June 21, 2018
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Nonprofit Alert: Legislature Clarifies Rules for Independent Expenditures in the 2018 Election
Recently enacted legislation made important changes to Minnesota’s election laws. These changes are important for 501(c)(4) and other nonprofits that intervene in state and local candidate campaigns.
501(c)(4) organizations and trade and professional associations exempt under section 501(c)(6) of the Internal Revenue Code are permitted by their tax-exempt status to intervene in campaigns and may endorse, oppose, and otherwise take action to influence the election or defeat of candidates for public office. By contrast, charitable organizations that are tax-exempt under section 501(c)(3) of the Internal Revenue Code must remain entirely nonpartisan and may not comment on or otherwise intervene in campaigns for public office.
For 501(c)(4) and other organizations that are permitted to intervene in campaigns, Minnesota state law governs those activities and how they may—and may not—interact directly with candidates for state and local office. Federal law governs conduct on races for federal office and those rules were not changed by the new legislation.
What is an “independent expenditure?”
While 501(c)(4) organizations may get involved in campaign activities, they may not make any contributions directly to candidates or political parties. Instead, they must conduct their activities independently of the candidate’s campaign. These activities are referred to as “independent expenditures.” The new amendments, which were effective June 1, 2018, are intended to clarify the distinctions between expenditures that will be considered “independent” versus “coordinated.”
An independent expenditure is any communication involving the expenditure of funds that expressly advocates the election or defeat of a candidate and that is made without consulting with or involving the candidate or the candidate’s committee in any way. To qualify as independent, the expenditure cannot be made with the express or implied consent, with the authorization of, with the cooperation of, in concert with, at the request of, or at the suggestion of the candidate, the candidate’s committee, or the candidate’s agent.
New Examples of Conduct that Would Defeat the Independence of an Expenditure
Over the years, through advisory opinions and enforcement actions, the Minnesota Campaign Finance Board has defined the lines between independent and coordinated activities. The recent amendments to Minnesota law largely align with the Board’s prior positions. The new law supplements the general definitions by providing specific examples of activities that will cause expenditures of a “spender” to be considered coordinated (and thus a prohibited contribution to a candidate campaign):
New Examples of Conduct that Does Not Threaten Independence
The new law also provides examples of activities, which taken alone, do not cause an expenditure to be coordinated and are thus permitted for 501(c)(4) organizations:
New Disclaimer Requirements on Campaign Material
Organizations conducting independent expenditures for Minnesota state and local candidates are required to include a disclaimer on their communications. The disclaimer requirements have long required including who paid for the material and the spender’s address.
The amendments modernize these requirements in that the disclaimer may now state an organization’s website instead of a mailing address, if the website in turn includes the organization’s mailing address. In addition, the new law makes clear that the disclaimer requirements are satisfied for an entire website or social media page if the required disclaimer appears on the home page in at least 8-point font.
As amended, the law now specifies that the disclaimer for independent expenditures must be substantially in the forms below:
Separate Rules for Federal Campaign Activities
The amendments described above relate only to activities attempting to influence the election of state or local candidate in Minnesota. Campaigns for federal office are governed by federal law and administered by the Federal Election Commission, and those rules are not changed by these amendments.
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For more information, contact Gray Plant Mooty’s Nonprofit and Tax-Exempt Organizations Team.
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