Rules of the Game: The Bolder Advocacy Podcast

Lobbying Series Part 4 – Lobbying Exceptions 

On this episode, our fourth in our on-going lobbying series, we’ll focus on lobbying exceptions for all 501(c)(3)s, even private foundations.   

Attorney Co-hosts 

Leslie Barnes  Tim Mooney  Shyaam Subramanian 

 The Basics  

• Reminder to check out the last two episodes on direct and grassroots lobbying for the definitions under 501(h). 
• We’ve spent a lot of time talking about the importance of lobbying as a matter of good policy. You know who else agrees? Congress and the IRS! 
• The law and regulations set up several lobbying exceptions – specific activity that is so important for policymaking that even though it would count as lobbying under the definitions, Congress and the IRS specifically exclude it from the tally. 
• Even better – remember when we mentioned private foundations are heavily taxed if they engage in lobbying? These exceptions are available to them as well! 

• Are you an organization that uses the insubstantial part test to measure lobbying? You may use some of these exceptions, but there are differences. Give us a call!   

The Exceptions 

Nonpartisan Analysis, Study, or Research (“The 50 Page Report Exception”) 

• An exception to grassroots and direct lobbying 
• Probably the most important exception – many charities do a ton of advocacy work, and may report no lobbying because they use this. 

• Full and fair discussion 
• Distributed widely 
• May contain a view on legislation 
• May also contain an indirect call to action (and only an indirect one!) 
• Typically, this is a written report, but the regulations don’t mandate that. Could be a podcast or a YouTube video, so long as the two prongs are met. 

• The synergy effect: non-lobbying report aids parallel lobbying efforts. 
• Watch out for subsequent use! 

• Don’t use this exception, then slap a cover letter on the report and include a direct call to action. This negates the whole exception for the report and then it all counts as grassroots lobbying. 
• That’s a rebuttable presumption, so there are some ways to back out of it, but it’s very narrow.  

Examinations of Broad Social, Economic, or Similar Problems (“The Less Helpful Than It Seems Exception”) 

• You discuss broad social, economic, or similar problems but do not express a view on specific legislation. 
• Example: You about the problems uninsured people have accessing healthcare, without discussing legislation to fund a national healthcare program that provides health insurance for all Americans. Could think of it as, “we’re talking about the problems, not the solutions.” 
• You might think – wait, if we’re not talking about legislation, how is this an exception? And we agree. But I think it is useful in the sense that you know you can comfortably talk about problems if you don’t talk about specific legislative solutions. You could even talk about administrative solutions! For example, President Biden should block the Keystone XL pipeline through an Executive Order. Not legislative! Or “Corporations should prioritize climate and energy efficiency goals, not just profit.” Not even about policy but could be impactful. 

Technical Advice or Assistance (“The Permission Slip”) 

• Providing testimony to legislative committees will often count as lobbying. But Congress wanted to ensure they had access to experts on subject matter relating to legislation. So, they included the Technical Advice or Technical Assistance exception as one of the activities that will not as lobbying for public charities or private foundations.     So when you hear us say “Nonprofits are trusted messengers” this is part of what we mean. Congress wants to hear from you!!    The elements or requirements of this exception are:

• Written request from a governmental body (e.g., legislative committee or subcommittee); 
• Response is available to every member of the body; 
• Response is limited to details of request; and 
• Response can include opinions or recommendations if requested. 

What it’s not: 

• Responding to a request from one or two legislators or a caucus of House Democratic lawmakers for input on a bill draft. 
• Responding to a general public notice for an upcoming city council meeting for which members of the public are invited to testify.  

One example of how it could be used: 

The Chair of the House Health and Public Policy Committee sends an email to your organization asking the Executive Director to testify next week on the specific portions of a bill dealing with parental notification of minors prior to medical procedures.  Your staff could spend time compiling data needed for the ED’s testimony as well as preparing a large visual display and preparing a section by section analysis of the parts of the bills the Chair’s inquiry pertained to and copies for each committee member. The staff and ED’s times spent preparing to testify as well as the time and resources spent to testify would NOT count as a lobbying expenditure.    Self-Defense (“The Not as Available as it May Seem at First Exception”) 

