Influencing legislation – or “lobbying” – is a key advocacy strategy that nonprofits can use to advance their cause. In fact, by not lobbying, many 501 (c)(3) organizations are not taking full advantage of their rights under federal tax laws, which set out generous lobbying limits.
The Internal Revenue Code defines lobbying as activities that attempt to influence specific legislation. There are two types of lobbying – direct and grassroots. Direct lobbying refers to a communication with a legislator (federal, state, local) or legislative staff member that refers to specific legislation and expresses a view on that legislation. Grassroots lobbying refers to a communication with the general public that refers to specific legislation, expresses a view on that legislation, and urges the public to contact their legislator(s). Not all communications that refer to, or even express a view about legislation, constitute lobbying.
Contrary to popular belief, nonprofits can lobby. The amount of lobbying a nonprofit organization can engage in depends on its tax-exempt status. 501(c)(3) public charities can engage in a limited, but generous, amount of lobbying; 501(c)(3) private foundations are subject to a prohibitive tax on any lobbying expenditures they make; 501(c)(4) organizations can engage in an unlimited amount of lobbying; and political organizations exempt under 527 may make very limited lobbying expenditures, but these expenditures may be subject to tax if they do not further a political purpose.
NOTE: This activity may be covered and disclosure required under federal or state lobby disclosure provisions.