Lobbying & Advocacy by Charities: Working Within Your Limits!

The Colorado General Assembly’s Regular Session got under way last week. Area nonprofits will be watching for developments that could  impact them—and potentially getting involved in advocacy or lobbying with respect to such developments. A close relative of political activity, discussed on this blog here and here , is lobbying and advocacy. As with political activity, nonprofits need to be mindful of the legal limitations related to lobbying. However, the good news is that organizations can actually do a fair amount of advocacy work without running afoul of these rules. This post focuses on public charities, and next week’s post will focus on private foundations and how the lobbying rules affect their activity.

Lobbying defined

501(c)(3) organizations other than private foundations are allowed to engage in an insubstantial amount of lobbying. This can be measured by facts-and-circumstances test, or by electing to use an expenditure test. The latter provides a bit more clarity for organizations, because it measures allowable lobbying as a percentage of the organization’s total exempt-purpose expenditures. It utilizes a sliding scale that will allow larger organizations to spend more on lobbying, up to a cap of $1 million.

The law distinguishes between direct lobbying (lobbying communications to a member or staff of a legislative body; to another government official who may participate in the formulation of legislation; or to the public, in the case of a public referendum or ballot issue), and grassroots lobbying (lobbying communications to the general public or a segment of the public).

In general, for a communication to count as lobbying, it must be made to one of the parties discussed above and also refer to and reflect a view on specific legislation. For grassroots lobbying, it also must contain a call to action. Keep in mind the following definitions and guidelines in considering whether this requirement is met:

  • Legislation is an action taken by a legislative body, which includes Congress, state legislatures, local councils or similar bodies, but not the executive branch (e.g. president, governor, mayor), the judicial branch or administrative bodies (e.g. school board, regulatory agencies or other special purpose bodies).
  • Action includes the introduction, amendment, enactment, defeat or repeal of Acts, bills, resolutions or similar items, so the term can be broader than one might intuitively think.
  • Specific legislation includes not only a measure that has already been introduced, but also a specific legislative proposal that has not been introduced, which could be something like “We should enact a tax credit like the one just passed in State X.” A helpful way to think of a specific legislative proposal is the pairing of a problem with a solution that is capable of being enacted.

Helpful exceptions

However, there are several exceptions from the lobbying definition that can be helpful to nonprofits, including:

  • Self-defense, if the communication addresses legislation that affects an organization’s existence, powers and duties, tax-exempt status and/or deductibility of contributions (only applies to direct lobbying);
  • Technical advice or assistance, if the organization gets a written request from the legislative body;
  • Nonpartisan analysis, study or research, where an organization engages in independent and objective study and research and makes it available to the public. It can even advocate particular viewpoint on legislation in the context of that study and research, if it provides sufficiently fair and full exposition of underlying facts; however, it cannot reflect a viewpoint on legislation if there is a direct call to action; and
  • Examination and discussion of broad social, economic or similar problems: discussion may address matters that are the subject of legislation if the merits of the legislation aren’t discussed and there is no direct call to action.

Unlike charities, 501(c)(4) and 501(c)(6) exempt organizations are not subject to limitations on lobbying amounts. However, their lobbying must be related to their exempt purposes.

For great resources on lobbying and political activity, visit Alliance for Justice. As always, feel free to contact us with lobbying or other nonprofit-related questions!

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