• An exception to direct lobbying 

• communications with legislators regarding possible actions of that body which could affect the organization’s existence, powers, duties, tax-exempt status, or the deductibility of contributions to the organization. 
• So long as the subject matter of the communication is limited to these specific areas, an organization may communicate with legislative bodies, their staff or even their individual members, and may also make expenditures to initiate legislation dealing with these specific topics. 
• What it’s not: hey, we’re a neighborhood group opposing development of the farm next door into a cement plant because it will effectively destroy our neighborhood. Important advocacy, but not impacting the existence or powers of the organization. 
• What it’s not part 2: A bill pending in Congress would raise the bulk mailing postage rates for nonprofits. Important to lobby perhaps, but just impacts your costs not your power. 
• What it could be: any attempts by Congress to limit (for example) civil rights organizations or environmental groups from qualifying as charities. Or limiting tax deductibility of donations to groups that lobby (sidebar: you can’t earmark donations for lobbying and get a deduction). 

• This exception can be used prospectively as well as defensively. So a bill to temporarily increase deductibility of donations through the end of COVID would qualify. 

Jointly Funded Project Exception 

• If private foundations communicate with legislators about legislation impacting programs they jointly fund with government, it’s not lobbying under IRS rules. To use this exception, private foundations must not discuss specific legislative issues unrelated to the jointly funded program. 
• Example: Regional Census Fund.  The Seattle Foundation contributed money to this effort and administered the fund. The City of Seattle and King County each invested resources in the effort. The fund supported community-based organizations to conduct Census outreach in hard-to-count communities. They reached out to residents in historically underrepresented communities, including communities of color, immigrants and refugees, native people, LGBTQ residents and others. Note: Seattle Foundation is a public charity.  
• This exception also applies to PROSPECTIVE jointly funded projects! So, if the private foundation is considering jointly funding a project with the govt. they could engage in conversations w lawmakers under this exceptions. 

• Also, if a private foundation makes a grant to an organization on the condition that the organization receive matching support from a governmental body, that fact does not make the grant a lobbying expenditure. 

How are these reported?  

They aren’t - track these as you would any other non-lobbying activity. 

Junk drawer of final thoughts 

Reminder: private foundations can use these exceptions. 

These aren’t lobbying, so often you can use restricted funds on these.  

Prep work for these activities also does not count as lobbying. 

We’re not sure if the advocacy we want to do is in an exception or not. Get in touch!  

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)  

When Does Your Activity Become Lobbying? (Factsheet) 

What is Lobbying Under 501(h)? (Factsheet) 

Technical Advice Exception (Factsheet) 

Nonpartisan Analysis Study and Research Exception (Factsheet) 

On this episode, our third in our ongoing lobbying series, we’ll focus on grassroots lobbying for public charities that have made the 501(h) election. 

Attorney Co-hosts 

Natalie Ossenfort  Jen Powis  Quyen Tu 

Recap of the 501(h) election 

Recap of the 501(c)(3) lobbying limits 

501(h) election allows you to calculate your lobbying limits 

Grassroots limit is 25% of overall lobbying limits 

Defining Grassroots Lobbying 

1. Communication 

2. with the General Public (not a legislator or member of the organization) 

3. that Expresses a View about Specific Legislation  

4. and contains a Call to Action 

There are 4 specific types of calls to action.  A call to action must comprise one of the following actions:  

1. tell the recipient to contact a legislator; 
2. provide information on how the recipient can contact her legislator, such as providing the phone number or address; 
3. provide a mechanism for enabling the recipient to contact her legislator, such as a postcard, petition, or email form; or 
4. identify a legislator who will vote on the legislation as being opposed to or undecided about the organization’s view on the legislation, a member of a legislative committee who will vote on the legislation, or the recipient’s legislator. 

Examples of Grassroots Lobbying: 

Examples of Non-Grassroots Lobbying: 

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) 

When Does Your Activity Become Lobbying? (Factsheet) 

Communicating With Your Members (Factsheet) 

501(h) Lobbying Limit Calculator 

On this episode, our second in our ongoing lobbying series, we’ll focus on direct lobbying for public charities that have taken the 501(h) election.   

For an introduction to lobbying and more on the 501(h) election for public charities, see part 1 of the series. 

