After attending the Michigan Nonprofit Association’s Nonprofit Day 2011, I found out that, yes nonprofits can lobby. According to the IRS, 501(c)(3) corporations are allowed to lobby as long as they follow their rules and fill out the proper forms. The IRS defines lobbying as attempting to influence legislation by contacting, or encouraging the public to contact, members of a legislative body for purposes of supporting/opposing/proposing legislation. The major rule is that nonprofits cannot spend a “substantial amount” of their budget on lobbying. For a clearer explanation of what the IRS considers to be a “substantial amount,” check out Measuring Lobbying Activity: Expenditure Test. Charity Lawyers Blog post titled, Lobbying-Yes You Can! clarifies in layman’s, terms what is and is not lobbying, as well as explaining the 501(h) election.
According to the IRS, qualifying organizations may file a special election under 501(h) of the Code, or Election/Revocation of Election by an Eligible Section 501(c)(3) Organization To Make Expenditures To Influence Legislation (501(H) Election), to allow them to spend up to a specified dollar amount for lobbying without fear of adverse tax consequence from such activities. The IRS and Michigan Nonprofit Association advise nonprofits to file the 501(h) election if they are planning on doing any lobbying, as well as tracking all expenditures. ‘Direct’ and ‘Grassroots’ lobbying must be tracked separately as they have separate expenditure limits.
IRS Resources on Lobbying and expenditure limits:
IRS Definition of Direct & Grassroots Lobbying
IRS Schedule C Political Campaign and Lobbying Activities
IRS General Instructions for Filing Schedule C for Lobbying Activity
Excessive lobbying activities over a four-year period may cause a nonprofit to lose its tax-exempt status, making all of its income for that period subject to tax.
For questions on how to use communication channels such as your website, email, and social media channels for lobbying, Alliance for Justice is offering a free downloadable copy of Influencing Public Policy In The Digital Age: The Law of Online Lobbying and Election-related Activities. The guide is intended to inform 501(c)(3) and (c)(4) organizations on how to stay within the law and encourage participation in the nation’s democratic process using technology.
Consult your attorney and the IRS Charities/Nonprofits webpage for more information on how nonprofits can lobby for their cause. Other helpful resources are the IRS eNews: Exempt Organization Update and Center for Lobbying in the Public Interest website. ONEplace will be hosting a webinar November 15 titled Lobbying Rules for Nonprofits presented by Alliance for Justice. Register online soon as we anticipate seats will go fast!
Please share your thoughts about nonprofit lobbying by commenting on my blog!
Lobbying-Yes You Can!