Advocacy and Lobbying by Non-Profits
Non-profits often wonder if they can carry out lobbying as part of their charitable activities without jeopardizing their charitable status. Various factors must first be carefully considered. These may include identifying the type of activity to be carried out, the tax classification of the non-profit organization and the proportion of time devoted to lobbying.
Activity Type: Advocacy, Lobbying or Political Activity
The IRS considers advocacy, lobbying and political activity to be separate activities. The specific type of activity must be identified in order to determine the extent to which it can be carried out by the organization without jeopardizing its tax-exempt status.
Advocacy is generally defined as an activity that seeks to influence social change in furtherance of the organization’s corporate purposes. An example is advocacy for environmental causes, gender and racial equality, or get-out-the vote drives to assist and encourage registration.
Lobbying is an extension of advocacy activity. Where advocacy strives to educate and influence the minds of the general public, lobbying activity is directed at influencing policy and legislative changes in furtherance of the social interest. An example is supporting legislation or working with lobbyists to advance new and modified laws and policies that would support the organization’s social goals.
Political activity specifically encourages voters to support or oppose a particular candidate for office.
It is important to identify and distinguish the activities because the organization’s tax classification will determine how, and to what extent, it can carry out advocacy, lobbying or political activity.
Tax Classification
Non-profit organizations are either charitable or non-charitable. Organizations such as public charities (which receive at least 1/3 of their contributions from the general public) or private foundations (which often receive a small number of generous donations) are considered charitable non-profits.
Most other non-profits are non-charitable – the most popular of which are social welfare/civic organizations (501(c)(4)) and membership organizations (501(c)(6)).
Time Devoted to Advocacy or Lobbying
Advocacy. There is generally no limit to the amount of advocacy that an organization may carry out. However, it is important to note that advocacy activity is not considered to be a charitable in nature. Accordingly, it cannot be the primary purpose of a public charity, such as a 501(c)(3).
Social welfare organizations which have exemption under 501(c)(4) may engage in unlimited advocacy. The IRS accepts that advocacy may be the primary purpose of a social welfare organization.
Legislative activity. Public charities (501(c)(3)) may engage in very limited lobbying, so long as an insubstantial amount of their funds are being used for lobbying purposes. There is no calculation or figure to define an “insubstantial” amount. If a public charity anticipates or chooses to engage in lobbying activity, it may request that the IRS review its anticipated lobbying activities under Section 501(h) to abide by the IRS’s formula which dictates the amount of lobbying authorized without jeopardizing a charity’s status.
Social welfare organizations (501(c)(4)) are allowed to engage in unlimited legislative activities if it is in furtherance of its corporate purposes.
Political activity. Public charities are prohibited from engaging in political activity. Social welfare organizations (501(c)(4)) are authorized to engage in political activity, provided it is not the organization’s primary purpose or primary activity.
Considerations
A non-profit organization that intends to carry out lobbying, advocacy or political activities must closely review their activities to ensure that they do not jeopardize the charitable status with the IRS.