Built upon four years of discussion and feedback, a committee of nine tax law experts, chaired by Greg Colvin (with Beth Kingsley as vice chair), has developed a set of six proposed rules which are designed to clarify the IRS regulations governing nonprofit organizations' political activities.
The Project’s approach:
- Seeks a middle road, striking a balance between promoting free speech and ensuring that speech closely connected to candidate elections is not subsidized by tax exemption.
- Uses a comprehensive and precise approach to defining political intervention including specific safe harbor exceptions so groups know what does and does not count as political.
- Notes that speech that refers to a candidate and reflects a view on that candidate would be considered political activity, but protects speech focused solely on issues, grass roots lobbying, nonpartisan voter guides, and other defensible forms of expression.
- Adopts a single definition for political intervention that applies to all tax-exempt categories, including charities (501(c)(3)s) for which political intervention is banned), social welfare groups (501(c)(4)s), unions (501(c)(5)s), and trade associations (501(c)(6)s).
History of the Bright Lines ProjectSince November 2012, the Bright Lines Project (BLP) has been housed at Public Citizen. A new phase of the project, described below, was launched on May 23, 2013 with an opinion piece in the Washington Post during the heightened awareness of the IRS inappropriately scrutinizing certain applicants for tax exemption.
The Bright Lines Project, under a different name, was started by OMB Watch (now called Center for Effective Government) in 2008. Two issues motivated the project. First, although charities know they may not support or oppose candidates for public office, the scope of what charities are permitted to do when it comes to nonpartisan election-related activities has never been clear. This ambiguity chills civic engagement rather than encouraging charities to participate in nonpartisan voter activities, something for which OMB Watch and others have advocated. Second, observers on all sides of the political spectrum perceived IRS enforcement of the rules as inconsistent. Charities conducting similar activities, for example, are responded to differently from the IRS.
Both the lack of clear rules guiding charities and perceived disparities in enforcement are a result of the IRS’s decision to evaluate election-related activities by charities based a contextual review of the “facts and circumstances” rather than setting clear objective standards.
This project is rooted in the belief that clear definitions of what constitutes political intervention by tax exempt groups will help strengthen American democracy. Such clarity must be associated with a zone of free speech that is wide and deep and that affords opportunity for charities and other tax exempt groups to pursue issue advocacy. The operating assumption is that bright lines will help nonprofit leaders understand that participating in nonpartisan voter activities is permissible, and, like lobbying activities, morally essential to a robust democracy.
To move this effort forward, Greg Colvin of Adler & Colvin volunteered to chair a Drafting Committee to develop a comprehensive regulatory framework. Working with Colvin, OMB Watch created a Drafting Committee of nine nonprofit tax law experts with Beth Kingsley of Harmon Curran as vice chair.
Once news broke in May about the IRS using keyword searches of organization names to inappropriately target conservative groups applying for tax exemption, the inadequacy of the “facts and circumstances” approach and the need for clearer definitions of political intervention, exactly what the BLP had been working on for the past four years, became rapidly apparent. Gary Bass and Beth Kingsley wrote a commentary for the Chronicle of Philanthropy and followed it with the op-ed in the Washington Post, thereby launching the new implementation phase of the BLP at Public Citizen.
In response to congressional interest in the IRS situation, the BLP shifted gears. Instead of focusing solely on regulatory solutions, the BLP turned to legislative remedies. As a first step, BLP translated the regulatory proposal into legislation and offered complementary changes to Section 527 of the tax code.