Rules of 501(c)(3) Nonprofit Lobbying
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Rules of 501(c)(3) Nonprofit Lobbying1
501(c)(3) nonprofit organizations can play an important role in influencing policy and legislation at the federal, state, and local levels. It is important that your organization understand the rules for lobbying before engaging in any lobbying activities. This document provides an overview of nonprofit lobbying definitions, rules, dos and don’ts, as well as links to additional resources and information.
A 501(c)(3) organization is subject to heightened restrictions on lobbying activities, A 501(c)(3) organization may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status. Lobbying may not constitute a “substantial part” of the activities of the 501(c)(3) organization.
Types of Lobbying
Direct lobbying: attempts to influence a legislative body through communication with a member or employee of a legislative body, or with a government official who participates in formulating legislation. These individuals are considered “covered” officials, which generally includes legislative branch officials, such as members of Congress, their staffs, and committee staffs, as well as executive branch officials, including the President, White House and Administration staff.
Grassroots lobbying: attempts to influence legislation by attempting to affect the opinion of the public with respect to the legislation and encouraging the audience to take action with respect to the legislation.
Key elements of grassroots lobbying may include:
- Referring to specific legislation;
- Reflecting or stating a point of view on the legislation’s merits; and
- Encouraging the general public to contact legislators.
Both direct lobbying and grassroots lobbying communications refer to or reflect a view on legislation.
A "covered" official is one who is identified by law as a policy maker or advisor. Under the Lobbying Disclosure Act, this generally includes members of Congress, their staffs, committee staffs, and executive branch officials. Contact with a covered official in order to affect policy generally constitutes lobbying activity, with certain exceptions.
Depending on the type of reporting of lobbying expenses your organization has selected, you may need to separately report direct lobbying activities and grassroots lobbying activities. At the federal level, no more 25% of lobbying expenses can be expenses for grassroots lobbying activities.
Lobbying Rules for Nonprofit Organizations2,3
There are two different ways to determine “substantial part.” One if through the substantial part test which is looking at the facts and circumstances, and the second is through the expenditure test, which requires the filing of a 501(h) election and is based upon a mathematical formula.
The following chart outlines lobbying limits.
- The “Substantial Part” column applies to organizations that have NOT filed the Internal Revenue Service (IRS) Form 5768 indicating that the organization plans to engage in permitted lobbying activities.
- The “Expenditure Test” column applies to organizations that HAVE filed the IRS Form 5768, also known as the 501h election.
|Substantial Part||Expenditure Test|
|No certain and definitely allowable amounts of lobbying expenditures||Clear and specific definitions of lobbying|
|Certain and definitely allowable amount of lobbying expenditures|
|A single year violation may result in the loss of tax-exempt status||No jeopardy to tax-exempt status for a single year violation|
|Importance of an issue is a relevant factor in determining permissible lobbying activity||Importance of an issue is not a relevant factor in measuring permissible lobbying activity|
|Possible additional reporting burden on tax form 990||Safe harbor exceptions|
|Possibly less reporting burden than substantial part test|
The Dos and Don’ts of 501(c)(3) Nonprofit Lobbying4
There are many activities that a 501(c)(3) nonprofit organization can do when it comes to advocating for your issue, both during an election season, and not. But there are also important limits, especially during elections, and it is critical for you and your organization to know what is and is not allowed. The list below includes some, but not all, activities that a nonprofit organization might want to undertake:
|Conduct public education and training sessions about participation in the political process||✔|
|Encourage members and non-members to write letters||✔|
|Sponsoring or co-sponsoring a debate during an election season,, among ALL candidates||✔|
|Meet with/speak with policymakers about legislation||✔|
|Testify at public hearings||✔|
|Provide research, analysis and commentary||✔|
|Publicly endorse or oppose specific legislation||✔|
|Criticize sitting elected officials||✔ (may not attack their personal characteristics or attack them in their status as a candidate)|
|Invite a policymaker to visit||✔|
|Use private "non-earmarked" funds to lobby||✔|
|Raise funds for candidates||X|
|Make campaign contributions, either cash or in kind||X|
|Publicly support or oppose candidates||X|
|Use federal funds to lobby (some exceptions apply)||X|
|Post partisan political messages on Facebook, Twitter, Tumblr, or other social media sites||X|
|Connect organization’s criticism of public official to voting in an election||X|
|During an election, compare organization’s issue position with that of a candidate||X|
More Tools and Resources
- IRS Lobbying Rules - http://www.irs.gov/Charities-&-Non-Profits/Lobbying
- Worry Free Lobbying for Nonprofits - https://bolderadvocacy.org/resource/worry-free-lobbying-for-nonprofits/
- Advocacy Guides and Resources - http://www.advocacyandcommunication.org/tools-resources/
- Lobbying FAQ - http://www.clpi.org/the-law/faq
1 Disclaimer: NAEYC is not providing advice . Each organization should seek advice from their own advisors or attorneys.