Working in coalition is one of the nonprofit sector's greatest strengths and can be especially powerful during election season. With the midterm elections around the corner, now is a good time for organizations to revisit their plans for election-related advocacy, including voter engagement, candidate education, and issue advocacy. A 501(c)(3) can collaborate with a 501(c)(4) and other nonprofits to advance common goals, pool resources, and build momentum. The key is knowing where collaboration ends and organizational boundaries begin, so allocate resources fairly, document cost-sharing agreements, and make sure each organization operates within the rules that apply to it. In this episode, we'll explore best practices for 501(c)(3)s collaborating and sharing resources with organizations operating under different tax rules during election season, including how to keep coalition work effective, compliant, and nonpartisan. Attorneys for this Episode: Maggie Ellinger-Locke Sarah Efthymiou Monika Graham 501(c)(3)s Must Remain Nonpartisan Internal Revenue Code: 501(c)(3) organizations are prohibited from directly or indirectly participating in partisan political activity on behalf of, or in opposition to, any candidate for public office. The Facts & Circumstances Analysis The IRS uses a "facts and circumstances" analysis to determine whether a 501(c)(3)'s communication about an issue is genuinely nonpartisan or is a veiled attempt to influence the outcome of an election. Factors include whether the communication mentions or evaluates candidates, references a candidate or election, occurs close to an election, or addresses an issue that distinguishes the candidates. The IRS also considers the broader context, including the timing, targeted audience, relationship to candidates' or political parties' communications, and whether the organization has a history of discussing the issue outside election periods. No single factor is determinative for the IRS looks at the full picture. What are some best practices for engaging in coalition work during election season? Build out the coalition's structure in advance. Develop a memorandum of understanding (MOU) with coalition partners outlining shared goals, decision-making processes, communications, roles, and responsibilities. Establish written cost-sharing agreements in advance to specify how shared costs will be allocated. Clarify who is responsible for particular communications, activities, and resources. Have a clear plan for keeping the 501(c)(3)'s work completely independent from partisan coalition work. Questions to ask in advance: What are your shared goals as a coalition? Are you time-limited, meaning you plan to disband after the election, or do you plan to continue working together toward a shared policy goal? Who is a member of the coalition? How will you communicate? How will decisions get made? How formal or informal do you want the coalition to be? What are some best practices for sharing resources? What can organizations actually pool to increase their collective impact? Staff, volunteers, office space, equipment, communications, educational resources, and other shared assets can expand a coalition's reach and strengthen collaborative power. Organizations can share tools and capacity so long as they adhere to the rules that apply to each entity. Things to Consider: 501(c)(3) resources and funds cannot be used to subsidize partisan political activity. Manage the expectations and agreements before you get going. Questions to ask: How will the organization share those resources? What are you going to share? Who owns or controls the resource? Which organization is using it, and for what purpose? How will costs be allocated? What happens if the use of that resource changes during the campaign? Best Practices: Know the Rules & Maintain Clear Boundaries: Understand each organization's tax status; keep governance, finances, and branding separate; and ensure there is a method for preventing the (c)(3)'s work from becoming intertwined with partisan activity. Document & Allocate Resources Fairly: Use written agreements, allocate shared costs using a reasonable method, track staff time accordingly; and maintain records of expenses, reimbursements, and resource-sharing arrangements. Don't Blur Organizational Lines: Use separate websites, social media accounts, and email addresses; clarify roles and responsibilities for each activity and/or communication; and make sure (c)(3) staff, volunteers, and resources are used only for activities it can legally undertake. Avoid Free or Below-Market Resource Sharing: If a resource has value—such as email lists, mailing lists, or voter registration files —it generally should be reimbursed at fair market value or through a reasonable cost-allocation agreement. Best practice is to use a list broker. Renting or exchanging lists can raise other legal and/or tax questions. For example, while list rental income is generally considered royalty income (and exempt from UBIT), if rented to a campaign, this exception does not apply to rentals made to political campaigns or PACs (the IRS does consider this to be UBI and therefore subject to tax. Nonpartisan voter registration files may only be rented to a 501(c)(4) or 527 at fair market value or exchanged for data of equal value. Even then, the circumstances in which these agreements can be made are complex, so it's wise to get legal advice. What's the bottom line? Sharing resources can strengthen partnerships, reduce costs, and advance meaningful change. Coalition building is literally solidarity in action—organizations coming together to advance joint goals. And we know we are stronger together, so establish agreements upfront, allocate costs fairly, keep good records, and maintain clear organizational boundaries. When done thoughtfully, collaboration can amplify a unified voice and build momentum while protecting each organization's tax-exempt status. Resources The Connection 501(c)(3) & 501(c)(4) Collaboration Sample Allocation of Costs Agreement Rules of the Game: Can We Rent (Or Share) That? Comparison of 501(c)(3) & 501(c)(4) Permissible Activities Rules of the Game: A Guide to Election Related Activities for 501(c)(3)s
