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.


61 Resources

Investing in Change: A Funder's Guide to Supporting Advocacy

This book is an indispensable guide for foundations in explaining the various roles they can play in the advocacy process. Investing in Change can serve as an in-depth guide to navigating the tax code surrounding support of public charities, or a quick reference guide to answer a specific question. ...

Transition of Power: Influencing a Presidential or Gubernatorial Transition Team

Whenever a new President or Governor is elected, nonprofit organizations, including 501(c)(3) public charities, wonder how they can be involved in nominating cabinet-level, judicial and executive branch nominees, including those that require legislative confirmation. This fact sheet addresses when influencing a president’s or governor’s  transition team may be considered lobbying under the IRS rules, as well as the federal Lobbying Disclosure Act (LDA) and state lobbying disclosure laws. ...