I would like to
open up the issue of the WMF getting involved in political
matters, such as copyrights and patents.
This has the potential to disqualify the Wikimedia Foundation from
501(c)3 status which would mean, not only, that we need to pay tax,
but also that we would then be severely restricted in the choice of
grant applications open to us.
According to http://www.irs.gov/charities/charitable/article/0,,id=120703,00.html
: "no organization may qualify for section 501(c)(3) status if a
substantial part of its activities is attempting to influence
legislation (commonly known as lobbying)."
If the Foundation were to have any such involvement, we would need to
be very careful that our activities were aimed at educating people
about these issues as opposed to encouraging people to lobby about
For a little more information on this, I should mention that the
restriction in section 501(c)(3) of the Internal Revenue Code ("no
substantial part of the activities" of the organization may be aimed at
"attempting to influence legislation") does not contain an exception for
legislation that is somehow related to the organization's purpose. And
even efforts to educate people can be interpreted as "grassroots
lobbying" under IRS rulings and disqualify an organization from
501(c)(3) status. In particular, efforts at voter education that
coincide with election campaigns tend to come under scrutiny for this;
perhaps more so, in fact, than similar efforts that coincide with the
consideration of specific legislation.
How is it, then, that we see general nonprofit organizations getting
involved in politics? One option is to create a separate organization
under section 501(c)(4) of the Internal Revenue Code for political
activity. This second organization can still be exempt from taxation
itself, but significantly, donations to it are not tax-deductible. The
alternative is for the organization to elect to be subject to section
501(h) of the Internal Revenue Code, which replaces the "no substantial
part" restriction with specific limitations on the organization's
The basic requirement with a 501(c)(4) lobbying affiliate is that the
two organizations "be separately incorporated and keep records adequate
to show that tax deductible contributions are not used to pay for
lobbying." (Regan v. Taxation With Representation of Washington, 461
U.S. 540.) Whether additional restrictions apply to the relationship
between the two organizations is not always certain, either in IRS
regulations or in terms of the U.S. Constitution. For the sake of
simplicity-don't laugh-I've left out political organizations under
section 527, which are somewhat similar in concept, but less likely to
be affiliated with a specific 501(c)(3) organization and have different
IRS reporting requirements.
Section 501(h) creates a different set of restrictions, and requires the
organization to report its political expenditures to the IRS regularly.
The IRS publication cited by Angela discusses the 501(h) option briefly.
The exact expenditure limitations are based on a percentage of overall
expenditures and capped at $1 million overall. However, "grassroots
lobbying", which is what I guess we might focus on most, is subject to a
lower scale and cap.
In either case, the effort needed for the Wikimedia Foundation to get
involved in any substantial kind of political activity would add
considerable complexity to financial and accounting matters. I'm not
sure if our financial procedures are in a state to support this kind of
change, although certainly they need to get there, regardless of how
politically active we become. However, the Foundation's mission as I
understand it is education and the dissemination of information, and I
think any political activity should be incidental to that mission.