Charity Lobbying in the Public Interest has a website where they provide access to information about lobbying and advocacy. See http://www.clpi.org
On September 11, 1998, the Let America Speak coalition distributed this memorandum to its mailing list:
FROM: Alliance for Justice - Nan Aron, INDEPENDENT SECTOR - Matt Hamill, and OMB Watch - Gary Bass
DATE: September 10, 1998
RE: A Brief Explanation for Your Boards of Directors and
Others of the 1976 Lobby Law
Let America Speak! members and other groups have asked for a
description of the 1976 lobby law that they can give to their
Board members, staff and others as they weigh the importance of
electing to come under the liberal provisions of that law.
Enclosed is a one page explanation and accompanying one pager
which describes a number of legislation related activities that
are not considered lobbying under the 1976 law. We urge you to
distribute the information broadly to your volunteer
leadership, staff, affiliates and other groups that lobby or
are considering lobbying. If you want additional information,
please contact any of our organizations listed below or
Charity
Lobbying in the Public Interest
2040 S Street, NW
Washington,
DC 20009
Phone: 202/387-5048 :: Fax: 202/387-5149 :: e-mail:
charity.lobbying@indepsec.org
Also, see below for a list of
publications related to lobbying and advocacy.
Alliance for Justice
Nan Aron
2000 P Street, NW, #600
Washington, DC 20036
Phone: 202/822-6070 :: Fax: 202/822-6068 :: e-mail: advocacy@afj.org
INDEPENDENT SECTOR
Matt Hamill
1828 L Street, NW, #1200
Washington, DC 20036
Phone: 202/223-8100 ::
Fax: 202/331-8126 ::
email: matt.hamill@indepsec.org
OMB Watch
Patrick Lemmon
1742 Connecticut Avenue, NW
Washington, DC 20009
Phone: 202/234-8494 ::
Fax: 202/234/8584 ::
email: lemmonp@ombwatch.org
Ruth Anderson wrote in NONPROFIT (see www.rain.org/mailman/listinfo/nonprofit)
on July 17, 1998:
There is no better source of information on what a 501(c)(3) and a
(c)(4) can and
cannot do than the Alliance for Justice -- http://www.afj.org -- If
you ever have the
opportunity to take their trainings on this, do so.
See the Position Paper by the Alliance and others at
http://www.nonprofits.org/npofaq/16/20.html.
In essence, a 501(c)(4) can do just about anything (legal) , but
electioneering cannot be the majority of its work. Therefore the IRS
says 49% or less.
A 501(c)(3) can do no substantial lobbying and zero-zip-nada-
electioneering. Substantial is one of those nasty subjective terms
so
(c)(3)s often elect to fill out the super short and easy 501(h)
form. Then
they can do up to 20% and it's averaged over 3 years so if you do
30%
one year and 15% the next two years, you're okay.
Making the 501(h) choice is very useful
because "substantial" is not just a monetary judgement. The IRS can
also
consider effectiveness. Imagine this somewhat implausible, but still
possible, scenario. Senator X's bill will throw your clients into
the
streets, cause mass starvation, and general mayhem. You hold a press
conference and, miraculously, the press actually covers it, the
people
notice and are concerned about the suffering the bill will cause and
calls flood the capitol. Now you spent all of 21.60 for the
photocopies
for the press conference. However, this is potentially substantial
lobbying because, hey!! you won!!! So electing is a nice safe out.
Also, according to the IRS and Alliance for Justice, they prefer
that
you elect and are less likely to audit (because it is so objective)
whereas they are more likely to audit if you do not elect (because
it is
so subjective). Having gone through an IRS 501(c)(3)/(c)(4) audit, I
would like
to avoid it....though it was not nearly so bad as I imagined!!
Lobbying is supporting or opposing a piece of legislation at any
level
of government or at the ballot (in the form of an initiative or
referendum).
Electioneering is supporting or opposing a candidate at any level of
government.
Sandy Deja (see http://www.form1023help.com) added this correction and
note the next day:
One small clarification:
Ruth Anderson said: "(c)(3)s often elect to fill out the super short
and easy 501(h) form. Then they
can do up to 20% [Lobbying] and it's averaged over 3 years so if you
do 30% one
year and 15% the next two years, you're okay."
The averaging is over 4 years, and averaging is only for purposes of
possible
IRS revocation.
An organization that spends more than 20% of its budget on lobbying
will owe
the IRS a penalty tax. An organization that spends more than 30% of
its budget
on lobbying can have its 501(c)(3) status taken away, but only if it
averages
more than 30% over any four year period of time.
