Lobbying and political activities are potentially powerful tools for advancing an organization’s mission. However, these activities come with significant legal and regulatory complexities. Nonprofit organizations need to understand the key definitions and rules surrounding lobbying and political activities.
Defining Lobbying
Lobbying is generally defined as communication designed to influence legislation. It can be categorized into two main types:
- Direct Lobbying: This involves contacting legislators to affect the passage or defeat of legislation or encouraging an organization’s members to do so.
- Grassroots Lobbying: This refers to attempts to motivate the public to contact legislators about specific legislation.
It’s important to note that not all communication with government officials constitutes lobbying. For instance, discussions about executive orders, administrative rules, or court opinions typically fall outside the definition of lobbying.
Political Activities
Political activities, on the other hand, involve supporting or opposing candidates for public office. This can include making contributions to political campaigns, public statements supporting or opposing candidates, or distributing information that clearly favors one candidate over another.
The rules governing lobbying and political activities vary depending on the type of nonprofit organization:
- Public Charities (501(c)(3)): Can engage in limited lobbying but are prohibited from political campaign activities.
- Private Foundations: Are strictly prohibited from lobbying and political activities.
- 501(c)(4), (5), and (6) Organizations: Can engage in lobbying as a primary purpose and some political activities, but with restrictions.
Reporting and Compliance
Nonprofits must carefully track and report their lobbying expenditures. The “No Substantial Part” test or the 501(h) election can be used to determine allowable lobbying limits for public charities. Other types of nonprofits have different reporting requirements and may need to pay taxes on certain activities.
Understanding these rules is essential for nonprofits to effectively advocate for their causes while maintaining compliance with federal regulations. Always consult with legal and tax professionals for guidance on your specific situation.
Have more questions? Our webinar Election Season Essentials: Navigating Nonprofit Lobbying and Political Activity Rules takes a deeper dive into the often-misunderstood rules surrounding lobbying and political activities.
YPTC’s accounting professionals can help your organization navigate the complexities of lobbying & political activity. Contact us here to learn more.
