IRS warns charities to stay out of political campaigns. In order to remain exempt from federal income tax a church cannot participate or intervene in any political campaign for or against any candidate for public office at the local, state or federal level. This is an absolute prohibition. A church’s exempt status is jeopardized by a single violation. The IRS recently cautioned charities to remain neutral during political campaigns: “(Charities) cannot endorse any candidates, make donations to their campaigns, engage in fundraising, distribute statements, or become involved in any other activities that may be beneficial or detrimental to any candidate.” IRS News Release IR-96-23

Key point. The IRS noted that “whether an organization is engaged in prohibited political campaign activity depends on all the facts and circumstances in each case. For example, orgnanizations may sponsor debates or forums to educate voters. But if the forum or debate shows a preference for or against a certain candidate, it becomes a prohibited activity.”

Key point. The IRS warned that if a charity engages in prohibited political campaign activity it could lose its exempt status. In addition, contributions to such an organization” are not deductible by donors for federal income tax purposes.”

Taken from Church Treasurer Alert! Monthly Newsletter
Richard Hammar, Editor

The monthly magazine Church Treasurer Alert! has accounting, tax, and financial articles by experts on church issues.

1. Determine the organization’s mission and set policies for its operation, ensuring that the provisions of the organization’s charter and law are being followed.

2. Set the organization’s overall program from year to year and engage in longer range planning to establish its general course for the future with short term (the next year),medium term (the next five years), long term (the next decade) goals and objectives.

a. establish goals and objectives in advance of every new year
b. develop a written plan
c. review the operational and financial consequences of these goals and objectives

3. Establish fiscal policy and boundaries.

a. develop and monitor budgets
b. establish fiscal control (who signs checks and approves invoices, will the treasurer be bonded, should the books be audited by an outside examiner, etc.

4. Provide adequate resources for the activities of the organization through direct financial contributions and a commitment to fund raising.

5. Select, evaluate, and if necessary, terminate the appointment of the chief executive.

6. Develop and maintain a communication link to the community to promote the work of the organization (speak to community and business groups, friends and associates about the organization’s activities and importance to the community.

Trustees should not:

Engage in the day-to-day operations of the organization
Hire staff other than the chief executive
Make detailed programmatic decisions without consulting staff

Should trustees be expected to donate to the Temple?

Trustees must support the organization in spirit, encouraging others to be as enthusiastic about its programs and activities as they are. They must support the organization more tangibly with money, demonstrating that those closest to the organization, its trustees, are 100 percent committed to it. No set amount of donation should be asked of the directors; however, the directors are expected to provide adequate resources for the activities of the organization through direct financial contributions and a commitment to fund raising.

Adapted from Managing a Nonprofit Organization by Thomas Wolf.