IRS Rule Change Allows Non-Profits to Discuss Political Campaigns, But Only With 'De Minimis' Extra Cost

The "Free Speech Fairness Act" is aiming to change the rules of the road for 501(c)(3) organizations—that’s the vast majority of non-profits, like your local food bank, church, or major research foundation. Right now, these groups are strictly banned from intervening in political campaigns if they want to keep their tax-exempt status. This bill loosens that rule, but only under specific conditions.

What’s the New Deal for Non-Profits?

Under this proposal, a 501(c)(3) organization won’t be penalized or lose its tax-exempt status just because it makes a statement related to a political campaign. However, two big checkboxes have to be marked. First, the statement must be made in the "ordinary course of carrying out its tax exempt purpose." In plain English, the political talk has to be directly related to the non-profit’s core mission. If a group dedicated to housing reform talks about a candidate’s housing policy, that would likely fit. If they suddenly start talking about foreign trade, maybe not.

Second, the organization cannot spend more than a "de minimis" amount—a fancy term for a tiny, insignificant amount—of extra money specifically to make that campaign statement. They can’t suddenly buy a billboard or run a TV ad campaign. If they mention a candidate’s position in their regular, mission-focused newsletter that they were already printing anyway, that might count. This change also updates the rules for tax deductions on donations and related excise taxes (Section 4955) to match this new standard, applying to tax years ending after the bill becomes law.

The Real-World Impact: Clarity vs. Chaos

For many mission-driven non-profits, this change could be a big win for clarity. Imagine a small environmental group that has to spend hours vetting every piece of communication to ensure they don't accidentally cross the line into campaign intervention. This bill gives them more latitude to speak directly about policy issues during an election cycle without fear of the IRS hammer, provided they stick to their mission and don't ramp up spending.

However, the language here is where things get fuzzy, and that’s the main concern. The bill hinges on two vague terms: "ordinary course" and "de minimis." The IRS doesn't have a clear, universal definition for either of these terms in this context. What one non-profit considers 'ordinary' or 'insignificant' in terms of cost, the IRS auditor might disagree with. This vagueness puts a huge burden on the IRS to figure out how to enforce the rule consistently across thousands of different non-profits, from giant foundations to tiny local charities. For the rest of us, this ambiguity could mean that organizations with deep pockets might push the boundaries, claiming their political advocacy is merely part of their 'ordinary course,' potentially blurring the line between non-profit advocacy and partisan politics.

If the enforcement is weak or inconsistent, we could see a lot more politically charged content coming from tax-exempt groups—groups that we, the taxpayers, are essentially subsidizing through their tax-free status and the tax deductions we get for donating to them. It’s a trade-off: more mission-related political speech, but at the potential cost of increased politicization in the non-profit sector.