Lobbying Rules for (c)(3)s: Keeping It Legal
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Transcript of Lobbying Rules for (c)(3)s: Keeping It Legal
1/29/2013
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1/29/2013
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Presenters Lobbying Rules for (c)(3)s:
Keeping It Legal
• What counts as lobbying and what
doesn’t
• The difference between the "501(h)
election" and the "no substantial part”
test
• How to calculate your organization’s
lobbying limit
• Fundraising for lobbying, including rules
for foundation funding
• The lobbying reporting requirements
Tom Southard, [email protected]
Paul MarchioneDirector of Community Outreach and AdvocacyIndependent [email protected]
Independent Sector
• Membership organization
• Nonprofit charitable organizations, foundations, and
corporate giving programs
• Voice, Leadership, Impact
• Policy: Focused on federal level sector-wide issues
� Tax incentives for charitable giving
� Tax exemption issues
� Advancing advocacy
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What We Will Cover Today
Public Charity Lobbying Rules
No Substantial Part Test or the (501)(h) Election?
Lobbying Definitions, Limits, Exceptions, and Penalties
Reporting and Recordkeeping
Foundation Lobbying and Funding Rules
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Coalition Building
Online Engagement
Education
Lobbying
Media Outreach
Research
Advocacy Tactics
80% of DC “thought leaders” say for-profits have a great deal or very much influence on policy decisions in Washington.
38% say charities and foundations have a great deal or very much influence on policy decisions in Washington.
For-profits have more influence on policy
in Washington than charities
2011 Harris Interactive Poll
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501(c)(3) Public Charities (includes community foundations)
� May lobby within limits
� May choose which rules (definitions, limits) they operate under
501(c)(3) Private Foundations
� Cannot lobby, except in self-defense
� Cannot directly fund lobbying
� May fund programs and organizations that include lobbying
501(c)(4) Social Welfare Organizations
� May engage in unlimited lobbying to further their social welfare purpose
Lobbying: The Basics
501(c)(3) Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.
The Internal Revenue Code
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…no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation ...
No Substantial Part Test
…(except as otherwise provided in subsection (h))
501(h) Election
Understanding the Choice: Definitions, Rules, and Limits
…no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation…
No Substantial Part Test
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Definition of Lobbying
• Contacting, or urging the public to contact, members of a
“legislative body” for the purpose of proposing, supporting or
opposing legislation
“Legislative body” includes legislators, legislative staff, and executive
branch officials who may participate in the formulation of legislation
• Advocating for the adoption or rejection of legislation
5% of expenditures?
20% of expenditures?
…whether, through a facts and circumstances test, no substantial part of the activities of your organization are carrying on propaganda or otherwise attempting to influence legislation…
Lobbying Limit
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• Direct expenditures
• Volunteer time
• Staff time
• Publicity
• Continuous/intermittent nature of activities
Facts and Circumstances Test
• Are you spending a substantial amount of your resources on trying to influence legislation?
Facts and Circumstances Test
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No Substantial Part Reporting – Form 990, Schedule C
…(except as otherwise provided in subsection (h))
501(h) Election
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Who can “elect” to lobby under 501(h)?
May be elected by mostpublic charities
Cannot be elected by:
• Churches
• Government agencies
• Public safety testingorganizations
Definition of Lobbying
• Direct Lobbying
Reflecting a view to a legislative or executive branch official on
specific legislation
• Grassroots Lobbying
Urging the public to contact a legislative or executive branch
official to reflect a view on specific legislation.
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Direct Lobbying Grassroots Lobbying
Communication to legislative
or executive branch official
Communication to members
of the public
Specific legislation Specific legislation
Reflects a view Reflects a view
Includes a call to action
Definition of Lobbying
• Letter
• Fax
• Conversation
Definition of Lobbying
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Legislative or Executive Branch Official
A member of a legislative body or staff. Executive branch officials who participate in the formulation of legislation.
