Often, we’ll receive emails from staff at 501c (3) organizations stating that because of their IRS classification, they cannot and do not engage in any advocacy. This is a misperception. Be advoca-savvy (ok, so this word doesn’t quite work…but you get the idea! Be savvy about advocacy and you won’t run into IRS tax dilemmas).
Generally, lobbying includes any communications that express a clear view either in support of or in opposition to a specific piece of legislation. Lobbying is advocacy conducted by an organization reflecting its views on certain items of legislation.
There are two types of recognized lobbying: direct and grassroots lobbying.
Direct lobbying describes communications an organization issues to influence a piece of legislation by targeting a certain government official(s). Direct lobbying also includes all Calls to Action issued by an organization to its members, prompting them to engage and contact lawmakers. Other communications between anorganization and its membership is not considered lobbying.
In comparison, grassroots lobbying generally encompasses communications to non-members (i.e., the public) about a specific piece of legislation, urging them to take action (and influence general sentiment on a piece of law). Federal tax law and the IRS limit grassroots expenditures more strictly than direct lobbying efforts.
Regardless of its classification as direct or grassroots, all lobbying activities exercised by an organization must be documented. All researching, mailing, expenses, etc. must be accounted for.
501c (3)
All 501c (3) organizations are legally allowed to lobbying at all levels of government, although several restrictions are in place and lobbying cannot be a significant part of the group’s agenda.
For purposes of clarification, 501c (3) organizations are not permitted to engage in political campaign activity (no direct sponsorship or involvement in a candidate’s political aspirations).
Financial Constraints
Rules and regulations state that annual lobbying cannot exceed the sum of:
including a maximum budget of $1 million in annual lobbying expenses. Additionally, no more than 25% of total expenditures can be used for grassroots lobbying.
Violating the financial restrictions 501c (3) organizations face in lobbying efforts may result in the loss of their tax-exempt status.
501c (6)
Unlike the set of lobbying restrictions 501c (3)’s are bound by, 501c (6) organizations are allowed to lobby freely. Lobbying efforts must be related to the organization’s business priorities and in line with the professional interests of the membership.
Questions, comments, concerns? Let’s chat below.