As you can’t help but be notice these days – the election year is in full swing. For some organizations, this means getting requests to share their lists of donors and/or members from campaigns and other organizations working on the election. How do you handle these requests? A few tips…
If you are a §501(c)(3) organization –
DO NOT provide your list for free to any candidate, party, or even politically active §501(c)(4). This would be a violation of your tax exempt status. If you are sharing your list with a 501(c)(4) working on a ballot measure, you should insure that you are limiting the 501(c)(4)’s use of the list to only certain puposes (I am being intentionally vague here because there are different degrees to which you could limit it, depending on the organization’s preferences and/or level of risk aversion). 501(c)(3) organizations that are contributing a list to a 501(c)(4) for ballot measure advocacy (lobbying) should also be aware that the value of the list is a lobbying expenditure for both IRS and state campaign finance purposes (where applicable).
You are not prohibited from entering into a business transaction with a candidate, PAC, or politically-active 501(c)(4) – so you can sell your list. However, the campaign must pay fair market value for the list, and the list must be provided equally to all candidates. It is even more preferable for the list to be made available to the general public (even better fact if it is made available to the public before it is made available to candidates). Particularly if an organization does not have a history of engaging in this activity, they should consult with an attorney.
If you are a §501(c)(4) organization –
DO NOT provide your list for free to a candidate. This would be an in-kind contribution. It is currently unlawful in Minnesota for a corporation to make a direct contribution to a candidate (this includes nonprofit corporations). The candidate must pay the organization fair market value for use of the list, and should pay in advance (to avoid the risk of it being considered an in-kind donation).
You do not have to provide the list equally to all candidates. You can choose to sell the list only to candidates that you support.
Please also be aware that specific facts relating to your organization and the transaction it intends to make with a candidate, party or politically-active organization are relevant to determining whether your specific situation is in violation of either your tax status or campaign finance law. If you have any questions, please consult competent counsel.