Lobbying and Other Advocacy Knowing the Rules and Using Them to Maximum Advantage Lobbying and Other...

Lobbying and Other Lobbying and Other AdvocacyAdvocacy

Knowing the Rules and Knowing the Rules and Using Them Using Them to to

Maximum Maximum AdvantageAdvantage

By Ben Tesdahl, Esq.December 3, 2008

GOOD NEWS!!! GOOD NEWS!!!

Both Presidential Both Presidential candidates promised candidates promised

“CHANGE” “CHANGE”

BAD NEWS!!! BAD NEWS!!!

The President has no The President has no power to unilaterally power to unilaterally

pass legislation or pass legislation or change anything.change anything.


Through effective Through effective lobbying, you can lobbying, you can

make your make your organization’s organization’s

concerns known to concerns known to elected leaders.elected leaders.


Both Presidential Both Presidential candidates promised to candidates promised to

curb the influence of curb the influence of “lobbyists” and other “lobbyists” and other “special interests” “special interests”


In 2007, Congress In 2007, Congress passed the “Honest passed the “Honest

Leadership and Open Leadership and Open Government Act”Government Act”


Both Presidential Both Presidential candidates are going candidates are going

to “clean up to “clean up Washington” and Washington” and

create a more honest create a more honest leadership and a more leadership and a more

open government. open government.

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HLOGA OVERVIEWHLOGA OVERVIEW

Amends the Lobbying Disclosure Amends the Lobbying Disclosure Act to strengthen public Act to strengthen public disclosure of federal lobbyingdisclosure of federal lobbying

Places more restrictions on gifts Places more restrictions on gifts to Congress and other payments to Congress and other payments between registered lobbyists and between registered lobbyists and CongressCongress

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Enforcement of Enforcement of HLOGA HLOGA

The Comptroller General The Comptroller General will conduct random will conduct random audits to determine audits to determine compliance with the LDA compliance with the LDA and issue an annual and issue an annual report to Congress. report to Congress.

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Enforcement of Enforcement of HLOGA HLOGA

Noncompliance with the Noncompliance with the Lobbying Disclosure Act Lobbying Disclosure Act could result in civil could result in civil penalties up to $200,000 penalties up to $200,000 and criminal penalties and criminal penalties of up to of up to five years in jailfive years in jail! !

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WILL A NONPROFIT WILL A NONPROFIT CEO WHO VIOLATES CEO WHO VIOLATES

HLOGA REALLY GO TO HLOGA REALLY GO TO JAIL?JAIL?

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When Do You Need to Worry About When Do You Need to Worry About the LDA?the LDA?

You must have at least one You must have at least one In-HouseIn-House “Lobbyist”“Lobbyist”

An in-house employee is considered a An in-house employee is considered a “lobbyist” if “lobbyist” if in any calendar quarterin any calendar quarter::

He/she spends at least twenty percent of his He/she spends at least twenty percent of his

or her time on federal “lobbying activities.” or her time on federal “lobbying activities.”

ANDAND He/she makes more than one “lobbying He/she makes more than one “lobbying

contact.” contact.”

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How Often Must LDA Reports How Often Must LDA Reports be Filed?be Filed?

Initial Registration: Initial Registration: within 45 dayswithin 45 days of the date that you have an in- of the date that you have an in-

house “lobbyist” and expect to spend more house “lobbyist” and expect to spend more than $10,000 on federal lobbying activities in than $10,000 on federal lobbying activities in a calendar quarter a calendar quarter

Quarterly Reporting (previously semi-Quarterly Reporting (previously semi-annually). annually). Made on Form LD-2 if the organization:Made on Form LD-2 if the organization: has at least one employee during the calendar has at least one employee during the calendar

quarter who is a “lobbyist” and quarter who is a “lobbyist” and spends at least $10,000 in that quarter in spends at least $10,000 in that quarter in

connection with all federal lobbying activities. connection with all federal lobbying activities.

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What Gets Reported? What Gets Reported? A list of the specific issues upon which lobbying A list of the specific issues upon which lobbying

occurred, including a list of bill numbers.occurred, including a list of bill numbers.

A list of the Houses of Congress and the Federal A list of the Houses of Congress and the Federal agencies contacted by lobbyists for the agencies contacted by lobbyists for the registrant. registrant.

A list of the employees of the registrant who A list of the employees of the registrant who acted as lobbyistsacted as lobbyists

A good faith estimate of the total expenses that A good faith estimate of the total expenses that the registrant and its employees incurred in the registrant and its employees incurred in connection with lobbying, rounded to the nearest connection with lobbying, rounded to the nearest $10,000. $10,000.

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IMPORTANT NOTE: IMPORTANT NOTE:

The LDA will allow section 501(c)The LDA will allow section 501(c)(3) organizations to report the (3) organizations to report the lobbying numbers they have lobbying numbers they have gathered under the IRS lobbying gathered under the IRS lobbying rules if they do not desire to rules if they do not desire to keep two sets of records.keep two sets of records.

