lobbying and 501(c)(3) status

[Arnold_Winkelried]

I was suprised to find out recently a rule about 501(c)(3) organizations in the USA. After being a volunteer for a 501(c)(3) organization for almost 20 years, I had always been under the impression that such an organization could not support candidates, but could take positions on legislation. Not so, as I recently was told, to my great surprise. The IRS says:

http://www.irs.gov/newsroom/article/0,,id=161131,00.html

[C]hurches and other 501(c)(3) organizations can engage in a limited amount of lobbying (including ballot measures) and advocate for or against issues that are in the political arena.

And

http://www.irs.gov/charities/article/0,,id=163392,00.html

In general, no organization may qualify for section 501(c)(3) status if a substantial part of its activities is attempting to influence legislation (commonly known as lobbying). A 501(c)(3) organization may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status.

Legislation includes action by Congress, any state legislature, any local council, or similar governing body, with respect to acts, bills, resolutions, or similar items (such as legislative confirmation of appointive office), or by the public in referendum, ballot initiative, constitutional amendment, or similar procedure. It does not include actions by executive, judicial, or administrative bodies.

An organization will be regarded as attempting to influence legislation if it contacts, or urges the public to contact, members or employees of a legislative body for the purpose of proposing, supporting, or opposing legislation, or if the organization advocates the adoption or rejection of legislation.

Organizations may, however, involve themselves in issues of public policy without the activity being considered as lobbying. For example, organizations may conduct educational meetings, prepare and distribute educational materials, or otherwise consider public policy issues in an educational manner without jeopardizing their tax-exempt status.

Does anyone know of any court cases or judgements or news where a 501(c)(3) organization got in trouble for lobbying specifically? Excluding cases where the organization got into trouble for supporting a candidate running for office?

[Munch]

Those links do not refute your original understanding.

In general, no organization may qualify for section 501©(3) status if a **substantial **part of its activities is attempting to influence legislation (commonly known as lobbying). A 501©(3) organization **may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status.

[Bolding and emphasis mine.]

[Munch]

To add to that, the IRS does not quantify what “substantial” means. They do, however, offer a chance to file what is known as the 501(h) Election (via Form 5768 - warning, .pdf), which notifies the IRS that the organization in question intends to expend funds lobbying, and is aware of the limitations:

• 20% of the first $500,000 of exempt purpose expenditures, plus
• 15% of the next $500,000 of exempt purpose expenditures, plus
• 10% of the next $500,000 of exempt purpose expenditures, plus
• 5% of the remaining exempt purpose expenditures up to a total cap of $1 million

(from http://mncn.org/lobbylaw.htm#501h)

[Gfactor]

**Arnold **We had a thread on a similar topic that involved the same rules a while back: Non-profit status: Political signs on church property? - Factual Questions - Straight Dope Message Board

I cited a bunch of stuff there.

This is also pretty good: http://www.speakupformuseums.org/docs/Rules%20of%20Nonprofit%20Lobbying.pdf

And this: STB Law - Page Not Found cites two cases:

Devoting less than 5% of activities to lobbying is not substantial. Seasongood v. Commissioner, 227 F.2d 907 (1955).
Spending between 16.6% and 20.5% of an organization’s time on lobbying is substantial. Haswell v. United States, 500 F.2d 1133 (Ct. Cl. 1974).

[Munch]

In addition to Gfactor’s links and facts, I want to point out that an organization does not need to file a 501(h) Election in order to lobby - but if they think they’re going to spend enough money to raise any doubts, it’s probably in their best interest.

[Arnold_Winkelried]

Thank you Munch and Gfactor. This is all good information and I will go through your links tonight. Specifically this is relating to an internal discussion amongst Amnesty International USA activists (I am involved in the discussion) about whether or not the organization could have taken an official position on Proposition 8 in California when it was on the ballot. I will be able to support my point of view more intelligently now.

ETA: I may come back tomorrow with more questions!

[Munch]

You’ll also want to get acquainted with the two forms of lobbying the IRS considers - direct lobbying and grassroots lobbying.

Direct lobbying would be Amnesty International taking an official position, or paying for a lobbyist or employees to talk to members of the legislature, putting out a newspaper page with their position, etc. Grassroots lobbying would be Amnesty International sending out an e-mail to all of their constituents encouraging them to call their legislators, bang on doors, etc. Not a penny that goes towards grassroots lobbying would be factored at all into an IRS inquiry.

An example of lobbying at work:
http://www.reuters.com/article/pressRelease/idUS221814+24-Apr-2008+PRN20080424

This would be both direct and indirect. I’m sure they sent out notices to all their constituents (grassroots). And their Executive Director is there doing lobbying, and is certainly still getting paid that day (direct).

[Tim_T-Bonham.net]

@Arnold_Winkelried

Specifically this is relating to an internal discussion amongst Amnesty International USA activists (I am involved in the discussion) about whether or not the organization could have taken an official position on Proposition 8 in California when it was on the ballot.

Certainly they could have taken a position on it. That is of no concern to the IRS & it’s tax-exempt status. They are only concerned if the organization spends donor funds on promoting this position. (The IRS truly is ‘all about the money’.)

If they take a position, and send out 1 press release about this, the spending on it is a minuscule part of their budget. If they devote a page or two of their newsletter to it, then they must consider the value of that, but it’s probably still a small part of their expenses. If they started sending letters to all their members urging them to vote against it, or had their paid lobbyist at the Capitol work against it, they they might be spending enough to be concerned.

[Munch]

@t-bonham@scc.net

Certainly they could have taken a position on it. That is of no concern to the IRS & it’s tax-exempt status.

This is false.

They could very certainly have taken a position on Prop 8. Or a Global Violence Against Women Bill (as linked to above). Or really any other piece of legislation or particular issue. But they most certainly CANNOT take a position on a particular candidate.

If Candidate A says, “I’m in favor of torture, suspending habeus corpus, and locking up all the arabs”, Amnesty International cannot say, “Do not vote for Candidate A.” What they can say is, “We are very much against <issue> - don’t vote for candidates in favor of it.”