Raffa Resources
Raffa Resources
Raffa Resources
​Coming Soon: ​Big Changes for Political Nonprofit Organizations in New York

​By Aaron Fox and Su Chung, Raffa Tax

The State of New York may soon be passing an ethics reform plan which brings about significant changes and new compliance requirements related to political campaign finance law. The plan will create several compliance and disclosure requirements for 501(c)(4) organizations engaging in political activities in the state of New York.

1. Additional disclosure requirement for 501(c)(4) organizations

Any 501(c)(4) organization registered or required to be registered in the state of New York who engage in political activity face additional reporting and donor disclosure requirement. 501(c)(4) organizations that spend $10,000 or more in a calendar year on an issue advocacy communication that gets distributed to at least 500 members of the general public and contains advocacy for or against any elected official or legislation will be required to file a financial disclosure report with the New York Attorney General. The financial disclosure report will include names of all the individuals with governance authority, the names of all the contributors who donated more than $1,000 to the exempt organization, and total expenses incurred for the issue advocacy communication. Certain exceptions to this rule exist; issue advocacy communications that are sent to the board of directors, officers or contributors who “affirmatively consent” to be the members of the political group are not subject to the special disclosure requirement. Furthermore, organizations can reduce the burden of contributor disclosure requirement by setting up a separate bank account that is exclusively used for the issue advocacy communication. In this case, only the contributions that are deposited to this separate account are subject to the disclosure requirement.


2. Political consultants

Every political consultant who provides political consulting services for an election candidate, elected official or works on legislative matters before the government agencies will be required to be registered with the New York Department of State. The registration discloses the names of all the clients that the political consultants are hired to provide services for such as political consulting advice on an election campaign.


3. New definitions and roles of IECs, PACs, and the “coordinated” activities

To prevent “dark money” from entering the electoral process and toughen ethics enforcement laws, this new rule clarifies the definition of “Independent Expenditure Committee (IEC)” and “Political Action Committees (PACs),” and strictly limits each of their roles. IECs are limited to independent expenditures only.  They cannot make any contributions to candidates, parties, and PACs. PACs may make contributions to candidates, parties, and IECs, but they cannot make any expenditures to support or oppose them. Also before any person or body makes independent expenditures for a candidate or a party, they must be properly registered with the New York State Board of Elections as an IEC.

The plan also strengthens the definition of “coordination” that applies to IECs. While an IEC organization can generally accept contributions and make expenditures on election activities, any “coordinated” activities pose limits on the contribution that the organization can receive. Examples of “coordinated” efforts and activities between IECs and candidates include a candidate’s involvement in the formation of IECs, involvement in the fundraising event held by the IECs, and having an employment or family relationship with the members of the IECs.

Non-profit organizations engaging in political activities in the state of New York should pay attention to the development of this plan put forth by Governor Cuomo and should structure their organization’s activities accordingly as it could result in significantly increased compliance requirements that would impact the operation and management of the businesses. Please contact Aaron Fox at afox@raffa.com or Su Chung at schung@raffa.com in the Raffa tax department for further questions or if any assistance is needed.