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Other Key Changes Other Key Changes

Electronic reporting is required. Electronic reporting is required.

Registered lobbyists (both Registered lobbyists (both individuals and organizations) individuals and organizations) will be required to file a new will be required to file a new semi-annual report (called Form semi-annual report (called Form LD-203) identifying political LD-203) identifying political contributions and compliance contributions and compliance with Congressional gifts rules. with Congressional gifts rules.

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Senate/House Ethics Senate/House Ethics RulesRules

HLOGA Reforms to Senate/House HLOGA Reforms to Senate/House Gift RulesGift Rules

New rules preclude any gifts New rules preclude any gifts from registered lobbyists or from registered lobbyists or any employees of firms that any employees of firms that employ or retain lobbyistsemploy or retain lobbyists. . (No longer a $50 gift exception)(No longer a $50 gift exception)

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Senate/House Ethics Senate/House Ethics RulesRules

HLOGA Reforms to Senate/House HLOGA Reforms to Senate/House Gift RulesGift Rules Exceptions for:Exceptions for:

Receptions – “stand-up food” is Receptions – “stand-up food” is OKOK

Charity events Charity events Widely-attended eventsWidely-attended events Events consistent with official dutiesEvents consistent with official duties Nominal value—trinkets, t-shirts, Nominal value—trinkets, t-shirts,

capscaps

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IRS LOBBYING RULES IRS LOBBYING RULES

The good news!The good news! 501(c)(3) entities can lobby, but with limits501(c)(3) entities can lobby, but with limits 501(c)(4) and (c)(6) can have unlimited 501(c)(4) and (c)(6) can have unlimited

lobbyinglobbying

Two ways of reporting lobbying for 501(c)Two ways of reporting lobbying for 501(c)(3)s(3)s ““No substantial part” testNo substantial part” test The 501(h) election – reporting money onlyThe 501(h) election – reporting money only

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IRS LOBBYING RULES IRS LOBBYING RULES

The IRS Legal Test for LobbyingThe IRS Legal Test for Lobbying

Section 501(c)(3) of the Internal Section 501(c)(3) of the Internal Revenue Code states that "Revenue Code states that "no no substantial partsubstantial part" of a charity's " of a charity's activities may consist of influencing activities may consist of influencing legislation. legislation.

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What Are the Lobbying What Are the Lobbying Limitations Under the Limitations Under the

Optional “Expenditure Test”?Optional “Expenditure Test”?

Expenditure Test LimitsExpenditure Test Limits

Roughly speaking, total lobbying can be no Roughly speaking, total lobbying can be no more than 20% of a charity’s annual budget more than 20% of a charity’s annual budget (with a cap of $1 M). (with a cap of $1 M).

Roughly 15% can be for “direct lobbying” Roughly 15% can be for “direct lobbying” and 5% for “grass roots lobbying”and 5% for “grass roots lobbying”

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How to Make the 501(h) How to Make the 501(h) ElectionElection

The expenditure test election is The expenditure test election is made by filing IRS Form 5768 any made by filing IRS Form 5768 any time during the yeartime during the year

Once filed, the form is effective for Once filed, the form is effective for the entire tax year and only the entire tax year and only expenditures of money are counted expenditures of money are counted (but not the time of unpaid (but not the time of unpaid lobbyists).lobbyists).

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What is Lobbying Under the IRS What is Lobbying Under the IRS

Definition?Definition? Direct LobbyingDirect Lobbying

It It refers to "specific legislation"refers to "specific legislation"

It It "reflects a view""reflects a view" on that legislation on that legislation

It is It is addressed to a legislator, an addressed to a legislator, an employee of a legislative body, or any employee of a legislative body, or any other government official other government official participating in formulating participating in formulating legislationlegislation

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Grass Roots Lobbying Grass Roots Lobbying

In general, a In general, a "grass roots lobbying "grass roots lobbying communication"communication" is one which”: is one which”:

RRefers to specific legislationefers to specific legislation

RReflects a vieweflects a view on that on that legislationlegislation

Contains a "call to action."Contains a "call to action."

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What is a “call to action”What is a “call to action” A call to action includes: A call to action includes:

(a) urging readers to contact their legislators; (a) urging readers to contact their legislators;

(b) stating a legislator's address or telephone (b) stating a legislator's address or telephone number; number;

(c) providing the reader with a petition or tear-off (c) providing the reader with a petition or tear-off post card; post card;

(d) identifying a legislator as being opposed to a (d) identifying a legislator as being opposed to a charity's view, undecided about the legislation, the charity's view, undecided about the legislation, the recipient's representative, or a member of the legislative recipient's representative, or a member of the legislative committee that will consider the legislation. [NOTE: It committee that will consider the legislation. [NOTE: It is permissible to identify the sponsors of legislation.]is permissible to identify the sponsors of legislation.]