Stricter rules apply to grass-roots lobbying, where, instead of
contacting
legislators itself, the organization urges the general public to
contact the
legislators.
David Batts commented in CharityTalk at
CharityChannel.com on November 11, 1997:
We have several publications available -- "Being A Player: A Guide
to the IRS Lobbying Regulations for Advocacy Charities," "Regulation
of Advocacy Activities of Nonprofits that Receive Federal Grants,"
"Myth v. Fact: Foundation Support of Advocacy," etc. Please visit
our website http://www.afj.org for ordering details and other
information on this topic.
Barnaby Zall wrote from his law office in Bethesda, MD, on July 5, 2001, in answer to a question about methods 501(c)(3)s use in keeping records to satisfy the requirements of the 501(h) election:
Often people go to great lengths to do these records, when the easy
answer is simply to tell people to keep timesheets. Some people will resist
keeping real-time timesheets, but you should have at least some
contemporaneous records for a period (and if it's not full-time records, then
an explanation of how the period recorded is representative of the entire
year/quarter). There are other ways, including percentages of costs, etc., but even those require some way to distinguish between lobbying and nonlobbying time. I've never had the Service question timesheets as a method.
Earlier (on 13 July 1995), Sanford Morton posted the following to
soc.org.nonprofit:
Some time ago, this question was raised in our organization.
Following
is an internal report on the issue. It addresses only current
practice
and not proposed legislation.
Permissable Lobbying by 501(c)(3)s
by Sanford Morton
The current rules proscribing lobbying by a 501(c)(3) public charity
are
complicated. The IRS, guided by the enabling legislation and
Congressional intent, appears to want to maintain a very strict
standard. Following is my understanding of the rules, though I am
not a
lawyer or otherwise an expert. Insert disclaimer here and sprinkle
liberally below.
What's the rule? In general, no 501(c)(3) tax exempt public
charity
may engage in lobbying as a substantial part of its total
activities.
Such lobbying is proscribed even if it relates directly to the basic
tax
exempt purpose of the organization.
The penalties for engaging in substantial lobbying include loss of
tax
exempt status, a surtax of 5% of the organization's lobbying
expenditures, and a similar tax on each of the organization's key
employees who knowingly authorized the excessive lobbying.
What is lobbying? Any activity by the organization designed
to
influence the outcome of legislation, at any political level. This
should be construed broadly. It includes direct contact with
legislators
and political officials, as well as public information campaigns to
influence the opinions of the general public, insofar as this may
affect
legislation.
Specifically exempt, however, are activities related to public
education
if they are nonpartisan, objective, and fairly consider alternative
points of view. Also, responses to a legislative request for expert
or
viewpoint testimony from the organization are not lobbying. Finally,
for
purposes of the expenditure test (see below), communications with
legislators on legislation which will directly affect the existence,
nature, powers, or tax exempt status of the organization itself is
also
not considered to be lobbying.
What is substantial? The IRS has been deliberately vague
about the
definition of substantial. It means significant, but much less than
half. The IRS may measure the amount of lobbying in various ways:
the
fraction of an organization's total expenditures that are devoted to
lobbying during a tax year; or the fraction of an organization's
total
efforts or activities, measured by person-hours or number of staff,
devoted to lobbying. Finally, the IRS may also attempt to gauge the
impact of the organization on the legislative outcome; if the
organization had a substantial impact, whatever its efforts may have
been, it will also be considered substantial lobbying.
What percentage is too much? No one knows for sure and the
IRS won't
say. Some think 15% is a ballpark, but this is a guess by outside
observers.
Many have complained about this deliberate uncertainty, so the IRS
will
also allow organizations to elect (using IRS Form 5768) to calculate
their lobbying activities using an expenditure test. Tax exempt
status will not be at risk if the
organization's lobbying expenditures are less than 20% of the
organization's first $500,000 in total exempt purpose expenditures,
15%
of the next $500,000, etc.
An organization must explicitly elect to use the expenditures test.
Not
many do, however, because there are extensive and burdensome
reporting
requirements that accompany this test.
For further information. There is no single authoritative
source that
describes these issues. Current practice has evolved from the tax
code,
Treasury regulations and case law. Much of the above information was
obtained from Bruce Hopkins, A Legal Guide to Starting and
Managing a
Nonprofit Organization, 2nd ed., Wiley 1993. This appears to be
a
worthwhile reference on other nonprofit issues as well. About $20,
paperback. (Order
href="http://www.amazon.com/exec/obidos/ASIN/0471585068/internetnonp
rofi">
A Legal Guide from Amazon.Com. A royalty from this sale
will help support the Nonprofit FAQ.)
