You are properly concerned about being used by a politician for political purposes and being accused of supporting a candidate for public office, an activity that could cost you your exempt status.  But it sounds as though you can accept the sponsorship and give the recognition in your situation.

First, since the Council member ran last year, it is not likely that she is running again this year.  A charity may work with elected officials in their official capacity, but may not support or oppose them in an election campaign.  If she is not currently running for office, you are not likely to run afoul of the rules.

Even during a campaign, you are allowed to provide goods, services, or other opportunities to candidates so long as you provide them to all candidates on the same basis and don’t prevent certain candidates from utilizing them.  If you are offering the sponsorship and providing the recognition on the same basis to the Council member as you are to every other member of the public (by advertising it on your website, for example), you would not be in violation of the electioneering rules even during a campaign. The more sponsors you have for your event who get the same recognition for the same level of gift, the easier it would be to show that you had not favored the politician over others.  (See Ready Reference Page: “IRS Issues New Guidance on Electioneering”)

For more on the rules for lobbying and electioneering, sign up for our Webinar on “Lobbying and Electioneering for Nonprofits.”