Non-profit Lobbying Rules & Regulations

Much of the social change in America had its origin in the nonprofit sector.  Nonprofit lobbying is the right thing to do.  It is about empowering individuals to make their collective voices heard on a wide range of human concerns.

               - Bob Smucker, Founder, Center for Lobbying in the Public Interest

Lobbying and other advocacy activities are critical components of the work we do on a daily basis. We have such an incredible opportunity to utilize the 2006 Elections as a way to inform candidates before they get into office about the importance of early childhood education and development. In addition, the 80th Legislative Session is right around the corner and we must have a strong network of advocates building relationships with legislators and staff on a regular basis.

In order to alleviate any fears you may have about the regulations regarding non-profit lobbying, we have provided you with a number of resources to reference.
 
YOUR MOST IMPORTANT QUESTIONS ANSWERED BY THE IRS
The Department of Treasury Internal Revenue Service has provided answers to the following questions that are most often asked by advocates engaging in lobbying activities:

Question: Is lobbying by section 501(c)(3) organizations permissible under federal tax laws?

Answer: Yes (except for private foundations under most circumstances)

Question: How much lobbying may a “public charity” (a section 501 (c)(3) organization other than a private foundation or an organization testing for public safety) conduct?

Answer: There are two sets of rules, and with the exception of churches, public charities can choose which set to follow. One rule is that no substantial part of the organization’s activities can be lobbying. The alternative rule, that an organization must affirmatively elect, provides for sliding scales (up to $1,000,000 on total lobbying and up to $250,000 on grass roots lobbying) that can be spent on lobbying. (The scales are based on a percentage of the organization’s exempt purpose expenditures.)

Question: What are the advantages and disadvantages of the two options?

Answer: Organizations covered by the “no substantial part” rule are not subject to any specific dollar-base limitation. However, few definitions exist under this standard as to what activities constitute lobbying, and difficult-to-value factors, such as volunteer time, are involved.

Organizations seeking clear and more definite rules covering this area may wish to avail themselves of the election. By electing the optional sliding scale, an organization can take advantage of specific, narrow definitions of lobbying and clear dollar-based safe harbors that generally permit significantly more lobbying than the “no substantial part” rule. However, as noted above, there are ceilings (unadjusted for inflation) on the amount of funds that can be spent on lobbying. Thus, these dollar limits should be considered when making the election.

Question: How does a public charity elect? May an election be revoked?

Answer: The organization files a simple, one-page Form 5768 with the Internal Revenue Service. The election only needs to be made once. It can be revoked by filing a second Form 5768, noting the revocation.

Question: Does making the election expose the organization to an increased risk of an audit?

Answer: No. The Internal Revenue Manual specifically informs our examination personnel that making the election will not be a basis for initiating an examination.

Question: Does the Internal Revenue Service Code allow public charities that receive federal grant funds and contracts to lobby with their private funds?

Answer: Yes. However, while it is not a matter of federal tax law, it should be noted that charities should be careful not to use federal grant funds for lobbying except where authorized to do so.

Question: May private foundations make grants to public charities that lobby?

Answer: Yes, so long as the grants are not earmarked for lobbying and are either  (1) general purpose grants, or (2) specific project grants that meet the requirements of section 53.4945-2(a)(6) of the Foundation Excise Tax Regulations.

Question: May section 501 (c)(3) organizations education voters during a political campaign?

Answer: Yes. However, organizations should be careful that their voter education efforts do not constitute support or opposition to any candidate.

Question: May public charities continue to lobby incumbent legislators even though the legislators are running for reelection?

Answer: Yes. Charities should be careful, however, to avoid any reference to the reelection campaign in their lobbying efforts.

*Please call TECEC at 512-476-7939 in order to receive a copy of the letter from the Internal Revenue Service with these questions and answers related to non-profit lobbying. Please share this letter with your Board of Directors and other interested individuals.  

HELPFUL RESOURCES

The Nonprofit Lobbying Guide, Second Edition, by Bob Smucker
This publication from the Center for Lobbying in the Public Interest includes information about the legislative process, effective communication strategies, developing grassroots action, lobbying through the media, and technical issues related to lobbying.

E-Advocacy for Nonprofits: The Law of Lobbying and Election Related Activity on the Net
This publication by the Alliance for Justice includes information on Internet advocacy and the law, Internet tools for advocates, federal law governing lobbying, voter education and election-related advocacy, and other key issues related to E-Advocacy.

Alliance for Justice
http://www.afj.org/  

Center for Lobbying in the Public Interest
http://www.clpi.org/Home_Final.aspx  

If you have any specific questions, please feel free to call TECEC at 512-476-7939. If we cannot answer your questions, we will find someone who can.

Last Updated: 1/12/06