Lobbying Rules for (c)(3)s: Keeping It Legal

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Presenters Lobbying Rules for (c)(3)s:

Keeping It Legal

• What counts as lobbying and what

doesn’t

• The difference between the "501(h)

election" and the "no substantial part”

test

• How to calculate your organization’s

lobbying limit

• Fundraising for lobbying, including rules

for foundation funding

• The lobbying reporting requirements

Tom Southard, [email protected]

Paul MarchioneDirector of Community Outreach and AdvocacyIndependent [email protected]

Independent Sector

• Membership organization

• Nonprofit charitable organizations, foundations, and

corporate giving programs

• Voice, Leadership, Impact

• Policy: Focused on federal level sector-wide issues

� Tax incentives for charitable giving

� Tax exemption issues

� Advancing advocacy

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What We Will Cover Today

Public Charity Lobbying Rules

No Substantial Part Test or the (501)(h) Election?

Lobbying Definitions, Limits, Exceptions, and Penalties

Reporting and Recordkeeping

Foundation Lobbying and Funding Rules

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Coalition Building

Online Engagement

Education

Lobbying

Media Outreach

Research

Advocacy Tactics

80% of DC “thought leaders” say for-profits have a great deal or very much influence on policy decisions in Washington.

38% say charities and foundations have a great deal or very much influence on policy decisions in Washington.

For-profits have more influence on policy

in Washington than charities

2011 Harris Interactive Poll

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501(c)(3) Public Charities (includes community foundations)

� May lobby within limits

� May choose which rules (definitions, limits) they operate under

501(c)(3) Private Foundations

� Cannot lobby, except in self-defense

� Cannot directly fund lobbying

� May fund programs and organizations that include lobbying

501(c)(4) Social Welfare Organizations

� May engage in unlimited lobbying to further their social welfare purpose

Lobbying: The Basics

501(c)(3) Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.

The Internal Revenue Code

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…no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation ...

No Substantial Part Test

…(except as otherwise provided in subsection (h))

501(h) Election

Understanding the Choice: Definitions, Rules, and Limits

…no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation…

No Substantial Part Test

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Definition of Lobbying

• Contacting, or urging the public to contact, members of a

“legislative body” for the purpose of proposing, supporting or

opposing legislation

“Legislative body” includes legislators, legislative staff, and executive

branch officials who may participate in the formulation of legislation

• Advocating for the adoption or rejection of legislation

5% of expenditures?

20% of expenditures?

…whether, through a facts and circumstances test, no substantial part of the activities of your organization are carrying on propaganda or otherwise attempting to influence legislation…

Lobbying Limit

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• Direct expenditures

• Volunteer time

• Staff time

• Publicity

• Continuous/intermittent nature of activities

Facts and Circumstances Test

• Are you spending a substantial amount of your resources on trying to influence legislation?

Facts and Circumstances Test

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No Substantial Part Reporting – Form 990, Schedule C

…(except as otherwise provided in subsection (h))

501(h) Election

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Who can “elect” to lobby under 501(h)?

May be elected by mostpublic charities

Cannot be elected by:

• Churches

• Government agencies

• Public safety testingorganizations


• Direct Lobbying

Reflecting a view to a legislative or executive branch official on

specific legislation

• Grassroots Lobbying

Urging the public to contact a legislative or executive branch

official to reflect a view on specific legislation.

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Direct Lobbying Grassroots Lobbying

Communication to legislative

or executive branch official

Communication to members

of the public

Specific legislation Specific legislation

Reflects a view Reflects a view

Includes a call to action


• Letter

• Email

• Fax

• Conversation

• Twitter

• Facebook


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Legislative or Executive Branch Official

A member of a legislative body or staff. Executive branch officials who participate in the formulation of legislation.

The Public

Anyone, except legislators or members of your organization



Specific Legislation

Legislation that has been introduced in a legislative body, or could be proposed. Does not include administrative rulemaking, executive orders, or litigation.

Reflects a View

Supports or opposes, in whole or in part.

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501(h) Election


Encourages recipient to take action

� Tells recipient to contact a legislator

� Provides information on contacting a legislator

� Provides a mechanism for contacting a legislator

� Identifies a legislator by view, by committee, or as the recipient’s legislator

Allocating Costs between Direct and

Grassroots Lobbying

Members: Pay dues or contribute time, beyond a nominal amount

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Activities that are not counted as lobbying

1. Nonpartisan analysis, study, or research

2. Examinations and discussions of broad social, economic, and similar problems

3. Response to requests for technical advice

4. Self-defense lobbying


1. Nonpartisan analysis, study, or research

� Independent/objective exposition of particular subject

� May advocate viewpoint, with explanation

� Cannot encourage action

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2. Examinations and discussions of broad social, economic, and similar problems

� Cannot address specific legislative proposal

� May address issue before legislature


3. Response to requests for technical advice

� Providing technical advice or assistance

� In response to a written request

� Request from a body, committee, or subcommittee

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4. Self-defense lobbying

Lobbying on legislation that might affect a charity’s:

� Existence

� Powers and duties

� Tax-exempt status

� Deductibility of contributions

501(h) Provides Clear Lobbying Expenditure Limits

Total Charitable ExpendituresLobbying

Expenditure Limit*

Less than $500,000 20% of charitable expenditures

Over $500,000 but not more than

$1 million

$100,000 plus 15% of total

expenditures over $500,000

Over $1 million but not more than

$1.5 million

$175,000 plus 10% of total

expenditures over $1 million

Over $1.5 million but not more

than $17 million

$225,000 plus 5% of total expenditures

over $1.5 million

Over $17 million $1 million

*Grassroots lobbying limited to 25% of lobbying expenditure limit

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Financial tracking only

� Direct expenditures for grassroots and direct lobbying

� Staff salaries/benefits

� Communications costs

� Overhead expenses

501(h) Reporting – Form 990, Schedule C

Choosing Between 501(h) and

No Substantial Part

No Substantial Part 501(h)

Facts and circumstances test Well-defined expenditure limits

“Influencing legislation”; no

exceptions

Specific definition of lobbying; clear

exceptions

IRS requires explanation of all

activities to influence legislation

IRS requires financial reporting only

LDA reports must use LDA definition

and accounting (two tracking systems

required)

LDA reports can use 501(h) definition

and accounting

Penalty for violations: Loss of

charitable tax-exempt status

Penalty for violations: Tax on

expenditures

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Lobbying Disclosure Act

� May have to register with Clerk of the House and Secretary of the Senate

� http://lobbyingdisclosure.house.gov

� http://www.independentsector.org

IRS Reporting

Federal Lobbying

Organizations are responsible for knowing and following state-level lobbying laws

Great Resource: “States' Legislative Ethics and Lobbying Laws” www.ncsl.org

Charities must follow state laws

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• Membership dues

• Federal funding

• Foundation funding

• Private donations

Funding for Lobbying

• Foundations may give general

operating support to

charities that lobby

• Foundations may fund

non-lobbying advocacy

efforts

• Foundations may give general

support to projects that

include lobbying

Foundations cannot DIRECTLY fund lobbying


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• Donations earmarked for lobbying are not deductible

• Donations in response to lobbying communications are considered earmarked for lobbying

Please help bring this message to others by making a donation

Donations for lobbying are

not deductible


Presenters Questions?

Salsa Resources

Jan 31. Training Webinar - Advocacy 101:

Taking Action in 2013

Tom Southard, [email protected]

Paul MarchioneDirector of Community Outreach and AdvocacyIndependent [email protected]

Lobbying Rules for (c)(3)s: Keeping It Legal

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