Safely stay within legal limits for your 501(c)(3)
April Ingle Executive Director Georgia River Network
Alliance for Justice
Provides one-on-one technical assistance to nonprofits via phone and letters. Call anytime, M-F 9:00 a.m. - 5:30 a.m. EST Ask for Nonprofit Advocacy technical assistance. 866-NPLOBBY, (866-675-6229) advocacy@afj.org www.afj.org
Election Activities
Strictly forbidden from engaging in any political activity in support of or in opposition to any candidate for public office. The IRS will consider all of the facts and circumstances surrounding an activity to determine whether the activity violates this prohibition. 501(c)(3) public charity organizations can engage in nonpartisan voter education activity.
Election Activities - What You Can Do
Work on ballot measures (considered lobbying) Conduct nonpartisan public education and training sessions about participation in the political process Educate ALL of the candidates on public interest issues Publish legislative scorecards - RESTRICTIONS Prepare candidate questionnaires and create voter guides - RESTRICTIONS
Election Activities – What You Can Do
Canvass the public on issues Sponsor candidate debates - RESTRICTIONS Rent at fair market value mailing lists and facilities to other organizations, legislators, and Candidates - RESTRICTIONS Conduct nonpartisan get-out-the-vote and voter registration drives Establish a controlled 501(c)(4) organization Work with all political parties to get its positions included on the party’s platform - RESTRICTIONS
Election Activities – What You Can’t Do
Endorse candidates for public office Make any campaign contributions Make expenditures on behalf of candidates Restrict rental of your mailing lists and facilities to certain candidates Ask candidates to sign pledges on any issue (tacit endorsement) Increase the volume or amount criticism of incumbents as election time approaches Publish or communicate anything that explicitly or implicitly favors or opposes a candidate
Election Activities - Individuals
Does not apply to the activities of officers, directors, or employees acting in their individual capacity. Staff may work on political campaigns outside work hours, or using their available leave time. No one may use the organization’s facilities, equipment, personnel, or other resources to provide support or oppose a candidate or campaign.
Lobbying Is Allowed by the IRS
Lobbying is limited Organizations must choose one of two standards:
– Insubstantial Part Test – Expenditure Test – 501 (h)
Limits are far more generous under the 501(h) election
Insubstantial Part Test
“No substantial part of a charity’s activities… be carrying on propaganda or otherwise attempting to influence legislation.” “Substantial” is not further defined Since charities which exceeded this vague standard risked losing their exemptions, many arbitrarily limited themselves to a tiny amount of lobbying.
Expenditure Test-501 (h)
Sets specific dollar limits The amount spent to influence legislation without losing its exempt status or incurring penalty taxes is calculated as a percentage of a charity’s total exempt purpose expenditures Exempt purpose expenditures are typically the organization’s budget minus some fundraising and capital costs.
Expenditure limits under 501(h)
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
Lobbying Defined and Described
Communications that are intended to influence specific legislation. Legislation is action by a legislative body including “introduction, amendment, enactment, defeat or repeal of Acts, bills, resolutions, or similar items.” Legislative bodies are Congress, state and local legislatures, and the general public (referenda, initiatives, or constitutional amendments). Typically, they are not judicial, executive and administrative bodies (school and zoning boards). 501(h): Two kinds of lobbying: Direct and Grass Roots
Direct Lobbying
Generally:
– Legislator – An employee of a legislative body – Any other government employee who may participate in the formulation of the legislation
It must refer to a specific piece of legislation and express a view on it.
Direct Lobbying Exceptions
Nonpartisan analysis, study or research that presents all sides of an issue Responses to written requests for assistance from committees or other legislative bodies Challenges to or support for legislative proposals that would change the organization’s rights or its right to exist Examinations and discussions of broad social, economic, and similar problems.
Grass Roots Lobbying
Generally: An attempt to influence specific legislation by encouraging the public, other than the organization’s members, to contact legislators about that legislation Must refer to specific legislation, reflect a view on it and encourage the recipient to take lobbying action on it. Grass roots lobbying expenditures are limited to 25% of the organization’s total lobbying limit.