Lobbying Rules for (c)(3)s: Keeping It Legal
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Lobbying Rules for (c)(3)s: Keeping It Legal

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Lobbying Rules for (c)(3)s: Keeping It Legal

Lobbying Rules for (c)(3)s: Keeping It Legal

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    Lobbying Rules for (c)(3)s: Keeping It Legal Lobbying Rules for (c)(3)s: Keeping It Legal Document Transcript

    • 1/29/2013 1
    • 1/29/2013Presenters Lobbying Rules for (c)(3)s: Keeping It Legal Paul Marchione Director of Community Outreach and Advocacy • What counts as lobbying and what Independent Sector paulm@independentsector.org doesn’t • The difference between the "501(h) election" and the "no substantial part” test • How to calculate your organization’s Tom Southard, Esq. tsouthard@gmail.com lobbying limit • Fundraising for lobbying, including rules for foundation funding • The lobbying reporting requirements Independent Sector • Membership organization • Nonprofit charitable organizations, foundations, and corporate giving programs • Voice, Leadership, Impact • Policy: Focused on federal level sector-wide issues Tax incentives for charitable giving Tax exemption issues Advancing advocacy 2
    • 1/29/2013 What We Will Cover TodayPublic Charity Lobbying Rules No Substantial Part Test or the (501)(h) Election? Lobbying Definitions, Limits, Exceptions, and Penalties Reporting and RecordkeepingFoundation Lobbying and Funding Rules 3
    • 1/29/2013 Advocacy Tactics Coalition Building Online Engagement Education Lobbying Media Outreach ResearchFor-profits have more influence on policy in Washington than charities80% of DC “thought leaders” say for-profits have agreat deal or very much influence on policy decisions inWashington.38% say charities and foundations have a greatdeal or very much influence on policy decisions inWashington. 2011 Harris Interactive Poll 4
    • 1/29/2013 Lobbying: The Basics501(c)(3) Public Charities (includes community foundations) May lobby within limits May choose which rules (definitions, limits) they operate under501(c)(3) Private Foundations Cannot lobby, except in self-defense Cannot directly fund lobbying May fund programs and organizations that include lobbying501(c)(4) Social Welfare Organizations May engage in unlimited lobbying to further their social welfare purpose The Internal Revenue Code 501(c)(3) Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office. 5
    • 1/29/2013 Understanding the Choice: Definitions, Rules, and LimitsNo Substantial Part Test …no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation ...501(h) Election …(except as otherwise provided in subsection (h)) No Substantial Part Test …no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation… 6
    • 1/29/2013 Definition of Lobbying• Contacting, or urging the public to contact, members of a “legislative body” for the purpose of proposing, supporting or opposing legislation “Legislative body” includes legislators, legislative staff, and executive branch officials who may participate in the formulation of legislation• Advocating for the adoption or rejection of legislation Lobbying Limit 5% of expenditures? 20% of expenditures? …whether, through a facts and circumstances test, no substantial part of the activities of your organization are carrying on propaganda or otherwise attempting to influence legislation… 7
    • 1/29/2013 Facts and Circumstances Test• Direct expenditures• Volunteer time• Staff time• Publicity• Continuous/intermittent nature of activities Facts and Circumstances Test• Are you spending a substantial amount of your resources on trying to influence legislation? 8
    • 1/29/2013No Substantial Part Reporting – Form 990, Schedule C 501(h) Election …(except as otherwise provided in subsection (h)) 9
    • 1/29/2013 Who can “elect” to lobby under 501(h)? May be elected by most public charities Cannot be elected by: • Churches • Government agencies • Public safety testing organizations Definition of Lobbying• Direct Lobbying Reflecting a view to a legislative or executive branch official on specific legislation• Grassroots Lobbying Urging the public to contact a legislative or executive branch official to reflect a view on specific legislation. 10
    • 1/29/2013 Definition of LobbyingDirect Lobbying Grassroots LobbyingCommunication to legislative Communication to membersor executive branch official of the publicSpecific legislation Specific legislationReflects a view Reflects a view Includes a call to action Definition of Lobbying • Letter • Email • Fax • Conversation • Twitter • Facebook 11