Basic Information About the 1976 Law
Governing Lobbying by Charities
The federal government, including Congress and the
Internal Revenue Service, supports lobbying by charities.
Congress sent that unambiguous message when it enacted the
liberal provisions under the 1976 lobby law. The same message
came from the Internal Revenue Service in regulations issued in
1990, which support both the spirit and intent of the 1976
legislation.
The 1976 law is clear regarding what constitutes
lobbying by charities. Following are key points about that
legislation. They apply only to charities that have "elected"
to come under the 1976 law. Those that have not elected remain
subject to the ambiguous "insubstantial" test, which leaves
uncertain which activities of charities related to legislation
constitute lobbying and how much lobbying is permitted:
- The most important feature of the law is that it
provides ample leeway for charities to lobby, and it protects
those that elect the advantages of the 1976 rules, from the
uncertainties they would be subject to if they remained under
the insubstantial test.
- Generally, organizations that elect the 1976 lobby law
may spend 20% of the first $500,000 of their annual
expenditures on lobbying ($100,000), 15% of the next $500,000,
and so on, up to $1 million dollars a year! Equally important,
there are eight critically important legislation-related
activities which charities may conduct that are not considered
lobbying by the IRS.
- Understanding what constitutes lobbying under the 1976
law is not difficult. In general, you are lobbying when you
state your position on specific legislation to legislators or
other government employees who participate in the formulation
of legislation, or urge your members to do so (direct
lobbying). In addition, you are lobbying when you state your
position on legislation to the general public and ask the
general public to contact legislators or other government
employees who participate in the formulation of legislation
(grassroots lobbying).
- The Internal Revenue Service encourages groups to elect
to come under the 1976 law. The IRS has found groups that have
elected are more often in compliance with the law than those
that have not. Also, it is easy to elect. Just have your
governing body vote to come under the provisions of the 1976
law and file the one page IRS Form 5768 with the IRS. FOr a
copy of Form 5768, contact Charity Lobbying in the Public
Interest at charity.lobbying@indepsec.org or at 202/387-5048,
or download it from the Web site at www.indepsec.org/clpi.
What Are the Main Elements of the 1976 Law?
Exclusions from Lobbying Critical to the 1976 law are the
provisions declaring that many expenditures that have some
relationship to public policy and legislative issues are not
treated as lobbying and so are permitted without limit. For
example:
- Contacts with executive branch employees or legislators
in support of or opposition to proposed regulations are not
considered lobbying. So, if your charity is trying to get a
regulation changed it may contact members of the Executive
Branch as well as legislators to urge support for your position
on the regulation and the action is not considered lobbying.
- Lobbying by volunteers is considered a lobbying
expenditure only to the extent that the charity incurs expenses
associated with the volunteers' lobbying. For example,
volunteers working for a charity could organize a huge rally of
volunteers at the state capitol to lobby on an issue and the
only expenses related to the rally paid by the charity would
count as a lobbying expenditure.
- A charity's communications to its members on
legislation -- even if it takes a position on the legislation
-- is not lobbying so long as the charity doesn't directly
encourage its members or others to lobby. For example, a group
could send out a public affairs bulletin to its members, take a
position on legislation in the bulletin, and it would not count
as lobbying if the charity didn't ask its members to take
action on the measure.
- A charity's response to written requests from a
legislative body (not just a single legislator) for technical
advice on pending legislation is not considered lobbying. So,
if requested in writing a group could provide testimony on
legislation, take a position in the testimony on that
legislation, and it would not be considered lobbying.
- So-called self-defense activity -- that is, lobbying
legislators (but not the general public) on matters that may
affect the organization's own existence, powers, tax exempt
status, and similar matters would not be lobbying. For
example, lobbying in opposition to proposals in Congress to
curtail charity lobbying, or lobbying in support of a
charitable tax deduction for nonitemizers, would not be a
lobbying expenditure. It would become lobbying only if you
asked for support from the general public. (Lobbying for programs in the organization's field,
(e.g., health, welfare, environment, education, etc.) however,
is not self-defense lobbying. For example, an organization
that is fighting to cure cancer could not consider working for
increased appropriations for cancer research to be self-defense
lobbying.)
- Making available the results of "nonpartisan analysis,
study or research" on a legislative issue that presents a
sufficiently full and fair exposition of the pertinent facts to
enable the audience to form an independent opinion, would not
be considered lobbying. The regulations make clear that such
research and analysis need not be "neutral" or "objective" to
fall within this "nonpartisan" exclusion. The exclusion is
available to research and analysis that take direct positions
on the merits of legislation, as long as the organization
presents facts fully and fairly, makes the material generally
available, and does not include a direct call to the reader to
contact legislators. This exception is particularly important
because many nonprofits that engage in public policy do conduct
significant amounts of nonpartisan analysis, study and research
on legislation.
