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Nonprofits and Lobbying


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Legal Information Resources
Simmons College 2010

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Nonprofits and Lobbying

  1. 1. Lobbying and Nonprofits<br />Sonya Durney<br /> LIS 437<br />Creating Social Change:<br />
  2. 2. [Charities] represent the public in many important areas such as health, education,<br />and the environment. These groups have much information to contribute and a wide<br />range of helpful experience that could greatly assist the consideration and enactment<br />of this country's laws.“<br /><ul><li>Senator Nelson (D-WI)</li></ul>119 Cong. Rec. 5749 (1973)<br />
  3. 3. Objectives:<br />Discuss<br /> lobbying <br />treasury regulations<br />foundations vs. charities<br />When is lobbying is allowed?<br />Highlight some interesting points in history<br />All the while avoiding legal jargon!<br />
  4. 4. Definitions:<br /><ul><li>Lobbying - communications intended to influence specific legislation. 
  5. 5. Legislation - action by a legislative body; introduction, amendment, enactment, defeat or repeal of Acts, bills, resolutions, etc.
  6. 6. Legislative bodies - Congress, state and local legislatures, and the general public (referenda, initiatives, or proposed constitutional amendments) 
  7. 7. Typically, they are not judicial, executive and administrative bodies such as school and zoning boards</li></ul>Lobbying….yes you can!<br />
  8. 8. <ul><li>Direct lobbying -an attempt to influence legislation by stating a position on specific legislation to legislators or other government employees who participate in the formulation of legislation, or urging your members to do so
  9. 9. Grassroots lobbying -an attempt to influence legislation by stating a position on specific legislation to the general public and asking them to contact legislators or other government employees who participate in the formulation of legislation. </li></ul>Lobbying defined…<br />
  10. 10. <ul><li>providing technical assistance or advice to a legislative body in response to a written request
  11. 11. making available nonpartisan analysis, study or research
  12. 12. providing discussions of broad, social, or economic problems
  13. 13. Self defense (communicating with a legislative body regarding matters which might affect the existence of your organization)
  14. 14. updating the members of your organization on the status of legislation, WITHOUT a call to action. </li></ul>Lobbying is NOT…<br />
  15. 15. <ul><li>Section 7805 of the Internal Revenue Code gives the United States Secretary of the Treasury the power to create the necessary rules and regulations for enforcing the Internal Revenue Code (IRC)
  16. 16. These regulations, also known as the “Income Tax Regulations,” are located in Title 26 of the Code of Federal Regulations (C.F.R.)
  17. 17. The regulations are organized according to the Internal Revenue Code section that a regulation interprets. </li></ul>Treasury Regulations<br />
  18. 18. Private Foundations<br />Usually get funding from a single family or corporation<br />Whereas, charities receive funds from a variety of sources<br />Subject to more stringent IRC rules<br />Allowed to give grants to lobbying charities, but must follow clear guidance provided.<br />
  19. 19. History<br />
  20. 20. We currently recognize:<br />“responsible representative Government requires public awareness of the efforts of paid lobbyists to influence the public decision making process in both the legislative and executive branches of the Federal Government”<br />2 U.S.C. § 1601<br />
  21. 21. "Congress shall make no law … abridging … the right of the people peaceably … to petition the Government for a redress of grievances."<br />“Too much disclosure stifles with red tape and has a ‘chilling effect’ on free speech.”- Sen. Chiles (D-Fla)<br />1st Amendment <br />
  22. 22. <ul><li>501(c)(3) which provided free medical services to married women, and collected and distributed information about birth control
  23. 23. Sought to enlist the support and cooperation of legislators in repealing and amending statutes preventing birth control
  24. 24. Regulations provided that organizations formed to disseminate controversial or partisan propaganda” were not educational” within the meaning of the statute:
  25. 25. Treas. Reg. 45, art 517 (1919 ed.); T.D. 2831, 21 Treas. Dec. Int. Rev. 285
  26. 26. ABCL, therefore, did not meet lobbying qualifications (know as the Slee case)</li></ul>Margaret Sanger & The American Birth Control League<br />
  27. 27. Operational Test<br />The organization’s lobbying activities will be considered permissible if:<br />The purpose of the organization is charitable<br />The activities are not illegal, contrary to a clearly defined and established public policy, or in conflict with express statutory restrictions<br />The activities further the organization’s exempt purpose and are reasonably related to the accomplishment of that purpose<br />
  28. 28. <ul><li>Prior to 1934 there were no specific statutory restrictions on the lobbying activities of charities. Legislative history is sparse.
  29. 29. Limits the lobbying activities of IRC 501(c)(3) organizations:
  30. 30. No “substantial part” of an organization’s activities may constitute “carrying on propaganda” or otherwise attempting to influence legislation
  31. 31. Represents a codification of the “Slee position” and a rejection of the strict Treasury point of view, as embodied in the 1919 regulation</li></ul>Revenue Act of 1934<br />
  32. 32. Federal Regulation of Lobbying Act (1946)<br />Required that lobbyists and the groups they represent register and report contributions and expenditures.<br /> The legislation contained many loopholes<br />groups began to use the term "public education" to conceal monies spent on lobbying.<br />
