Nonprofit organizations play a crucial role in shaping public policy and advocating for social change. However, their engagement in lobbying activities is subject to specific legal guidelines and limitations (NAEYC, 2023).
Key Facts
- Nonprofits can engage in lobbying activities, but there are limits to the amount of lobbying they can do. The restrictions are in place to ensure that lobbying does not become a substantial part of their activities.
- There are two types of lobbying: direct lobbying and grassroots lobbying. Direct lobbying involves communicating with legislators or government officials to influence legislation, while grassroots lobbying aims to influence public opinion and encourage the public to take action on legislation.
- Nonprofits that are classified as 501(c)(3) organizations have heightened restrictions on lobbying activities. They may engage in some lobbying, but too much lobbying can risk their tax-exempt status. The IRS has specific guidelines and definitions for lobbying activities.
- Nonprofits can choose to file a 501(h) election with the IRS, which allows them to use a mathematical formula to determine their lobbying limits. This provides clear guidelines and safe harbor exceptions for nonprofits engaged in lobbying activities.
- Nonprofits can engage in a variety of advocacy activities, such as public education, writing letters, sponsoring debates, meeting with policymakers, testifying at public hearings, providing research and analysis, and publicly endorsing or opposing specific legislation. However, there are activities that are not permitted, such as making campaign contributions, publicly supporting or opposing candidates, and using federal funds for lobbying.
Restrictions on Lobbying for 501(c)(3) Organizations
501(c)(3) nonprofit organizations are subject to stricter restrictions on lobbying activities compared to other nonprofit categories (Council of Nonprofits, 2023). The Internal Revenue Service (IRS) prohibits lobbying as a “substantial part” of their activities, which can lead to the loss of tax-exempt status (VAWnet, 2023).
Measuring Lobbying Activity
The IRS employs two methods to measure lobbying activity:
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Substantial Part Test
Assesses the facts and circumstances to determine if lobbying constitutes a significant portion of the organization’s activities.
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Expenditure Test
Requires the filing of a 501(h) election and sets forth specific dollar limits for lobbying expenses based on a mathematical formula (NAEYC, 2023).
Types of Lobbying
Lobbying activities can be categorized into two main types:
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Direct Lobbying
Communicating with legislators or government officials to influence legislation.
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Grassroots Lobbying
Attempting to influence public opinion and encourage the public to engage with legislation (NAEYC, 2023).
Permissible and Impermissible Advocacy Activities
Nonprofits can engage in a wide range of advocacy activities that do not constitute lobbying, such as:
- Public education and training
- Encouraging letter writing
- Sponsoring debates
- Meeting with policymakers
- Testifying at hearings
- Providing research and analysis
- Publicly endorsing or opposing legislation
However, certain activities are strictly prohibited, including:
- Raising funds for candidates
- Making campaign contributions
- Publicly supporting or opposing candidates
- Using federal funds for lobbying
- Posting partisan political messages on social media
- Connecting criticism of public officials to voting (NAEYC, 2023)
Conclusion
Nonprofits can effectively advocate for their missions by engaging in responsible lobbying activities within the legal framework. By adhering to the IRS guidelines and distinguishing between lobbying and permissible advocacy, nonprofits can preserve their tax-exempt status and maintain their integrity as nonpartisan organizations.
References
- Council of Nonprofits. (2023). Federal Law Protects Nonprofit Advocacy & Lobbying. https://www.councilofnonprofits.org/federal-law-protects-nonprofit-advocacy-lobbying
- NAEYC. (2023). Rules of 501(c)(3) Nonprofit Lobbying. https://www.naeyc.org/our-work/public-policy-advocacy/rules-501c3-nonprofit-lobbying
- VAWnet. (2023). Nonprofits and Lobbying: General Information. https://vawnet.org/sc/legislative-advocacy-nonprofit-organizations/nonprofits-and-lobbying-general-information
FAQs
Are nonprofits allowed to lobby?
Yes, nonprofits are allowed to engage in some lobbying activities, but there are limits to the amount of lobbying they can do.
What are the restrictions on lobbying for nonprofits?
Nonprofits that are classified as 501(c)(3) organizations have heightened restrictions on lobbying activities. They may engage in some lobbying, but too much lobbying can risk their tax-exempt status.
How much lobbying can a nonprofit do?
The amount of lobbying a nonprofit can do depends on whether they have filed a 501(h) election with the IRS. Nonprofits that have filed a 501(h) election can use a mathematical formula to determine their lobbying limits.
What is the difference between direct lobbying and grassroots lobbying?
Direct lobbying involves communicating with legislators or government officials to influence legislation, while grassroots lobbying aims to influence public opinion and encourage the public to take action on legislation.
What activities are considered lobbying for nonprofits?
Lobbying activities for nonprofits include contacting legislators or government officials to influence legislation, urging the public to contact legislators, and advocating for or against specific legislation.
What activities are not considered lobbying for nonprofits?
Non-lobbying activities for nonprofits include providing research and analysis on public policy issues, educating the public about policy issues, and advocating for changes to laws and regulations through non-lobbying channels.
Can nonprofits use federal funds for lobbying?
No, nonprofits cannot use federal funds for lobbying activities.
What are the consequences of violating lobbying restrictions for nonprofits?
Violating lobbying restrictions can result in the loss of tax-exempt status for nonprofits.