- A charity's discussion of broad social, economic and
similar policy issues whose resolution would require
legislation -- even if specific legislation on the matter is
pending -- is not considered lobbying so long as the discussion
does not address the merits of specific legislation. For
example, a session at a charity's annual meeting regarding the
importance of enacting child welfare legislation, would not be
lobbying so long as the organization is not addressing merits
of specific child welfare legislation pending in the
legislature. Representatives of the organizations would even
talk directly to legislators on the broad issue of child
welfare, so long as there is no reference to specific
legislation on that issue.
- It's not grassroots lobbying if a charity urges the
public, through the media or other means, to vote for or
against a ballot initiative or referendum. (It's direct
lobbying, not grassroots, because the public in this situation
becomes the legislature. Lobbying the public through the media
is therefore considered a direct lobbying expenditure, not a
grassroots expenditure. This is an advantage because charities
are permitted to spend more on direct lobbying than on
grassroots lobbying.)
From the foregoing, it is very clear that there are many
activities related to legislation that do not count toward
lobbying expenditure limits.
Selected Publications Related to Lobbying and Advocacy
These plain language nonprofit advocacy guides and others are
available from the Alliance for Justice at 2000 P Street, NW,
#712, Washington, DC 20036; by calling 202/822-6070, or order
over the web at http://www.afj.org.
Being a Player: A Guide to the IRS Lobbying Regulations for
Advocacy Charities A comprehensive, yet easy-to-understand,
guide to the IRS rules on lobbying by 501(c)(c)(3)'s. ($15)
The Rules of the Game: An Election Year Legal Guide for
Nonprofit Organizations A user-friendly guide that describes
tax and election laws that govern what nonprofits can do in an
election year. ($20)
Seize the Initiative A straightforward guide that shows how
nonprofits can legally pursue their agendas through the pilot
campaigns. ($20)
Order the following publications through Independent Sector by
calling 1-888-860-8118; on our website at http://www.indepsec.org; or by
mail to Independent Sector Publications Center,
P. O. Box 343, Waldorf, MD 20604-0343:
The Nonprofit Lobbying Guide -- Advocating Your Cause and
Getting Results A 142 page practical guide on how to lobby
and the lobby law by Bob Smucker, former Senior Vice President
for Government Relations at Independent Sector. ($24.95)
Charity Lobbying in the Public Interest With public
skepticism toward government and other institutions on the
rise, this 16 page pamphlet speaks to the reasons why charities
lobby and how that activity serves the public interest. ($.50)
Lobby? You? Yes, Your Organization Can and It Should! A 12
page "how-to" guideline for advancing your cause by letting
your legislators know what is needed and why. ($1.25)
The following publications are available from OMB Watch at
202/234-8494 or via e-mail ombwatch@ombwatch.org.
So You Want to Make A Difference: Advocacy is the Key This
handbook, which was written by Nancy Amidei and has sold over
12,000 copies, explains basics and gives case examples for
community groups and others interested in learning how to
become more effective advocates. (Price $10)
Living with A-122: A Handbook for Nonprofit Organizations
This handbook, published after major changes to lobbying rules
in OMB Circular A-122, is available in three parts: Part I is a
technical analysis of the lobbying rules; Part II describes how
to cope with the rules; and Part III is a comparison with other
lobbying rules. (Each part is $8; the complete set is $20.00)
Public Policy and Technology: Examples of Nonprofit Internet
Use This paper, which will be available by the end of
September, 1998 and then will be updated annually for three
years, reviews how nonprofits are using internet-based
technologies in nine policy areas. (Price is free)
LET AMERICA SPEAK! Coalition Co-Chairs
Alliance for Justice
Nan Aron
2000 P Street, NW, #600
Washington, DC 20036
Phone: 202/822-6070
Fax: 202/822-6068
e-mail: advocacy@afj.org
INDEPENDENT SECTOR
Matt Hamill
1828 L Street, NW, #1200
Washington, DC 20036
Phone: 202/223-8100
Fax: 202/331-8126
email: matt.hamill@indepsec.org
OMB Watch
Patrick Lemmon
1742 Connecticut Avenue, NW
Washington, DC 20009
Phone: 202/234-8494
Fax: 202/234/8584
email: lemmonp@ombwatch.org
Posted September 11, 1998 -- PB Reposted, with revisions and additions, August 1, 1998 -- PB; modifications to keywords, September 2, 1999 -- CM; new material added 7/5/01; two items combined 2/18/05 -- PB
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