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FEC Unlikely to Act Soon on Applying Political Rules to Nonprofits

(April 26, 2004) Regulators with the Federal Election Commission (FEC) have recently indicated that they don't believe they will act this year on a proposed regulation that would strictly limit 501(c) nonprofit organizations in their ability to advocate and communicate with the government, donors and the public.

The FEC received more than 200,000 comments regarding the proposed rule, the largest number of responses it has received on any issue in its approximately 30-year history. According to the FEC, a large majority of the comments came from nonprofits worried about the impact of the rule on charitable organizations.

The regulation was originally intended to impact nonprofit entities organized under Section 527 of the Internal Revenue Code. Section 527 organizations are unrestricted in how much money they can receive and spend on influencing political elections.

However, the rule proposed by the FEC was so broad as to possibly include 501(c) organizations, such as professional associations and charities. In the proposed rule, the FEC specifically requested comments as to whether the rules should apply to all types of nonprofit organizations.

Several commissioners from the FEC have indicated that given the complex issues involved, they want to move slowly in developing regulations. It is possible that the FEC will begin consideration of the rule again in early 2005 after the elections.

AFP will continue to monitor this issue and alert members when the issue returns. Please refer to the AFP web site for more information about the rules and a copy of AFP's comments to the FEC on the proposed rule.

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