Attorney Co-hosts  

• Jen 
• Shyaam 
• Leslie 

Not all advocacy counts as lobbying 

• Communications aimed at executive orders or special purpose bodies like school boards (even though they are elected, those school boards don’t make new laws!). 

• Example: asking the incoming Biden Administration to rejoin the Paris climate agreement or ban fossil fuel production on federal lands through Executive Order. 
• Example: The incoming Biden Administration might be able to take executive action to dramatically expand the number of gun sellers required to do background checks.  

What counts as direct lobbying under 501(h) 

• Remember that 501(h) is an expenditure test so it only counts what the organization spends on the communication that is lobbying (including staff time and overhead).  
• If you are an all volunteer organization, you should keep track of your time for your own purpose but unpaid volunteer time wouldn’t be counted on the 990 at the end of the year. However, any expenses to facilitate volunteer lobbying (e.g., reimbursements for meals or travel associated with lobbying) would need to be tracked and reported.  
• Typically, the types of expenses you need to track are direct costs (e.g., travel costs), staff time, and overhead expenses.  

The three-prong defintion of direct lobbying 

• A communication 
• To someone who formulates legislation (like a legislator, or city council member) or their staff or committee staff 
• Expresses a view about a specific piece of legislation 

Communication 

• Tweets, emails, letters.  Preparation for those communications too.  
• One on One meetings (when we can do those!) 
• Or good old fashioned phone calls? 
• What does the communication say? 

  Legislators (and their staff) 

• The legislator that can make the decision needs to be the target of the communication. And it’s at any level of government – city, county, tribal govt., state, federal, even international.  
• It can be broader though to include his or her staff because those staff (like the policy director, or the chief of staff) are normally authorized to represent the views of their boss (the elected official).   
• What about staff of the Committee on Appropriations when the nonprofit public charity seeks to ensure a line item in the budget to buy new land for a new state park? 

• What about public testimony at the committee hearing when a bill is being considered and the nonprofit says “we support this bill in its entirety?” In a later episode we will talk about some exceptions, including being invited to give testimony.  
• Executive officials in certain situations, too.  
• Are members of the public ever considered “legislators”? Yes when voting on public questions, referenda, constitutional amendments, bond measures. Anytime voters are asked to vote “yes” or “no” in an election, may constitute “legislators” for the IRS for your organization’s advocacy work. 

Specific legislation 

• The easy case is when the bill has a number, like HB 270.   
• How about a piece of model legislation that your nonprofit public charity is trying to get adopted in your state? Or asking for a law to be enacted that was recently enacted in a neighboring state? 
• Harder is when you’re working with a champion, an elected official that supports your mission, for example, to end homelessness.  Is working with that officials’ office to highlight policy changes, perhaps discussing opportunities to revise statutes, or look for additional funding, is that lobbying? In some cases, you might just be educating legislators and not expressing a view on any specific legislation.  
• What about just an idea?  The We Want World Peace bill where we’ll teach about peace instead of war? We want you to address climate change. We want you to prioritize arts in the budget. The context is important.  

    Examples    Southerners on New Ground (SONG) a 501(c)(3) . 

The Montgomery County Public School Board is holding a public hearing to discuss renaming Lee High School and the issue of Confederate statues. SONG shared this Instagram post.  Does the post constitute Lobbying, what if SONG’s followers took these signs to the school board meeting? 

  An example from the state of Texas.  In Texas, the legislature meets every odd numbered year. This year, there’s a bill by Representative Johnson that removes the Confederate Hero’s Texas State Holiday from the code.  

Generally, if an Executive Director met with their local state representative to tell them to vote for removing this day, then that would be direct lobbying.  Because , you have a (1) communication, (2) to the legislator, (3) on a specific bill.     

When to start tracking expenses 

• Almost always has to be you or your organization specifically sending something to a sitting official asking them to support a bill or ordinance.   

• Examples?  Let’s say your E.D. has an appointment with a city council member who historically has not supported funding for LGBTQ homeless shelters.  The staff prepare a report that the ED will use with the opposing city council member and the ED intends to specifically ask for the city councilmembers support for a new ordinance creating a shelter for LGBTQ kids.  What is the cost of the expenditures? 
• Staff time on report? Travel and lunch of ED?  Printing?  ED time?  Overhead?   

