Freedom Path Ruling: A Step Backward for Nonprofits’ First Amendment Freedom

A Texas federal trial court recently rejected Freedom Path’s challenge to the IRS’s multi-factor “facts and circumstances” test for a nonprofit’s politically-tinged advocacy speech as not unconstitutionally too vague or otherwise legally problematic.  The court’s adverse decision deals a setback for free speech interests affected by the IRS’s constitutionally dubious test, as contained in its Revenue Ruling 2004-6.

The Road Thus Far

Getting Started: Factoring State Nonprofit Law into Corporate Development

Nonprofit corporations are creatures of state law for corporate status and operations, while also subject to federal law for tax-exempt purposes.  Under which state law should a nonprofit incorporate, and what other state corporate requirements should be considered?  The following questions and answers provide guidance in both areas for nonprofit leaders seeking successful development, compliance with related IRS tax-exemption aspects, and long-term organizational vitality.

What, More Politics?: Proposed Free Speech Fairness Act Aims to Modify the Nonprofit Ban

Public charities described under Section 501(c)(3) of the Internal Revenue Code (“Code”) that wish to engage in politically related speech must consider several important questions:

  • May Section 501(c)(3) organizations engage in political campaign activity at all? 
  • Just what is “political campaign activity”? 
  • Who or what determines whether speech is political?

Since 1954, 501(c)(3) organizations have been prohibited from engaging in certain politically-related speech, with the possible penalty of the loss of tax-exempt status.  This has been historically problematic, since what constitutes political speech can be hard to determine, and the IRS uses a vague “facts and circumstances” test in its assessments.  However,  Congress is considering a newly proposed law that would make it permissible for c(3)s to engage in limited politically-related speech.