How many nonprofits lobby and what are the IRS limits to lobbying? (FAQ)

The IRS imposes limits on lobbying efforts of 501(c)(3) public charities, but offers charities a choice of two

standards by which their lobbying efforts are measured: the 501(h) expenditure test, or the insubstantial part

test. By choosing the 501(h) election, a public charity is subjecting itself to a specific financial test, which

is calculated as a percentage of the charity's total exempt purpose expenditures. Under this election, the code

provides definitions of grassroots and lobbying efforts and exceptions, and specific calculations for measuring

those efforts. To make the election, organizations complete the IRS Form 5768, available at

The second standard is the "insubstantial part" test, which requires that "no substantial part of a charity's

activities consist of carrying on propaganda or otherwise attempting to influence legislation." This standard is

much less clear, encompassing a much broader measure of lobbying activity to include the organization's goals and

achievements, as well as time and effort spent to influence legislation.

An analysis of data provided by the IRS in April 2003 indicates 9,566 organizations have made the 501(h) election,

which is less than 5% of those public charities filing Form 990 in 2002/03. This listing of 501(h) electors can

found on the Data Web under the section of 'Other Files.'

In the NCCS Core 2002 file, we found only 2,085 (0.7% of the 278,490 public charities) reported positive amounts

for lobbying expenses on line 38(b). (Note a data inconsistency: 353 of these did NOT report lobbying expenses on

Schedule A, Part 3.)

The data dictionary for our NCCS 2002 list 501(h) electors available in our list of Data Dictionaries under


The regulations governing lobbying limitations and excise taxes for "electing" public charities (Code of Fed.

Regulations 56.4911) can be found at

Other resources can be found at Charity Lobbying in the Public Interest:

Added 09/04/2003 by tpollak, Modified 04/07/2010 by asblackwood


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