    • 1/29/2013 Definition of LobbyingLegislative or Executive Branch OfficialA member of a legislativebody or staff. Executivebranch officials whoparticipate in theformulation of legislation. The PublicAnyone, except legislatorsor members of yourorganization Definition of Lobbying Specific LegislationLegislation that has beenintroduced in a legislativebody, or could beproposed. Does notinclude administrativerulemaking, executiveorders, or litigation. Reflects a ViewSupports or opposes, inwhole or in part. 12
    • 1/29/2013 501(h) Election Definition of Lobbying Encourages recipient to take action Tells recipient to contact a legislator Provides information on contacting a legislator Provides a mechanism for contacting a legislator Identifies a legislator by view, by committee, or as the recipient’s legislator Allocating Costs between Direct and Grassroots LobbyingMembers: Pay dues or contribute time, beyond a nominal amount 13
    • 1/29/2013Activities that are not counted as lobbying 1. Nonpartisan analysis, study, or research 2. Examinations and discussions of broad social, economic, and similar problems 3. Response to requests for technical advice 4. Self-defense lobbyingActivities that are not counted as lobbying 1. Nonpartisan analysis, study, or research Independent/objective exposition of particular subject May advocate viewpoint, with explanation Cannot encourage action 14
    • 1/29/2013Activities that are not counted as lobbying 2. Examinations and discussions of broad social, economic, and similar problems Cannot address specific legislative proposal May address issue before legislatureActivities that are not counted as lobbying 3. Response to requests for technical advice Providing technical advice or assistance In response to a written request Request from a body, committee, or subcommittee 15
    • 1/29/2013 Activities that are not counted as lobbying 4. Self-defense lobbying Lobbying on legislation that might affect a charity’s: Existence Powers and duties Tax-exempt status Deductibility of contributions 501(h) Provides Clear Lobbying Expenditure Limits Lobbying Total Charitable Expenditures Expenditure Limit*Less than $500,000 20% of charitable expendituresOver $500,000 but not more than $100,000 plus 15% of total$1 million expenditures over $500,000Over $1 million but not more than $175,000 plus 10% of total$1.5 million expenditures over $1 millionOver $1.5 million but not more $225,000 plus 5% of total expendituresthan $17 million over $1.5 millionOver $17 million $1 million *Grassroots lobbying limited to 25% of lobbying expenditure limit 16
    • 1/29/2013 501(h) Reporting – Form 990, Schedule C Financial tracking only Direct expenditures for grassroots and direct lobbying Staff salaries/benefits Communications costs Overhead expenses Choosing Between 501(h) and No Substantial Part No Substantial Part 501(h)Facts and circumstances test Well-defined expenditure limits“Influencing legislation”; no Specific definition of lobbying; clearexceptions exceptionsIRS requires explanation of all IRS requires financial reporting onlyactivities to influence legislationLDA reports must use LDA definition LDA reports can use 501(h) definitionand accounting (two tracking systems and accountingrequired)Penalty for violations: Loss of Penalty for violations: Tax oncharitable tax-exempt status expenditures 17
    • 1/29/2013 IRS Reporting Federal Lobbying Lobbying Disclosure Act May have to register with Clerk of the House and Secretary of the Senate http://lobbyingdisclosure.house.gov http://www.independentsector.org Charities must follow state lawsOrganizations are responsible for knowing andfollowing state-level lobbying lawsGreat Resource: “States Legislative Ethics andLobbying Laws” www.ncsl.org 18
    • 1/29/2013 Funding for Lobbying• Membership dues• Federal funding• Foundation funding• Private donations Funding for LobbyingFoundations cannot DIRECTLY fund lobbying • Foundations may give general operating support to charities that lobby • Foundations may fund non-lobbying advocacy efforts • Foundations may give general support to projects that include lobbying 19
    • 1/29/2013 Funding for Lobbying Donations for lobbying are not deductible • Donations earmarked for lobbying are not deductible • Donations in response to lobbying communications are considered earmarked for lobbying Please help bring this message to others by making a donationPresenters Questions? Paul Marchione Director of Community Outreach and Advocacy Independent Sector paulm@independentsector.org Salsa Resources Jan 31. Training Webinar - Advocacy 101: Taking Action in 2013 Tom Southard, Esq. tsouthard@gmail.com 20