 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)  

When Does Your Activity Become Lobbying? (Factsheet)  

501(h) Lobbying Limit Calculator  

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 

On this episode, we chat about impeachment and detail how nonprofits, including 501(c)(3)s, can take a stance on the renewed calls for impeachment and removal of the President plus calls for expulsion of some members of the Senate and House following the failed attempt to baselessly challenge the November election and the insurrection of January 6th.

Resources

Reminder: Nonprofits Can Advocate for Impeachment

Can a 501(c)(3) Advocate for Impeachment of a Federal Office Holder?

Taking a Stance on Articles of Impeachment and the Senate Trial

As we close out 2020 and look to the start of new legislative sessions in Congress and in many states, we wanted to remind folks that lobbying is an important tool for nonprofits to make positive changes for the communities they serve.

Our attorneys for this episode:

• Tim Mooney
• Jen Powis
• Ronnie Pawelko

Shownotes

• Bolder Advocacy: lobbying advocates
• Why it's important to lobby
• Why has lobbying become a dirty word in some circles?
• What role will lobbying play in 2021?
• Coming in January - a three-part series on the ins and outs of lobbying for public charities and more.

On this episode we take a look at the ways nonprofits can create a policy agenda to advance their missions. Now that the election is over, we have to begin looking forward to what’s ahead and what we want our local, state, and federal policymakers to consider in the coming year. 

Our attorneys this episode

• Jen Powis
• Shyaam
• Natalie Ossenfort

Resources

• Transition Team Advocacy 
• Amplify Your Voice: Lobbying Do’s and Don’ts 
• Bolder Advocacy’s TA hotline: 866-NP-LOBBY 
• Email us at [email protected] 
• Our website is bolderadvocacy.org 

Now that elections are mostly behind us, we wanted to turn our attention to lobbying for policy changes no matter where you are or what project you work on. 

Our attorneys for this episode

Leslie Barnes

Jen Powis

Shyaam Subramanian

Direct download

https://traffic.libsyn.com/secure/rulesofthegame/ROTG-advancing-policy.mp3

Shownotes

In this episode, we wanted to introduce the topic of lobbying and encourage all of our nonprofit listeners to take advantage of this transition time to begin educating and advancing your work to newly elected officials.

• Nonprofits as subject matter experts & trusted experts
• Introduce organization, facts about clients you serve & policies your organization support
• Congratulate newly elected officials by introducing yourself and your mission and
  • Become a resource for new elected official staff.

During this transition time, when elections are over, but perhaps new legislative sessions have not begun, or electeds are not sworn in, work to make your issue one of the top issues.  Nonprofit public charities can absolutely connect with transition teams to advocate for policy agendas or to prioritize your issue in the early days.

• For example, recommending characteristics to consider in new appointees to department heads or other appointed spots is permissible and may not count as lobbying!
• Asking for distinct budget line items to be adopted may be lobbying though because you’re specifically asking for funds to be included in the law at a very specific amount. For example, providing a fact sheet showing exactly how you’d like police funding to re-allocated to social services within the police department (or outside of it) would likely be lobbying.
• Remember there’s a distinction between lobbying for specific people to be voted in; and for recommending people (or types of people) to be placed. The more specific your request is on a policy, the closer it become to actual lobbying and not simply education and advocacy.

Remember, advocacy to existing government staff around rules, regulations, and executive orders is NOT LOBBYING! E.g., HUD regulations, Executive Orders to fix family separation etc.

We’ll be discussing the distinctions between lobbying and advocacy a lot over the next few months as we gear up for a new year and new legislative season but in the short term, remember that as a nonprofit, you play an incredibly important role in policy!

This could also include actually serving on the transition team.

• For example, maybe a new mayor wants to study an issue in your town, like how to support performing arts organizations that are struggling. So before she is sworn in, she creates a table to gather resources in the lame duck period.
• If you’re not at the table, ask to be, or better yet, ask that the table be formed with you as chair! This is allowed!

When does it turn into lobbying? All this education turns to lobbying when distinct policy agendas are discussed or specific requests for a line item in a budget is relayed to a legislative official or staff member that has the ability to write it into a law.

