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When does our advocacy work on policies or legislation become lobbying that our 501c3 has to report to the Internal Revenue Service?

Many organizations ask the question “when does our advocacy work on policies or legislation become lobbying that our 501(C)(3) has to report to the IRS?”  

We think that the difference between “lobbying” and “advocacy” is very important to understand, so that organizations can maximize their impact while staying within the limits on their charitable status.

ADVOCACY VS. LOBBYING & THE IMPORTANCE OF SECTION 501(H) OF THE INTERNAL REVENUE CODE (IRC)

Lobbying”, in most situations, such state or local lobbying rules or restrictions, or for 501(C)(3) organizations electing to be governed by Section 501(H) (more below), is a defined term, whose elements typically include communication (a request or call to action), public officials, subject matter, expenditures, and or meals and gifts. 

Advocacy” is much broader as seen on the slide below, and includes any form of active support for a policy or cause, so that ‘lobbying’ activity can be considered a subset within possible advocacy

 

ADVOCACY

LOBBYING

Public education

Normally defined by statute

Media and Messaging Campaigns

State and local laws may vary from IRC provisions

Litigation

Usual Key Elements: Communication (a request or call to action), subject matter and money

Organizing Activities

Protests and Marches

Lobbying”


We strongly encourage eligible charitable and other Section 501(C)(3) organizations to affirmatively elect to be governed by rules of Section 501(H) of the Internal Revenue Code.

Under the basic or “default” provisions in the Internal Revenue Code, a charity is required to report and specifically describe with its annual Form 990 or 990EZ “any activities to influence legislation”, which could include anything under the “Advocacy” heading, even if done by volunteers. 

BUT if the 501C3 has made the Section 501(H) ‘election’ (by filing IRS Form 5768) it gains two great benefits.  First, ‘lobbying’ is permitted up to a relatively generous amount, and only your expenditures for activities that explicitly meet the definition of lobbying are reported.

Second, a wide range of impactful ‘advocacy’ activities are excluded from the definition of “lobbying” under the Section 501(H) regulations.  For example, no ‘public education’ or messaging about an issue, even about a piece of legislation, would count as lobbying unless it includes a “call to action”, such as a request for the public to contact legislators to oppose or support specific legislation.  A full-page newspaper ad saying that your organization opposes Bill #523 and explaining its harms or defects would definitely be “advocacy”.   But without what the IRS defines as a “call to action”, it would not be “lobbying” if your organization has made the 501H election. 

We believe it’s important for groups to take advantage of the Section 501H option.  Read “Worry Free Lobbying” by the Alliance for Justice!

Henry Bogdan joined Maryland Nonprofits as Director of Public Policy in 1997, after a 20-year career in policy analysis, advocacy, and government relations for the City of Baltimore. Henry is responsible for implementing Maryland Nonprofits’ Public Policy program and assisting organizations with legal or practical questions arising from their own advocacy efforts. Henry’s background in nonprofit tax-exemption issues, his broad knowledge of federal and state laws governing nonprofit organizations (including fundraising regulations), and his familiarity with government processes and the inner workings of state and local legislative bodies make him an ideal speaker and trainer. Henry is a graduate of the University of Baltimore Law School. The Standards for Excellence Institute is a project of Maryland Nonprofits.

By Henry Bogdan | December 06, 2021 |
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About the Author: Henry Bogdan

Henry Bogdan joined Maryland Nonprofits as Director of Public Policy in 1997, after a 20-year career in policy analysis, advocacy, and government relations for the City of Baltimore.

 

Henry is responsible for implementing Maryland Nonprofits’ Public Policy program and assisting organizations with legal or practical questions arising from their own advocacy efforts. Henry’s background in nonprofit tax-exemption issues, his broad knowledge of federal and state laws governing nonprofit organizations (including fundraising regulations), and his familiarity with government processes and the inner workings of state and local legislative bodies make him an ideal speaker and trainer.

 

Henry is a graduate of the University of Baltimore Law School. The Standards for Excellence Institute is a project of Maryland Nonprofits.