May a Section 501(c)(3) nonprofit engage in business operations to generate revenue? Such organizations often brainstorm creative solutions to accomplish their charitable purposes and ensure revenue is sufficient to support their charitable endeavors, including business-related ideas. These activities may blur the lines between a nonprofit organization engaging in permissible commercial activity, on the one hand, and a de facto for-profit business with charitable overtones. How does a Section 501(c)(3) stay tax-exempt within applicable IRS constraints, and yet carry on a profit-generating business? The “Newman’s Own” exception provides a fascinating example of charity mixed with business, within the broader context of other more common and far less complex nonprofit operational models.
Amid revelations of Russian-backed Facebook ad campaigns and troublesome data leaks, Facebook has recently implemented new mandatory disclaimer labels and related requirements for advertisements deemed to be “political.” Given applicable political restrictions for Section 501(c)(3) organizations, does Facebook’s new political ad policy mean that public charities may no longer advertise on Facebook? Or could Facebook’s new ad policy lead to legal trouble for Section 501(c)(3) organizations, if the IRS should question their self-declared “political” involvement? The answer to both questions should be “No,” but the taint of identifying activities as “political” may well create some legitimate consternation among nonprofits.
The U.S. Supreme Court’s recently issued Masterpiece Cakeshop v. Colorado Civil Rights Commission ruling may afford more protection for civil discourse and diverse opinion than appears on the surface. Although it narrowly focused on the Colorado law’s unconstitutional application in the majority opinion, the Court also addressed the intersection of dignity, respect, conscience, and liberty within the context of important First Amendment Free Exercise rights. The case thus reflects the developing contours of the Court’s still newly minted framework established in the 2015 landmark Obergefell v. Hodges same-sex marriage case, with some cause for religious liberty optimism.