Wealthy donors looking to secretly influence elections frequently donate to politically active nonprofits, such as 501(c)(4) “dark money” groups, exploiting a loophole that deprives voters of their right to know who’s spending money to influence elections.
However, among the various types of nonprofits, 501(c)(3) organizations — groups that are tax-exempt because of their charitable, religious, or educational purposes and whose donors don’t have to pay federal taxes on their donations — are categorically prohibited from spending any money on partisan political activity.
In a new complaint, Campaign Legal Center (CLC) is calling on the Internal Revenue Service (IRS) to investigate the organization True the Vote, which is registered as a 501(c)(3), for violating these restrictions by illegally providing free political services to the Georgia Republican Party in 2020.
Enforcing the prohibition on political activity by 501(c)(3) groups is critical to preventing wealthy special interests from turning them into a new type of dark money vehicle.
True the Vote claims that it “protects elections” based on unfounded and misleading claims of widespread voter fraud. In 2020, True the Vote announced a partnership with the Georgia Republican Party to provide its services.
It ultimately challenged the eligibility of 364,541 Georgia voters. A federal court would later call these challenges “seemingly frivolous” and “shoddy and rife with errors.”
True the Vote’s involvement in this race threatened to disenfranchise thousands of Georgia voters — and it violated federal campaign finance and tax laws. By coordinating with the Georgia Republican Party to provide its assistance, True the Vote was providing services that the party would otherwise have needed to pay for, which is an illegal in-kind political contribution.
Not only did True the Vote violate campaign finance laws that prohibit corporations from making contributions to a political party committee like the Georgia Republican Party, it also violated federal tax laws that prohibit 501(c)(3)s from making any political contributions.
Additionally, all federal political committees are required to disclose the contributions they receive. But the Georgia Republican Party did not report any of the unlawful contributions it received from True the Vote, depriving voters of timely information about who was spending money to sway their vote.
CLC and the nonprofit group Common Cause Georgia filed a complaint regarding True the Vote’s illegal coordination scheme with the Federal Election Commission (FEC), the federal regulator responsible for administering and enforcing federal campaign finance laws.
When the FEC initially refused to enforce the law, CLC represented Common Cause Georgia in a lawsuit. A federal court found the FEC’s dismissal was unlawful and ordered it to review the case again.
As a result, the Georgia Republican Party signed a conciliation agreement with the FEC: A negotiated settlement in which the party acknowledged that it had received and failed to report True the Vote’s in-kind contributions and agreed to pay a fine.
While True the Vote did not participate in this conciliation process, the FEC and the Georgia Republican Party agreed to report the value of its work at $500,000 as a “good-faith estimate.”
While this was a win for democracy advocates looking to hold political parties responsible for engaging in illegal coordination schemes with outside groups, the FEC failed to hold True the Vote accountable for its clear violations of campaign finance law, or even to conduct a full investigation of the matter to determine the actual value of the services True the Vote provided.
It is indisputable that the $500,000 True the Vote is estimated to have contributed is strictly prohibited under federal tax laws that govern 501(c)(3)s.
Federal law prohibits 501(c)(3) groups from engaging in the political process because these groups are subsidized by taxpayers for their charitable, religious, and educational work, not for partisan political activity.
The IRS must ensure that when 501(c)(3)s appear to engage in partisan political activity, they are fully investigated and held accountable.
501(c)(3) groups receive substantial tax benefits to support their mission, and they hold a respected place in public life, advancing important charitable goals. In turn, they must refrain from using their unique legal status as a vehicle to raise and spend money on partisan political activity.
By breaking those rules, True the Vote has weakened the public’s trust in the integrity of our election system and nonprofit institutions. It’s crucial that federal regulators hold them accountable and reaffirm that partisan politics has no place in charitable and educational organizations.