A short fact sheet of items in campaign finance reform that are of interest to charities 1. Campaign Finance Reform is a Top Priority for Charities In the fall of 2000 four national nonprofits conducted a survey that gave small, state and local nonprofits a chance to tell the new administration what their needs are. Over 1,000 groups from all parts of the country responded, and overwhelmingly ranked campaign finance reform as the number one priority. Nonprofits know that their advocacy efforts will not be effective if something is not done to minimize the influence of money in politics. The Nonprofit Agenda, which resulted from the survey, proposes a ban of soft money, public financing for federal campaigns and expansion of nonprofit advocacy rights to level the political playing field. The report is available at http://www.ombwatch.org/files/npagenda/. 2. Charities Play a Unique Role in the Electoral Process: Nonpartisan Voter Education and Participation Activities Charities, that is, organizations exempt under 501(c)(3) of the tax code, are prohibited from electioneering, but not from nonpartisan electoral work. The definition of "electioneering" under the tax code is far broader than the "express advocacy" standard used in election law, prohibiting any direct or indirect activity that would imply support or opposition to candidates. This allows charities to serve as an impartial source of information for voters. Examples of nonpartisan electoral activity by charities include candidate debates and forums, voter guides and candidate questionnaires, legislative scorecards, candidate briefings and get out the vote and voter registration activity. The IRS rules strictly prohibit charities from rating or ranking candidates' positions or qualifications in carrying out these activities. All candidates must be treated equally. 3. McCain-Feingold and Shays-Meehan Would Prohibit Nonpartisan Public Education and Advocacy by Charities The ban on "electioneering communications" within 60 days of a general election or 30 days of a primary contained in current versions of campaign finance legislation would deprive voters of access to nonpartisan information, forcing greater reliance on partisan political groups and candidate communications. Voter education activity by charities is necessary to the public during an election cycle, and cannot be effective if they cannot identify candidates. Since these communications are not intended to influence the outcome elections, but seek to inform voters and increase civic participation, they should be exempted from any definition of "electioneering" in campaign finance laws. 4. Lobbying and Public Education Activity by Charities: Valuable to the Public and Decision Makers Legislative lobbying and general public education activity by charities are constitutionally protected activities that provide valuable information to the public and to legislative bodies. IRS rules strictly limit the amount of money charities can spend on legislative lobbying, particularly paid mass media advertising. In addition, costs associated with lobbying are reported to the IRS and in the case of federal issues, under the Lobbying Disclosure Act. Further disclosure of the same costs creates unduly burdensome and duplicative reporting obligations for charities, since they are not allowed to attempt to influence elections. 5. Charities Are Protected From Becoming Conduits for Electioneering Activity Existing law provides significant protection from the danger that charities could be used as conduits for soft money. At least one-third of their total revenues must come from public sources. The portion of large contributions that can count toward this one-third threshold is limited. It is doubtful that many of the groups running "sham issue ads" in the last election could have passed such a test. In fact this approach has the advantage of avoiding content based regulation of speech, focusing instead on sham interest groups that are fronts for wealthy individuals, rather than "sham issue advocacy". If a charity fails to pass a public support test the IRS will re-classify it as a private foundation. Private foundations are prohibited from engaging in legislative lobbying or voter education activities, and cannot earmark grants for those purposes. 6. Alternatives Can Address Sham Issue Advocacy Without Infringing on Rights of Charities

• Exempt charities from bans on "electioneering communications:
• Exempt protected activities, such as nonpartisan
• Apply the ban only to groups that cannot pass a public support test
• Apply the ban only to groups that are not made up of members with governance rights
• Limit disclosure to independent expenditures For more information contact Kay Guinane, Nonprofit Advocacy staff.