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Nonprofit organizations, designated as a 501(c)(3), are able to do some “lobbying” as defined by the IRS, and there are many activities that are actually designated as advocacy which are permissible for nonprofit organizations. Nonprofits are prohibited from any political activity which includes intervention in a political campaign to endorse or oppose any candidate for public office.

 

Why Engage in Policy Advocacy?

  • Advocacy allows your organization to portray the on the ground experience of providing direct services to influence development of effective public policies,
  • Advocacy helps bring the voices and lived realities of our communities to bear on policy decisions,
  • Non-profits provide valuable perspectives in representing constituencies that have a limited voice in the policy process,
  • Advocacy has the potential to improve policies that are responsive to the needs and realities of survivors as well as their children and families, and
  • Advocacy encourages movement beyond a “One-size fits all” approach.

What Constitutes “Lobbying”?  

Lobbying is a specific type of advocacy, and includes both direct and grassroots lobbying

  • Direct lobbying is defined as Communication with a Legislator (including any government employee who may participate in the formulation of legislation)  that expresses a view about Specific Legislation
  • Grassroots lobbying is defined as Communication with the Public that expresses a View about Specific Legislation and Includes a Call to Action

Permissible Lobbying Activities for Nonprofit 501(c)(3) Organizations with Non-Federal Funding:

There are two sets of IRS rules that organizations can choose to fall under:

  1. The “501(h) expenditure test”, which sets limits for the percentage of an organization’s budget that can be used on lobbying activities. (This method requires opting in); or
  2. The “insubstantial part” test provides that a nonprofit may engage in lobbying so long as it does not account for a “substantial part” of their activities. (These are the default rules)

Note: Non-profit organizations cannot use federal funds to support, oppose, or seek to change pending legislation. However, grantees of federal funding can participate in these lobbying activities with unrestricted, non-federal sources of funding within the generous limits above for 501(c)(3) organizations.

Filing the 501(h) election

Nonprofit organizations are able to remove the uncertainty of the “insubstantial part” test  for  lobbying activities and apply an expenditure test instead. Under the 501(h) election the nonprofit may spend the following amounts on lobbying activities:
 

If the amount of exempt purpose expenditures is: Lobbying nontaxable amount is:
 ≤ $500,000 20% of the exempt purpose expenditures
>$500,00 but ≤ $1,000,000 $100,000 plus 15% of the excess of exempt purpose expenditures over $500,000
> $1,000,000 but ≤ $1,500,000 $175,000 plus 10% of the excess of exempt purpose expenditures over $1,000,000
 >$1,500,000 $225,000 plus 5% of the exempt purpose expenditures over $1,500,000

 

Note: Not more than 25% of the funds permitted to be spent on lobbying activities can be spent on “Grassroots Lobbying”, as defined above.

Activities that are NOT Permissible for all Nonprofit Organizations

Nonprofit organizations CANNOT:

  1. Directly or indirectly participate in or intervene in any political campaign on behalf of (or in opposition to) any candidate for elective public office
  2. Contribute to political campaign funds
  3. Make public statements of position (verbal or written) on behalf of the organization in favor of or in opposition to any candidate for public office
  4. Ask candidate to sign pledges on any issue

Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.

Permissible Activities

A guiding principle for a nonprofit’s permissible advocacy activities is to remain nonpartisan.

Nonprofit organizations CAN:

  1. Write letters and make calls to legislators
  2. Invite legislator to visit your program/event
  3. Conduct educational meetings with legislative offices and share stories
  4. Write letters to the editor in local media
  5. Send action alerts
  6. Prepare and distribute educational materials such as nonpartisan analysis, study, or research that presents all sides of an issue
  7. Respond to written requests for assistance from committees or other legislative bodies
  8. Engage in collaborative policy development with government agencies
  9. Challenge or support legislative proposals that would change the organization’s right to exist
  10. Examine broad social, economic, or similar problems
  11. Conduct voter education activities (including presenting public forums and publishing voter education guides)
  12. Conduct activities intended to encourage people to participate in the electoral process, such as voter registration and get-out-the-vote drives

Source IRS website here and here.

The following activities are not considered “Lobbying” and are permissible for all nonprofit 501(C)(3) organizations regardless of their funding source:

  1. Making available the results of nonpartisan analysis, study, or research;
  2. Providing technical advice or assistance to a government body, or to its committee or other subdivision, in response to a written request from the chair of that body (this is sort of a free pass to directly express a view about legislation to the relevant legislators);
  3. Self-defense communications with a governmental body regarding legislation which would affect your existence, your powers or duties, your tax-exempt status, or the deductibility of contributions to your group (note that fighting cuts in government funding for your cause is not self-defense);
  4. Discussing broad social issues, without mentioning specific legislation;
  5. Communicating with a government official or employee, other than for the purpose of influencing legislation (note that many important decisions, such as how to enforce or implement a law, are made by government agencies, and since their decisions are not legislation, even direct communications to agency officials about these decisions would not be lobbying);
  6. Communicating with members of your organization with respect to legislation and expressing a view about the legislation so long as the communication does not encourage members to take action regarding the legislation.

Visit the Council of Nonprofits website for more information.

Source: Center for Nonprofit Management

More resources:

IRS- Guidelines for Compliance
IRS- Measuring lobbying activity: substantial part test
IRS- Measuring lobbying activity: expenditure test

“Lobbying and Advocacy: A guide to Federal Law” available at www.vawnet.org
Center for Lobbying in the Public Interest: www.clpi.org
Alliance for Justice: www.afj.org
OMB Watch: www.npaction.org or www.ombwatch.org
Center for Community Change: www.communitychange.org
National Center for Responsive Philanthropy: www.ncrp.org