By Katherine Delos Reyes
Not too long ago, I attended a workshop hosted by Alliance for Justice called Advocacy Rules for Nonprofits. Attendants of the workshop all had different mission goals for their organizations but attributed to the same common tribulations regarding the rules of lobbying and nonprofits. A nonprofit's ability should never be taken for granted, even when encountering opposing viewpoints from lobbyists working for corporate interests.
Nonprofits can be broken down into two common types. Most nonprofits are public charities (501(c)(3)) or social welfare organizations (501(c)(4).) Public charities are given tax exemption, tax-deductible donations and private foundation grants but lack the capacity to lobby without limit and engage in electoral activities as much as a social welfare organization could. It is not strange to see a 501(c)(3) fully dedicate it's efforts to lobbying as they do not have limits. In regards to electoral activities, a 501(c)(3) follows election and state election law, while 501(c)(4)s remain nonpartisan in that aspect. Because Common Cause has the status of a 501(c)(3) and a 501(c)(4) nonprofit, it is able to push both education and lobbying on a much more effective and efficient scale.
A public charity can determine its limit to lobbying through two kinds of tests: insubstantial part test or 501(H) Expenditure Test. Public charities assume the insubstantial test by default. Lobbying limits with an insubstantial part test is much more vague and restrictive than 501(H) expenditure tests. In a 501(H) expenditure test, you can opt into it at any time by simply competing the IRS Form 5768 and qualifying. It can be preferred over the insubstantial test because it places dollar limits on the amount of lobbying you do, which is much more concrete than the former.
In the case that your organization qualifies for the 501(H) election, you must first calculate your annual expenditures. The overall lobbying limit goes in accordance to that. If you make $500,000 or less, your overall lobbying limit is 20% but if you make over $17 million, your lobbying limit is $1,000,000. The amount for all grassroots lobbying is 25% of the overall limit (Source).
Nonprofit lobbying puts public interest on the agenda of policymakers but to do so, we must understand the rules of advocacy in order to maximize our gains. Because the rules of the of the advocacy are not always so clearly laid out, it is absolutely imperative that we continue to inform ourselves and other nonprofits.
Katherine Delos Reyes is a senior Political Science and Law & Society Major at UC Riverside. She is interning at the Los Angeles Office of California Common Cause for the Summer of 2013.