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Nonlobbying Nonlobbying

Communications to the executive or Communications to the executive or judicial branches or to administrative judicial branches or to administrative agencies agencies

Communications in response to a Communications in response to a written written requestrequest for technical advice from a for technical advice from a legislature legislature

Any grass roots message that omits a “call Any grass roots message that omits a “call to action” to action”

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EXAMPLE: H.R. 1234 is an ill-EXAMPLE: H.R. 1234 is an ill-conceived and devastating piece of conceived and devastating piece of legislation. The ADAP Advocacy legislation. The ADAP Advocacy Association strongly opposes this Association strongly opposes this legislation. IT MUST BE STOPPED legislation. IT MUST BE STOPPED NOW! NOW!

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Tracking Lobbying Tracking Lobbying ExpendituresExpenditures

Generally, all costs incurred in:Generally, all costs incurred in: researching researching draftingdrafting editing editing disseminatingdisseminating

the lobbying communication must be the lobbying communication must be captured. captured.

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PRACTICAL TIPS PRACTICAL TIPS When lobbying, use the cheapest means When lobbying, use the cheapest means

possible. possible.

Use unpaid volunteers to draft and/or Use unpaid volunteers to draft and/or deliver your lobbying message, since their deliver your lobbying message, since their time is not counted at all.time is not counted at all.

Use the Internet to conduct grass roots Use the Internet to conduct grass roots lobbying whenever possible, since it can lobbying whenever possible, since it can reach millions of people at a very tiny cost reach millions of people at a very tiny cost as compared to using regular mail or as compared to using regular mail or other means. other means.

For grass roots messages, omit a call to For grass roots messages, omit a call to action whenever you possibly canaction whenever you possibly can. .

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IRS Rules—Political IRS Rules—Political ActivityActivity

501(c)(3)s can’t directly or 501(c)(3)s can’t directly or indirectly “intervene in a indirectly “intervene in a campaign” for or against a campaign” for or against a candidate for public officecandidate for public office

Doing so can result in loss of tax Doing so can result in loss of tax exemption and/or payment of a exemption and/or payment of a penalty taxpenalty tax

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Political Activity Political Activity (continued)(continued)

But, it is OK to conduct But, it is OK to conduct neutralneutral voter voter education or voter registration education or voter registration activities: activities:

Hosting candidate forums and Hosting candidate forums and debatesdebates

Preparing candidate questionnaires Preparing candidate questionnaires

Preparing voter guides on the issuesPreparing voter guides on the issues

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Hosting candidate forums Hosting candidate forums and debatesand debates

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Preparing candidate Preparing candidate questionnaires questionnaires

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Preparing voter guides on the Preparing voter guides on the issuesissues

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You can engage in issue You can engage in issue advocacy, including issues advocacy, including issues that surround a political that surround a political campaign, as long as it is campaign, as long as it is not slanted for/against not slanted for/against particular candidatesparticular candidates

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Nonprofit leaders can Nonprofit leaders can participate in campaigns participate in campaigns and endorse candidates and endorse candidates if they do so in their if they do so in their “personal capacity”“personal capacity”

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““Incumbents” can be invited Incumbents” can be invited to speak before a nonprofit, to speak before a nonprofit, even if the person may also be even if the person may also be a “candidate”. But introduce a “candidate”. But introduce the person by his/her current the person by his/her current job title and make sure the job title and make sure the speech does not turn into a speech does not turn into a campaign speech. campaign speech.

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BE SURE TO CONTINUE BE SURE TO CONTINUE YOUR RELATIONSHIPS YOUR RELATIONSHIPS WITH POLITICIANS IN WITH POLITICIANS IN BOTH ELECTION YEARS BOTH ELECTION YEARS AND ALSO IN NON-AND ALSO IN NON-ELECTION YEARS.ELECTION YEARS.

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• The IRS will look at the purpose of the political link and the number of “clicks” it take to get to partisan campaign information.

[See Revenue Ruling 2007-41 and IRS Memo dated July 28, 2008]

INTERNET LINKS TO POLITICAL MATERIAL:

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•• Any website content involving voterAny website content involving voter guides and other “voter education” guides and other “voter education” activities should follow the same activities should follow the same guidelines that exist for printed guidelines that exist for printed

materials. Such content must be materials. Such content must be educational and nonpartisaneducational and nonpartisan..

Political Website Links (continued)

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• When in doubt regarding candidate-related activity, seek legal guidance first and take action second.

General Rules of Thumb (continued)

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Your competitors are likely to be the first ones to complain about you publicly or turn you in to the IRS for any alleged misstep regarding the foregoing political rules.

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TESDAHL’S RULE OF TESDAHL’S RULE OF THUMB FOR POLITICAL THUMB FOR POLITICAL CAMPAIGN ACTIVITY BY CAMPAIGN ACTIVITY BY 501(C)(3) ENTITIES --501(C)(3) ENTITIES --

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Follow-Up QuestionsFollow-Up Questions

Contact:Contact:

Ben TesdahlBen Tesdahl

Powers, Pyles, Sutter & Verville, PCPowers, Pyles, Sutter & Verville, PC

1501 M Street, NW1501 M Street, NW

Washington, DC 20005Washington, DC 20005

[email protected]

202-872-6743202-872-6743

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