The Public
Anyone, except legislators or members of your organization
Definition of Lobbying
Definition of Lobbying
Specific Legislation
Legislation that has been introduced in a legislative body, or could be proposed. Does not include administrative rulemaking, executive orders, or litigation.
Reflects a View
Supports or opposes, in whole or in part.
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501(h) Election
Definition of Lobbying
Encourages recipient to take action
� Tells recipient to contact a legislator
� Provides information on contacting a legislator
� Provides a mechanism for contacting a legislator
� Identifies a legislator by view, by committee, or as the recipient’s legislator
Allocating Costs between Direct and
Grassroots Lobbying
Members: Pay dues or contribute time, beyond a nominal amount
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Activities that are not counted as lobbying
1. Nonpartisan analysis, study, or research
2. Examinations and discussions of broad social, economic, and similar problems
3. Response to requests for technical advice
4. Self-defense lobbying
Activities that are not counted as lobbying
1. Nonpartisan analysis, study, or research
� Independent/objective exposition of particular subject
� May advocate viewpoint, with explanation
� Cannot encourage action
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Activities that are not counted as lobbying
2. Examinations and discussions of broad social, economic, and similar problems
� Cannot address specific legislative proposal
� May address issue before legislature
Activities that are not counted as lobbying
3. Response to requests for technical advice
� Providing technical advice or assistance
� In response to a written request
� Request from a body, committee, or subcommittee
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Activities that are not counted as lobbying
4. Self-defense lobbying
Lobbying on legislation that might affect a charity’s:
� Existence
� Powers and duties
� Tax-exempt status
� Deductibility of contributions
501(h) Provides Clear Lobbying Expenditure Limits
Total Charitable ExpendituresLobbying
Expenditure Limit*
Less than $500,000 20% of charitable expenditures
Over $500,000 but not more than
$1 million
$100,000 plus 15% of total
expenditures over $500,000
Over $1 million but not more than
$1.5 million
$175,000 plus 10% of total
expenditures over $1 million
Over $1.5 million but not more
than $17 million
$225,000 plus 5% of total expenditures
over $1.5 million
Over $17 million $1 million
*Grassroots lobbying limited to 25% of lobbying expenditure limit
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Financial tracking only
� Direct expenditures for grassroots and direct lobbying
� Staff salaries/benefits
� Communications costs
� Overhead expenses
501(h) Reporting – Form 990, Schedule C
Choosing Between 501(h) and
No Substantial Part
No Substantial Part 501(h)
Facts and circumstances test Well-defined expenditure limits
“Influencing legislation”; no
exceptions
Specific definition of lobbying; clear
exceptions
IRS requires explanation of all
activities to influence legislation
IRS requires financial reporting only
LDA reports must use LDA definition
and accounting (two tracking systems
required)
LDA reports can use 501(h) definition
and accounting
Penalty for violations: Loss of
charitable tax-exempt status
Penalty for violations: Tax on
expenditures
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Lobbying Disclosure Act
� May have to register with Clerk of the House and Secretary of the Senate
� http://lobbyingdisclosure.house.gov
� http://www.independentsector.org
IRS Reporting
Federal Lobbying
Organizations are responsible for knowing and following state-level lobbying laws
Great Resource: “States' Legislative Ethics and Lobbying Laws” www.ncsl.org
Charities must follow state laws
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• Membership dues
• Federal funding
• Foundation funding
• Private donations
Funding for Lobbying
• Foundations may give general
operating support to
charities that lobby
• Foundations may fund
non-lobbying advocacy
efforts
• Foundations may give general
support to projects that
include lobbying
Foundations cannot DIRECTLY fund lobbying
Funding for Lobbying
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• Donations earmarked for lobbying are not deductible
• Donations in response to lobbying communications are considered earmarked for lobbying
Please help bring this message to others by making a donation
Donations for lobbying are
not deductible
Funding for Lobbying
Presenters Questions?
Salsa Resources
Jan 31. Training Webinar - Advocacy 101:
Taking Action in 2013
Tom Southard, [email protected]
Paul MarchioneDirector of Community Outreach and AdvocacyIndependent [email protected]