Should a Non-Profit Organization be Sanctioned by the IRS for Donating to a Presidential Campaign?

A very hot and well debated topic is the allegation that Republican Candidate Herman Cain has received Forty Thousand Dollars in donation from a non-profit organization. It is also alleged that these funds were used to pay for chartered flights and Ipads. Activists are requesting that the Internal Revenue Service step in and sanction any non-profit organization or deny them of their exempt status for donating to a presidential campaign. The question becomes what powers does the IRS have under these circumstances, and should such measures be taken?

Under the Internal Revenue Code (IRC), "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." As a result, contributions made 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. The IRC holds that violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.

However, some political activities or expenditures may not be prohibited depending on the facts and circumstances. For example, 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, would constitute prohibited participation or intervention.

As a result, it appears that the IRS does have the power to sanction these charitable organizations and also has the ability to strip them of their non-exempt status. Any non-profit organization that receives donations from others should not donate such funds to political campaigns. Rather, the funds should be used for the benefit and well being of society. The belief that a certain candidate can better the economy for the benefit and well being of others is insufficient, and is more like a game of Russian Roulette that is not worth undertaking. The IRS would be well in its right to step in and sanction these organizations.

What do you think, do you believe that the IRS should step in and discipline these non-profit organizations?

Reference: http://www.irs.gov/charities/charitable/article/0,,id=163395,00.html