Lobbying Series Part 1 - Introduction to Lobbying

On this episode, we begin a multi-part series on lobbying for 501(c)(3) public charities — the limits, the definitions, the exceptions and much more. If you're advocating on federal, state or local public policy in 2021, this is the podcast you've been looking for.  Our Attorneys Tim MooneyNatalie OssenfortQuyen Tu Intro – Why are we talking about public charities and lobbying?  It's still worth a listen for 501(c)(4)s, private foundations, and others.  Underscore that not all advocacy is lobbying (which is why we'll spend several episodes on defining lobbying)  Lobbying limits as a function of tax treatment and deductibility of contributions to 501(c)(3)  Is this a 1st Amendment issue of speech being curtailed? Not according to the Supreme Court of the United States    The Insubstantial Part Test  This is the default measurement system for 501(c)(3)s  Very little IRS or legal guidance on this  No “substantial” part of a public charity's activities can be lobbying  No definition of lobbying  No definition of substantial  All activity is counted, whether it costs money or is done by volunteers  Most practitioners go with 5% but that is not an IRS rule!  Report lobbying on Schedule C of Form 990    501(h) Election  In the 1970s Congress passed reform legislation that included another choice for most charities  501(c)(3)s must "elect" this option  Available to most charities, but not churches or auxiliaries (controlled by) of churches also referred to as houses of worship  This is an expenditure-based test  Clear limits based on organizations exempt expenditure  For most 501(c)(3)s that's 20% of their annual exempt expenditures but this limit does go down as the organization’s exempt expenditures go up  Max cap is $1 million for organizations with exempt expenditures $17 million or more  Clear, bright-line definitions of lobbying    What Are the Advantages 501(h)?  Clarity of what is lobbying  Organizations ca pay excise taxes for going over limits rather than risk losing their tax status  Easier to plan for lobbying activities  Easier to report  No additional risk of audit (perhaps less?)  Example: AFJ and many other 501(c)(3) public charities    What Are the Advantage of the Insubstantial Part Test (IPT)?  Vanishingly small  Very large organizations with budgets $100 million or more maybe able to lobby more with IPT than under the 501(h) election despite the IPT’s lack of clarity  These organizations can afford to hire lawyers!  Example: The Nature Conservancy    Bolder Advocacy strongly recommends that public charities make the 501(h) election  How do you know if your organization has made 501h? Look at your Form 990 Schedule C.  How do you make the 501(h) election? File IRS Form 5768v  Backdates to the beginning of the organization's tax year  You only have to make this election once    Resources  Being a Player: A Guide to the IRS Lobbying Regulations for Advocacy Charities  What is Advocacy?  Worry-Free Lobbying For Nonprofits: How To Use The 501(h) Election To Maximize Effectiveness  Public Charities Can Lobby: Guidelines for 501(c)(3) Public Charities (Factsheet)  Lobbying Rules For Houses of Worship  501(h) Lobbying Limit Calculator