Political Activity, Lobbying and Advocacy

As we are in an election year, it is important to remember what nonprofits, especially 501(c)(3) organizations, can and cannot do and the specifics of each type of political related activity.  You should also educate your organization’s board and staff on their responsibilities as a representative of your organization.

Political Campaign Activity

Political campaign activity is any activity that supports or opposes a candidate for elective federal, state, or local public office.  A candidate is anyone who offers themselves for public office or is proposed by others for public office.  Whether the candidate is elected or defeated is immaterial. 

501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) a candidate for public office.  Engaging in political activity can result in excise tax or the loss of exempt status.

• Cannot make contributions to a political organization described in section 527 (i.e. a candidate committee, political party committee or a political action committee (PAC)).
• Cannot make public statements in favor of or in opposition to any candidate for public office.

Individuals related to an organization such as board members and employees may make personal political statements, but they must make it very clear that the statements are their own personal opinion, not the view of the organization.  It is important to educate your board and staff on what they can and cannot do on behalf of your organization.

501(c)(3) organizations may engage in certain voter education activities so long as they are conducted in a non-partisan manner.  Organizations need to be very careful if engaging in this type of activity as voter education may turn into political activity.  Two examples where the IRS determined that what seemed like voter education activities were actually political activity are as follows:

• An organization sent a questionnaire to candidates for major public offices and used their responses to prepare a voters’ guide which was distributed during an election campaign.  Some questions evidenced a bias on certain issues.  By using a questionnaire structured in this way, the organization was determined to have participated in a political campaign.  (Revenue Ruling 78-248, 1978-1 C.B. 154)
• An organization published a voters’ guide for its members and others concerned with land conversation issues.  The guides was intended as a compilation of the incumbents’ voting records in selected land conversation issues of importance to the organization and was factual in nature.  It contained no express statements in support of or in opposition to any candidate.  While the guide may have provided the voting public with useful information, its emphasis on one area of concern indicated that its purpose was not non-partisan voter education.  (Revenue Ruling 78-248, 1978-1 C.B. 154)

Lobbying

Lobbying are activities intended to influence foreign, national, state, or local legislation. Activities include direct lobbying (attempting to influence legislators) and grassroots lobbying (attempting to influence legislation by influencing the general public).

501(c)(3) organizations may lobby within limits but cannot engage in substantial lobbying nor can it be their primary purpose.  If a substantial part of a 501(c)(3) organization’s activities are for lobbying, it may lose its exempt status.  For organizations that may engage in lobbying and want to determine the amount allowed to spend on lobbying based on total expenditures, a 501(h) election may be made by filing Form 5768, Election/Revocation of Election by an Eligible IRC Section 501(c)(3) Organization to make Expenditures to Influence Legislation.

Advocacy

Advocacy is the process of stakeholders making their voices heard on issues that affect their lives and the lives of others at the local, state, and national level.  It also means helping policymakers find specific solutions to persistent problems. 

501(c)(3) organizations can and should engage in advocacy for their mission.  Advocacy is about education; educating your city leaders about the effects of a policy on your constituency or inviting your congressman to visit your organization to see how federal funding affects the daily operations.  Unlike lobbying that has a call to action in favor or against legislation, advocacy is about educating policymakers about the needs of your organizations and how policies affect you.  Advocacy is really what nonprofits do every day in trying to advance their mission.   

Contributed by: Carrie Minnich, CPA, MAcct | Director | DWD CPAs & Advisors