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Should Ladera Ranch Civic Council Members Be Able to Endorse Candidates for Election?

At its most recent meeting, the Ladera Ranch Civic Council debated a tricky issue balancing an individual’s right to protected political speech and the Civic Council’s role as a non-partisan, tax exempt public benefit organization.  The issue was whether it was appropriate for the Civic Council members to endorse the candidates running for election.  At the end of the meeting, the Civic Council voted 4-2 to postpone the discussion until the October meeting (after the recent elections).  Although this has the potential to be a divisive and controversial issue, we thought the description of the debate posted on the Civic Council’s website was fair, accurate and even-handed.  We have reprinted it below (sources: Ladera Ranch Civic Council and OC Register article ($)):

Ladera Ranch Civic Council members Monday debated whether, in their official capacity, they should be able to endorse political candidates or parties.

The issue arose after council member Connor Traut sent an email out in late August endorsing three of four candidates vying for three open seats on the council. The email told recipients to “Elect Tomaino, Hubbard, Kephart for the Ladera Ranch Civic Council.”

The email includes a line that states: “Endorsed by Civic Council Member Connor J Traut.”

Following the email endorsement, council Chairman Jett McCormick proposed a policy prohibiting the council or its directors as individuals from endorsing political candidates or parties.

The council – which is a nonpartisan, nonprofit group that helps gather input from residents on issues such as public safety and land use to share with county officials – was split on the issue.

“As a whole, we shouldn’t be able to endorse a candidate or party, but as an individual, I can endorse whoever I want,” board secretary Michael Mazza said. “It comes down to the First Amendment.”

McCormick disagreed.

“As an individual, you can do whatever you want, but as soon as you put a tag on as a council member you speak for the council,” he said.

Traut said the policy limits political speech.

Council member Carlo Tomaino, who is running for one of the open seats, called the issue “tricky.”

“You don’t want to infringe on someone’s personal freedoms, but at the same time you don’t want to give the impression that the Civic Council as a group endorses any single candidate over another.”

Tomaino proposed tabling the issue until the group’s next meeting so it could “meet in the middle.”

“My goal is to help both sides find a common solution,” he said. “Maybe there is an updated policy that hopefully satisfies both points or maybe there is no solution. But at least you think twice before you do it.”

The council voted 4-2 to push the issue to its Oct. 21 meeting. McCormick and council member Todd Carlson voted against the postponement.

We assume that the Ladera Ranch Civic Council is properly qualified as a tax-exempt public benefit corporation.  It purports to be tax exempt under Internal Revenue Code Section 501(c)(4).  Section 501(c)(4) “provides for exemption from federal income tax of civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare.”  If so, there is a legitimate concern that engaging in political activities by the organization could result in the IRS revoking the Council’s tax exempt status.  The IRS has very strict rules about this:  a tax exempt organization under 501(c)(3) of the Internal Revenue Code is forbidden to directly or indirectly participate in any political campaign on behalf of (or in opposition to) any candidate for elective public office.  A public benefit organization organized under 501(c)(4) has a little more leeway to engage in political activities when it is not the organization’s primary purpose, but IRS Regulation Section 1.501(c)(4)-1(a)(2)(ii) still provides that “the promotion of social welfare does not include direct or indirect participation in political campaigns on behalf of or in opposition to any candidate for public office.”  The IRS has also clearly ruled that endorsing individual candidates is “participating in political campaigns.”

It should be emphasized that these restrictions only apply to political activities conducted by the tax exempt organization.  Individuals are not prohibited from engaging in political activities.  However, at what point might the actions of an individual cross the line and be considered the act of the organization?  According to the IRS, when an officer or executive director of an organization engages in the restricted activity in his or her capacity as a member or director of the organization, such political activity can be imputed to the organization.  This is likely why the issue surfaced at the Civic Council — an incumbent director of the Ladera Ranch Civic Council endorsed three of the four candidates vying for the Council in his capacity as a Council member.  In our opinion, that comes dangerously close to crossing the IRS rule against participating in political campaigns.  We also recognize, however, that it is far from certain that the Ladera Ranch Civic Council election is in fact a political campaign for public office, although for purposes of analyzing this issue we are assuming that the Civic Council is quasi-governmental enough that it ought to treat its elections in a consistent manner.

While we don’t support the practice of endorsing candidates on a partisan basis for what is essentially a community advocacy organization, we oppose any policy that would seek to restrict it.  We believe that mere membership on the Civic Council does not require an individual to give up their right to participate in the political process, and that the Civic Council should not adopt a policy prohibiting individuals, in their individual capacity, from endorsing candidates for election.  However, Council members ought to make it expressly clear that political endorsements are being done solely in an individual capacity and not in any way affiliated with the Civic Council itself.

If it were us in an individual capacity, we would refrain from making partisan political endorsements for Ladera Ranch Civic Council elections.  We may be naive, but it is unfortunate that the Ladera Ranch Civic Council, a social welfare organization, is becoming increasingly politicized.  Perhaps it is the issue of local cityhood that is attracting aspiring politicians to our Council?  Maybe it is the fact that a couple dozen votes in an opaque online election is sufficient to get one elected to something that sounds an awful lot like a city council on a political resumé?  Nevertheless, while the Ladera Ranch Civic Council has some evolving to do, censoring the protected political speech of individuals is not the right way to do it.

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