vote made in-kind contributions to the Trump campaign that would be illegal under federal election law.) But as with the Thomas More Society, True the Vote presumably would argue its goal is to protect election integrity more broadly, a claim bolstered by its longstanding involvement with this issue (as reflected in its name).
There have also been reports of broader, election-related activities involving tax-exempt nonprofits. For example, Politico recently published "In final years of Liberty [University], Falwell spent millions on pro-Trump causes," including raising concerns about a university-funded "think tank" that ran pro-Trump ads, hired Trump allies as fellows, and promoted Trump's false claims of election fraud. And non-501(c)(3)s were also heavily involved in the 2020 election, and not only on the conversative side. For example, Politico published "Liberal dark-money behemoth raised nearly $140M last year," describing the issue advocacy, legislative, and election-related activities of the Sixteen Thirty Fund, a section 501(c)(4) social welfare organization. (Hat tip for both stories: EO Tax Journal.)