  33. 33. “This time it's the Grand Canyon they want to flood. Should we also flood the Sistine Chapel so tourists can get nearer the ceiling?”<br />The Sierra Club…<br />
  34. 34. 501(c)(3) to 501(c)(4) <br />
  35. 35. Insubstantial<br />?<br />What the heck does that mean?<br />
  36. 36. Coalition of Concerned Charities<br />the American Cancer Society, <br />American Heart Association,<br /> Association of Schools of Public Health, <br />Big Brothers of America, <br />Campfire Girls Inc., <br />Council for Advancement and Support of Education,<br /> Family Service Association of America, <br />Goodwill Industries of America, <br />National Audubon Society, <br />National Council on the Aging, <br />National Health Council, National Mental Health Association<br /> YWCA of the USA<br />
  37. 37. <ul><li>Any lobbyist (individual or firm) whose lobbying expenses exceed certain thresholds must register with the Secretary of the Senate and the Clerk of the House of Representatives within 45 days after the lobbyist first makes a lobbying contact with covered officials in the legislative and executive branches of the federal government on behalf of a client.
  38. 38. Introduces H election (will discuss in a moment
  39. 39. Must report:
  40. 40. Estimate of money spent
  41. 41. Issues lobbied for
  42. 42. A statement of houses contacted
  43. 43. A list of employees who acted as lobbyists on behalf of the client</li></ul>Lobbying Disclosure Act (1976)<br />
  44. 44. Expenditure Limits<br />Insubstantial part test (1934)<br />Enacted in 1934<br />Vague-applies facts and circumstances criteria<br />501(h) expenditure test (1976)<br />Elect by filling out Form 5768 (suggested) <br />Direct Lobbying:20% of the first $500,000 of its exempt purpose expenditures; 15% of the next $500,000, and so on, up to one million dollars a year. <br />Grassroots Lobbying: 5% of the first $500,000 of its exempt purpose expenditures;3.75% of the next $500,000, and so on, up to $250,000 a year. <br />
  45. 45. National endowment for the preservation of liberty<br />IRC 501(c)(3) organization<br />1987, House Ways and Means Oversight<br /> Subcommittee Chairman J.J. Pickle<br /> announced that he was initiating an investigation<br />The organization reportedly received funds from the Iran- Contra arms sales and used the money<br />to finance conservative Congressional candidates in the 1986 campaign <br />to run negative advertisements about Congressional incumbents who opposed aid to the Nicaraguan Contras<br />NEPL also engaged in a considerable amount of grass roots lobbying to garner support for Contra aid<br />The hearings resulted in the enactment of several statutes<br />
  46. 46. <ul><li>As amended by the Lobbying Disclosure Technical Amendments Act of 1998
  47. 47. These acts provide for further disclosure of lobbying activities
  48. 48. Concerns were raised about the capacity of Congress to oversee
  49. 49. lobbying activities
  50. 50. campaign finance practices
  51. 51. Congressional rules concerning gifts and support from lobbyists. </li></ul>Lobbying Disclosure Act of 1995<br />
  52. 52. Honest Leadership and Open Government Act of 2007 (H.R. 2316)<br /><ul><li>Substantially amended the Lobbying Act of 1995
  53. 53. While not an ideal set of reforms; makes important advances in increasing accountability and transparency in Washington
  54. 54. 12/23/2009: Secretary of Senate and Clerk of the House issue updated guidance on how to interpret the Lobbying Disclosure Act as updated by HLOGA</li></li></ul><li><ul><li>Citizens United v. Federal Election Commission
  55. 55. Supreme Court ruling to deregulate corporate political spending
  56. 56. Equates corporate and individual First Amendment rights
  57. 57. Is the ban on partisan political activity for 501(c)3 charities now vulnerable to constitutional challenge?
  58. 58. Frees up nonprofit associations and social welfare groups to spend money directly on elections, (through voter guides, registration drives, get-out-the-vote activities, sponsoring candidate debates, etc)
  59. 59. Still trying to sort out….</li></ul>Recent developments…<br />
  60. 60. State Legislation<br />Besides these federal regulations, states may separately enact their own regulations governing state lobbying. Most lobby restrictions involve reporting and registration provisions similar to those in place at the federal level.<br />For instance in Maine a <br /> lobbyist must wear a nametag!<br />
  61. 61. <ul><li>CLPI founded in 1998
  62. 62. CLPI promotes, supports, and protects 501(c)(3) nonprofit advocacy and lobbying to strengthen participation in our democratic society and advance the missions of charitable organizations.</li></ul>Center for Lobbying and Public Interest<br />
  63. 63. Conclusion<br />Nonprofits are a resource for millions; homeless, immigrants, senior citizens, the sick (with or without health insurance), and the countless others who all too often are overlooked in society. <br />As government grows leaner, nonprofits can be called upon to do more work for the people. <br />From a standpoint of good government, the best policy would promote communication between government and its vendors. <br />
  64. 64. Many feel it is more important than ever that charities become involved in the public policy debate!<br />
  65. 65. North Carolina Lobby Laws<br />Unlike the IRS lobbying rules, N.C. law covers executive action as well as legislative action.<br />Unlike the IRS lobbying rules, the N.C. rules only apply to lobbying with the N.C. state government, not the federal government or local governments.<br /> For purposes of the N.C. rules, developing goodwill with designated individuals counts as lobbying.<br />Encouraging others to take action on legislation is grassroots lobbying under IRS rules, but it isn’t lobbying under the N.C. rules.<br />