In the nonprofit world, we face tough challenges every day. And different challenges require different solutions. Your organization may need to play offense to advance its cause or, at times, play defense to block certain policy threats. Whatever the approach, there are many paths you can take to achieve your mission through advocacy.
The word advocacy is used a lot, most times incorrectly. It's defined as the public support for or recommendation of a particular cause or policy. Which really means it covers a lot. Common tactics include coalition building, online engagement, education, media outreach, research and lobbying. Yes, public policy advocacy is a critical function of nonprofits.
Decisions get made every day on Capitol Hill that have a profound impact on your nonprofit, and all too often, if you are not at the table you are left to pick up the pieces. Whenever you can balance elevating your organization’s voice and needs of the communities you serve with championing those voices for public officials who may not otherwise hear them, you are creating a positive and lasting effect for your cause.
Given the many issues facing nonprofits today, and the people they serve, it is more important than ever to get involved in the public policy debate. When it comes to lobbying, there are many misconceptions. Lobbying does not always include giving money to politicians or their campaigns, but can mean reaching out to a specific legislator or group of legislators to ensure that the voice of their constituents (and your supporters) is truly being heard—and listened to.
So who can lobby?
To clear up some misconceptions, the following are some key definitions based on a nonprofit’s tax-exempt status:
- 501(c)3 Public Charities can lobby within certain limits, but their ability to freely conduct political or lobbying efforts is constrained by factors such as the size of the organization in relation to how it allocates money toward any and all lobbying efforts.
- 501(c)3 Private Foundations may not lobby, except in self defense, and cannot directly fund lobbying. However, they can fund programs and organizations that include lobbying.
- 501(c)4 Social Welfare Organizations may engage in unlimited lobbying to further their social welfare purpose.
Knowing what constitutes lobbying under the law, and what the limits are, is key to being able to lobby legally and safely.
But before you read any further—please keep in mind that this is a general overview of nonprofits and lobbying. For more specific details about lobbying for your organization, contact your tax professional.
If you are a 501(c)3, there are two key measurements used to gauge whether your organization is lobbying within bounds:
Option 1 – The “Insubstantial Part” Test
It is important to note that this category is the default for all 501(c)3s. Basically, the Internal Revenue Code states that “no substantial part of a charity’s activities” can be carried out to influence legislation. So how exactly does the IRS determine whether the lobbying being done is in fact “substantial”? Well, that’s where things get a bit hairy. There are no firm numbers for the test, rather the IRS looks at a series of facts and circumstances regarding your organization’s direct expenditures, volunteer time, staff time, publicity and continuous/intermittent nature of activities to determine if your primary focus is on lobbying. The law is vague at best so as a rule of thumb you should tread carefully.
Option 2 – 501(h) Election
For organizations that prefer the added protection of having clearer definitions and more generous limits, they can elect to take this additional step. A 501(h) election means your nonprofit meets all the elements of either direct or grassroots lobbying. Direct lobbying is focused on a specific target that can affect legislation and specifically reflects your viewpoint. Grassroots lobbying is communication to the general public about a specific piece of legislation, reflecting your view and offering a call to action.
The 501(h) option provides clear lobbying expenditure limits based on the size of your organization:
* More information can be found at IRS.gov
If you choose a 501(h) election, you must fill out the appropriate form (Form 5768). Your status will automatically be retained until you fill out the form again to revoke it.
Own Your Seat at the Table
Clearly there are a lot of rules and regulations that surround lobbying as a 501(c) organization. But if followed properly, your seat at the table will ensure that your nonprofit’s priorities are heard, the communities you serve are represented, good ideas are funded and questionable policies are scrutinized. Your public policy campaigns, when fully developed and executed, can make an impact and set the stage for real and lasting success.
If you’re looking for more details or specific examples, view the recorded webinar Lobby Rules for 501(c)3s: Keeping it Legal. Or for more resources, check out Bolder Advocacy’s “Worry-Free Lobbying for Nonprofits” guide on the 501(h) election and Independent Sector’s Advocacy Materials.
This blog originally appeared in NonProfit PRO and is posted here with kind permission.
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