Because lobbying is such a big topic, we’re going to spend multiple episodes fleshing out the nuances in the topic.  But for now, the most important part, and you’ll get tired of hearing us say it is:

Public Charities and community foundations CAN lobby

• Lobbying is the express act or communication that attempts to influence legislation or change the law.
• There are two tests for how much lobbying a public charity can engage in and how it reports that lobbying to the IRS on its tax return at the end of the year. The two tests are:
  • Insubstantial Part and
  • 501(h) Expenditures Test
• Just a reminder, you must track and report IRS-defined lobbying activities to the IRS.

Another bit of misunderstanding we often see is around whether private foundations can fund grantees that lobby.  This topic is complex and while a private foundation can absolutely support all nonpartisan advocacy programs, a private foundation can not earmark funds for lobbying or it risks incurring an excise tax.

Let’s not leave out unions, or trade associations, or other types of nonprofits!  While this is not the main subject of this show, just a reminder, 501(c)(4)/(c)(5)/(c)(6)’s can also lobby.

Lobbying is a big topic and one that BA specializes in.  There’s much more on our next episodes.  For immediate questions, call us at the Bolder Advocacy hotline (free) 1-866-NP-LOBBY.  And be bold in your advocacy!  Decide what policy you want today and go lobby!

Resources

• National Conference of State Legislatures list of states’ legislative session calendars.
• Transition Team Advocacy
• Being a Player: A Guide to the IRS Lobbying Regulations for Advocacy Charities
• Technical assistance (TA) hotline: 866-NP-LOBBY
• Email us at [email protected]
• Our website is org

On this episode of Rules of the Game, we’ll take a look at the ways nonprofits can work with newly elected officials to advance missions and policy agendas. Now that all votes have been cast, we have to begin looking forward to what’s ahead and what we want our local, state, and federal policymakers to consider over the comings months and years.

Direct download: https://traffic.libsyn.com/secure/rulesofthegame/ROTG-newly-elected-officials.mp3

Our attorneys for this episode

Leslie Barnes

Natalie Ossenfort

Shyaam Subramanian

Shownotes

How 501(c)(3) public charities can build relationships with newly elected officials and their staff to amplify the organization’s mission and advance community’s policy priorities

• Congratulate or acknowledge those who won their elections
• Take care not to take credit for victory or “flipping the state”
• Can discuss how c3 registered “x” number of voters
• Can discuss how c3 increased voter turnout
• Can share why it’s good/bad X was elected
• Can share issues your organization hopes to work on with new official
• Remind officials what they promised during campaign
• Identify likely allies

During a site visit or meet-n-greet with new official a 501(c)(3) public charity may do the following:

• Inform official of organization’s mission
• Inform official of community’s policy priorities
• Share statistics on number of community served by organization
• Shine light on issues of importance
• Make budgetary asks or legislative requests (lobbying-IRS purposes)

501(c)(3) public charities can lobby a limited amount.

Lobbying is defined as activities designed to influence legislation, for IRS purposes.

501(c)(4) social welfare groups can lobby an unlimited amount.

Private foundations cannot lobby without incurring a steep excise tax, but they can engage in the following non-lobbying activities:

• Congratulate newly elected officials
• Hold elected officials accountable
• Schedule meet-n-greets
• Share funding interest
• Share foundation’s mission
• Build relationships
• Influence executive orders, rules, regulations (not IRS lobbying)
• Join us for future episodes of funding advocacy AND direct advocacy

Advocating on Executive Orders

• Don’t involve legislative action, therefore NOT IRS lobbying
• Safe for 501(c)(3) public charities and private foundation alike
• Gov. Newsom’s moratorium on death penalty
• Pres. Trump’s ban on gender & racial diversity training that conflicts with administration’s view of country’s founding

Resources

• Can We Really Say That: Post Election Advocacy for 501(c)(3) Organizations.
• Transition Team Advocacy
• Private Foundations May Lobby
• Bolder Advocacy’s TA hotline: 866-NP-LOBBY
• Email us at [email protected]
• Our website is org

Tim, Natalie and Leslie discuss the role nonprofits are playing the day after the 2020 election, including examples of messaging now, a look ahead to what may come, plus a look back at the remarkable work nonprofits did to get out the 2020 vote.