LICHTMAN, TRISTER & ROSS, PLLC

February 17, 2004

TO: Environmental Grantmakers Association
FROM: B. Holly Schadler
RE: Volunteer Activity

This memorandum addresses the rules governing individual volunteer activities by employees of organizations tax-exempt under section 501(c)(3) of the Internal Revenue Code. It is not unusual that employers permit, and even encourage, their employees to volunteer in community and public affairs activities in pursuit of personal interests during their free time. This type of involvement in volunteer activities enriches the experiences and perspectives that employees bring to their jobs, and enhances employees’ understanding of the problems facing communities that they may serve. Some employers adopt written policies setting forth the procedures for taking vacation and other leave to pursue these interests.

In the event that an exempt organization employee wishes to volunteer for a political campaign or activity, extreme care should be exercised to insure that the employee’s individual activities do not jeopardize the employer’s exempt status under federal law. There is an absolute prohibition on a 501(c)(3) organization participating or intervening in any political campaign on behalf of or opposition to any candidate for federal office. The Internal Revenue Service has recognized, however, that this proscription on political activity does not cover the involvement of staff, directors or member volunteers in the electoral process in their individual capacity during after-work hours, leave without pay, or accrued vacation. See “Election Year Issues,” by Judith E. Kindell and John Francis Reilly, Exempt Organizations Continuing Professional Education Technical Instruction Program for Fiscal Year 2001 (“CPE Text”) at 363.

This memorandum discusses some of the precautions an organization should consider to ensure that an individual employee’s activities are not attributed to the organization. In light of the specific issues that may arise related to particular employee’s political activities and developing leave policies, it is advisable to consult legal counsel.

As a general rule, employees must conduct personal political activities on their own time, including after-work hours, lunchtime, compensatory time and personal paid or unpaid leave. To the extent possible, the rules governing leave should be specifically provided in a personnel manual or policy. Formal policies assist in documenting that a particular employee is volunteering on his or her own time. For example, in the event that an employee takes compensatory time to volunteer for a political candidate, the terms and conditions for accruing this leave should be documented in a written policy. Similarly, if an organization has a vacation or unpaid leave policy, it should be in writing and there should be procedures in place for tracking time off taken by individual employees to ensure that adequate leave to pursue personal interests. In the event that an organization provides additional leave to employees during an election year, the IRS would likely treat any political activity conducted by the employees as authorized by the organization and a violation of the political prohibition.

Employees should not use their employer’s equipment, computers, facilities, staff, or other resources in connection with political activities. For example, personal e-mail accounts should be used for communications.

Employees and employers should also take steps to ensure that the views employees express on political issues are attributed to them as individuals and not to their employer. This means that employees should generally not be identified with the organization or the association should be explicitly for identification purposes only when participating in outside activities. Moreover, letterhead may never be used in connection with outside activities.

Guidelines for Officials of an Organization

An official, including an officer, director and trustee, acting on his or her own behalf, may participate in a campaign in support of or in opposition to a candidate. See “Election Year Issues,” CPE Text at 364. However, the official must not speak or act in the name of the organization while engaged in political activity and he may not use any organizational resources, personnel or facilities for the activity. Within these constraints an individual may participate in any campaign activities, including endorsing or opposing a candidate, holding a fundraiser or hosting a campaign gathering.

While an individual, for identification purposes, may be listed or introduced with mention of his or her organization affiliation, caution should be used in this area. Certainly, it poses the least risk to the organization if affiliation is not referred to at all. If an affiliation is listed, it should be noted clearly that the individual is not acting on behalf of the organization but in his or her individual capacity and that the affiliation is given for identification purposes only. If the disclaimer does not appear, the acts of the individual could be attributed to the organization.

Guidelines for Other Individuals Associated With an Organization

The individual members and employees of an organization also may participate in political campaign activity so long as they do so in their private capacity and the activities are not conducted with organizational resources. See “Election Year Issues,” CPE Text at 364-5. The factors that the IRS will look at to determine whether to attribute these acts to the organization are slightly different than those for officials. Generally, there must be authorization by the organization of these individuals’ actions to cause them to be considered attributable.

• Activities of employees during working hours or in their capacity as employees generally will be attributed to the organization.

• If the activities are implicitly or explicitly authorized by the organization, they are likely to be attributed. Activities may be considered authorized if an organization does not disavow the individual’s actions in a timely manner and in a manner consistent with the original activity. For example, political activities of individual members were ruled to be attributable to the organization when the organization’s publication announced that members would be working in a candidate’s campaign, the members were identified as representatives of the organization and there was no attempt by the organization to disavow their activities. See GCM 39414 (Feb. 29, 1984).

• The organization must take steps to avoid future unauthorized activities.

As I noted above, because of the complexity of the rules governing political activities by individual employees and the danger of jeopardizing an organization’s tax-exempt status, it is always advisable to consult with legal counsel prior to engaging in these activities. If you have any questions, please feel free to contact me.