Advocacy and Lobbying Without Fear

Those of us working within the nonprofit community, and particularly in or with 501(c)(3) public charities, recognize advocacy as a vital part of our mission. However, many of us get caught up in the delivery of services and may spend very little time advocating for the very systemic changes that could reduce the extensive need for the services we deliver. I am certain that we can agree that there may be no better spokespersons for the sick and elderly than those who commit themselves to nursing home service and hospice care. And who are more qualified to testify to successful rehabilitation methods than those who counsel in local drug clinics?

However, in my daily practice, I have come to recognize that time and money are not the only causes for a limited advocacy program. Often, it is a lack of understanding about what one can and cannot do when your public charity gets involved as an advocate in the public policy arena. There is confusion as to the distinctions between advocacy and lobbying, limited knowledge of the related lobbying regulations, and a resulting uninformed concern over losing one's tax-exempt status.

While it is true that a public charity under the Internal Revenue Code Section 501(c)(3) is not allowed to take part in a political campaign on behalf of any candidate for public office, there are no such restrictions on cause-related advocacy. In fact, even lobbying can be undertaken by a public charity without any risk to its tax-exemption so long as these efforts are not a substantial part of its activities.

Lobbying Defined Direct lobbying is attempting to persuade legislators to enact or not enact a bill. Grassroots lobbying involves encouraging the constituency of legislators to exercise their influence with such legislators on behalf of or against some legislation. Political campaigning consists of working for or against candidates' election to office. (See box for extended definitions.)

Is It Advocacy or Is It Lobbying? Under these definitions, there is in fact a great number of activities an organization can engage in that are neither campaigning nor lobbying, thereby, eliminating the concern for legal repercussions that lobbying might have on the tax exemption of a “public charity.”

For example, the following activities are not lobbying:

• Efforts to make an administrative agency of the government change its policies, rules or regulations, or to adopt new ones, are not considered lobbying.
• An exempt organization can target a political executive (e.g.: a mayor or governor) so long as they are not being asked to promote, discourage or veto legislation.
• Your organization can develop a general policy position directed at issues as long as the issues have not been reduced to a specific legislative proposal.
• Testifying before a legislative committee on a matter for which the organization has received a written request from the committee to testify.[1]
• Non-partisan voter registration drives are also allowable,[2] as is voter educational material so long as such material:
  1. States the position of all candidates without any evaluation of the candidates,
  2. covers a broad range of issues without any particulate bias toward such matters, and/or
  3. describes the candidates’ positions in ways that do not show bias on the issues or a preference.

Applies to Organizations Not Individuals Also, it may be important to your organization to note that these rules apply only to the organization and not to individuals acting in their individual capacity and not as a representative of the organization. Staff or board members can advocate individually or join volunteer advocacy groups formed to advance positions as long as the group has no connection to the exempt organization with which the individual is associated.

In acting on your own, you should not use the letterhead of your exempt organization; in addition, if your name is to appear on the letterhead of some unrelated group that may be lobbying, it is always better not to list your organization’s name. Several of my clients have an individual that is so closely associated by the public with their organization that I encourage he or she not to participate “on their own” unless we can track such activity within the organization to ensure it is not substantial.

Options Available Under the Law for Lobbying In understanding some of the aforementioned distinctions, you may determine that your organization does need to lobby or that some of its “advocacy” activities may begin to meet the lobbying definitions. While it is true that the actual boundaries can, at times, only be ascertained through an in-depth knowledge of the code sections, regulations, revenue rulings and case law, this should not discourage you from pursuing your efforts.

There is the “traditional” test under which no “substantial part” of the organization’s activities can consist of lobbying. Unfortunately, there is no specific definition by the IRS of “what is substantial,” therefore, the amount of lobbying activity allowed to a given organization may ultimately depend on the extent and nature of its other activities.

It was once suggested that less than five percent of an organization's time and effort involved in legislative activities is not “substantial.”[3] However, this may be misleading in that several cases have established that the political activities of an organization must be assessed in the context of its objectives and circumstances to determine whether a substantial part of its activities was to influence or attempt to influence legislation.

It is up to the organization to ensure that “no substantial part of the activities of the organization is carrying on propaganda or otherwise attempting to influence legislation.” It should be obvious from our discussions above that the “no substantial part” tests rests upon subjective criteria that have been developed in an inconsistent and unclear manner.

Endnote 1. See Rev. ruling 70-449. 2. See Rev. ruling 74-574. 3. Seasongood v. Commissioner, 227 F.2d 907, 912 (6th Cir. 1955)

About the Author Thomas Raffa is the managing partner of Raffa and Associates, P.C., a certified public accounting and consulting firm based in Washington D.C. with a financial services subsidiary in Maryland. The firm currently employs 100 professionals who serve the nonprofit sector by providing a wide variety of services to over 300 international, national, and community-based nonprofit organizations. Tom has 24 years experience and currently serves on the board of directors of two national nonprofit organizations. He often speaks at seminars and training workshops on accounting, tax, and business-related matters. Contact: 202-822-5000, tom@raffa.com

Copyright 2000, All Rights Reserved. (Vol. 7, Issue 2). The Nonprofit Quarterly is published by Third Sector New England: Boston, MA. 617-523-6565. The Nonprofit Quarterly covers innovative thinking and trends that concern nonprofit leaders and managers. Subscription $39, 800-281-7770.

IRS Definitions

Lobbying activities consist of “attempts to influence legislation by propaganda or otherwise”. Such activities can be conducted directly or indirectly.

Direct Lobbying communication is any attempt to influence legislation through communication with any member of a legislative body (i.e. a Congressman or Senator) or any government official or employee who may participate in the formulation of legislation. For the communication to be considered direct lobbying communication, it must refer to specific legislation and reflect a view on such legislation.

Indirect Lobbying activities are those “grassroots lobbying communications that attempt to influence legislation through attempts to affect the opinions of the general public. Like direct lobbying communication, it must refer to specific legislation and reflect a view on such legislation. Furthermore, to be considered lobbying, it must also “encourage the recipients” of the communication to take action with respect to such legislation.

Encouraging a recipient to take action with respect to legislation means that the communication:

1. Directs the recipient to contact a legislator or employee of a legislative body;
2. Provides the address, telephone number or similar information of a legislator or an employee of a legislative body;
3. Provides the recipient with a tear-off postcard or similar material to communicate with a legislator or an employee of a legislative body or any other government official or employee who may participate in the formulation of legislation; and
4. Specifically identifies one or more legislators who will vote on legislation in support of or opposing the organization’s view