Readers weigh in on rule that could prevent 501(c)(4) nonprofits from even mentioning Senator Durbin’s name when he introduces a bill. Action Alert!
Last December, we published an article about new IRS rules that would place limitations on the political activity and speech of 501(c)(4) nonprofits. In it, we expressed concerns about how they would affect ANH-USA’s work to protect the rights and freedoms of natural health consumers and practitioners.
Here’s an example: under the new IRS rules, even naming a candidate in any public communication through any medium, even orally—and this includes even vague references to him or her—within sixty days of a general election or thirty days of a primary election would be banned as “political activity.” This even includes content previously posted by an organization.
Just imagine: sixty days before an election, ANH-USA would have to remove every single reference to a candidate from its website—no matter how old it is! We also wouldn’t be able to make any reference to a candidate’s connection to any legislation within sixty days of an election. This gives incumbents a thirty- to sixty-day free pass to introduce legislation with almost no public scrutiny.
This is simply unconstitutional, and we should fight the rule that could make it a reality.
Consider the implications: Sen. Durbin of Illinois—you may remember him as the anti-supplement senator who wants to regulate supplements like drugs—is up for reelection in 2014. If he reintroduces or has new anti-natural health legislation filed during the sixty days before his reelection, ANH-USA would be preventing from telling you about his connection to it.
The new IRS rules will severely curtail the speech of 501(c)4s, as they may be afraid to engage in any political activities for fear of IRS or government retaliation. Any disgruntled politician could easily ask the IRS to revoke the 501(c)4 status of groups who disagree with his or her politics!
Some readers suggested that it is unlikely that the IRS would scrutinize a smaller organization like ANH-USA. Don’t count on it. Although we are small in staff size, we represent millions of consumers. On numerous occasions, ANH-USA has suffered the wrath of members of Congress by holding up or working to change their bills.
We received strong, thoughtful reader feedback on the proper role of 501(c)(4) nonprofits, how they should be best monitored by the IRS, and how such regulations should be weighed against political spending and free speech. Given this issue’s paramount importance, we’re dedicating an entire article to clarifying the current rules governing the political activities of nonprofits, how the new rules threaten to silence political dissent, and what we can do to protect the integrity of our democratic process.
Nonprofit Politics: Organization Types and Permitted Activities
The Alliance for Natural Health USA is a 501(c)(4) nonprofit. 501(c)(4)s must “primarily” promote “social welfare,” which is defined as “the common good and general welfare of the people of the community, i.e., …bringing about civic betterments and social improvements.” (For example, ANH-USA works to improve public health by educating consumers about the benefits of a natural health lifestyle and threats to that lifestyle.)
As long as the “primary” role of a 501(c)(4) is to promote social welfare, it is permitted to engage in certain political activities. Currently, the IRS has no hard definition for “primary.” This is one of our concerns: while the IRS’s new rules would reclassify many “social welfare” activities as “political intervention” (for example, nonpartisan voter registration, which we don’t do), it reserves the right to define “primary” at a later date. We worry that this could be a backdoor attempt to ensure that 501(c)4s engage in political activities in only a greatly restricted way—say, only 0.01% of the time. This would essentially eliminate their ability to take any political action whatsoever. A decision like this shouldn’t be left to the IRS. It should be made by congressional representatives of the people.
Despite our main focus on public education (i.e., articles on how to keep healthy naturally and how the government and mainstream media work together to attack innovative doctors), ANH-USA is set up as a 501(c)(4) nonprofit for a reason. Despite the many advantages of 501(c)(3) status (for example, donor gifts are tax deductible), our mission is best advanced via direct and grassroots lobbying, which 501(c)(4)s are permitted to engage in. From the IRS regulations themselves:
Seeking legislation germane to the organization’s programs is a permissible means of attaining social welfare purposes. Thus, a section 501(c)(4) social welfare organization may further its exempt purposes through lobbying as its primary activity without jeopardizing its exempt status….
The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. However, a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity.
The regulations are clearly contradictory. One paragraph says a 501(c)(4) may “further its [social welfare] purposes through lobbying as its primary activity” while the paragraph that immediately follows it says the organization may engage in political activities so long as that is not its primary activity! Lobbying is not ANH’s primary activity, especially since comment on regulatory bodies (such as the FDA) and related activity is by law excluded from the definition of lobbying. But the IRS’s contradicting itself in its existing regulations highlights the danger: what activity will the IRS allow? Why is it appropriate for them to decide this?
Legitimate 501(c)4 organizations play a unique role in the political process: they pool the resources and political energies of many like-minded individuals to advance a single goal. In the case of ANH-USA, we are a collection of natural health consumers, patients, and practitioners who wish to protect our right to unhindered access to the healthful foods, nutritional supplements, lifestyle choices, and integrative treatments we prefer, and to prevent government interference in our health and lifestyle choices.
According to Douglas B. Levene, corporate finance and business law professor at the Peking University School of Transnational Law, the goal of the IRS’s new rules may be to “impose a prohibitive tax on group political activities that would not be imposed if the group’s members engaged in them individually. This appears to be a straight-up violation of the First Amendment.”
What’s at Stake: Meaningful Political Dialogue
501(c)(4)s serve as the boots- and ears-on-the-ground for concerned citizens. We serve as your voice on Capitol Hill, in state legislatures, and at high-level agency meetings. We work to stop the bills and regulations that would, for example, prevent your access to healthy foods and dietary supplements. A summary of the threats we have faced in recent years and our accomplishments in fighting off those threats is available here.
By limiting the political activities of 501(c)(4)s, the only remaining political influences will be the huge industries (Big Pharma, Big Agro, and Big Biotech included), unions, and other special interests that can afford to make enormous political contributions and hire expensive lobbyists. In 2013 alone, PhRMA—the leading advocacy organization for the drug industry—spent nearly $14 million in lobbying expenditures.
501(c)(4) Abuse: Will the IRS’s New Rules Help?
As many of our readers pointed out, the exploitation of 501(c)(4) status is of serious concern. However, the IRS’s new rules will not stop abuse—it will simply threaten your right to be heard and represented by grassroots organizations. In addition, the new rules only address 501(c)(4) nonprofits, ignoring 501(c)(6) and 501(c)(3) organizations, which can also be abused. Those who wish to abuse the tax-exempt framework will simply move to other tax-exempt categories.
Even the IRS doesn’t think the new rules will work. In the words of former Acting IRS Commissioner Steven Miller, even if new IRS rules concerning 501(c)(4)s were implemented, “We would have a hard time parsing what’s [directly engaging in electoral] politics and what’s not.”
The IRS’s new rules also address the wrong kind of political activity. For example, ANH-USA doesn’t take positions on candidates during elections. Our advocacy is issue-based, not politician-based, and certainly not party-based. We are completely nonpartisan and have members who support different parties.
This means we support or criticize the individual decisions of elected representatives. We don’t “bet on a horse” hoping they remember us once their seat is secure. The IRS seems to be primarily concerned with campaign spending, but these new rules don’t reflect that.
The IRS already has the ability, the authority, and all the information it needs to ensure nonprofits are law abiding. It’s wrong that a powerful government agency, instead of exercising its current authority by investigating where facts dictate, would plan to remove free speech protections for an entire group of nonprofits.
Action Alert! The IRS has no business in politics. Tell the agency to rescind this political gag order and protect the right of political dissenters and organizations that represent individuals like you! Please send your message to the IRS immediately—the deadline for comments is next month!