Calling for a Veto?
Question: A number of bills limiting women’s access to reproductive services have been passed in states across the country. Can our public charity urge the governors in these states to veto the bills?
Answer: Yes, public charities can engage in advocacy around the signing or vetoing of a bill, but you just need to count the staff time and expenses associated with this work as lobbying. If you communicate with a state governor and encourage him or her to veto a bill, this would be considered lobbying under either the 501(h) expenditure test or the insubstantial part test. Typically, administrative and executive branch officials—including a president, governor, or even possibly a mayor—are not considered legislators. At times, however, these officials participate in the formulation of legislation, and communications with them may count as lobbying. An organization engages in direct lobbying when it communicates with any government official or employee who may participate in the formulation of legislation, if the principal purpose of the communication is to influence legislation. Because a bill cannot become law without the governor’s signature, encouraging a governor to veto a bill—or sign a bill into law—is participating in the formulation of legislation.
Can Nonprofits Call for Impeachment?
Question: Can a 501(c)(3) public charity call for the impeachment or resignation of an elected public official?
Answer: Probably. Although no IRS precedent directly on point exists, calling for the impeachment or resignation of an elected public official is probably permissible for 501(c)(3) public charities (assuming doing so is connected to the organization’s charitable purpose). In the case of impeachment, since a vote of a legislative body is required, the activity would probably count as lobbying, subject to the 501(c)(3)’s lobbying limits. Of course, organizations cannot comment on who should be elected to succeed the ousted official. In light of the lack of guidance, organizations should consult with legal counsel before engaging in any impeachment activities. For more information, read Ballot Measures and Recalls: Basic Rules for 501(c)(3) Public Charities, 501(c)(4)s, and Unions.
Can Private Foundations Fund Nonprofits that Lobby?
Question: Our private foundation includes a clause in its grant agreements that says that “grant funds cannot be used for any propaganda or to influence legislation.” Is the foundation required to include this restriction?
Answer: No! Private foundations are permitted to fund 501(c)(3) public charities that lobby, and can do so without restricting the grant funds from being used on lobbying. Language in grant funds that prohibit grantees from using grant funds for lobbying is overly restrictive and may undermine a grantee’s ability to effectively and efficiently achieve its goals. Although any money paid or incurred by a private foundation to carry on propaganda, or to attempt to influence legislation, constitutes a “taxable expenditure”—and subjects both the foundation itself and any foundation managers who approve the taxable expenditure to a tax—private foundations may still fund public charities that lobby. Under federal tax law, private foundations may make two types of grants that avoid creating taxable expenditures—general support and specific project grants—while permitting grantees flexibility in the use of their funds. Making restrictive grants is not necessary since these two safe harbors, if properly applied, allow grantees to use private foundation resources for their projects without sacrificing their ability to lobby and without exposing the private foundation to tax liability. For more information, please see our factsheet: The Downside of Private Foundations Using Restrictive Grant Agreements.
Can We Comment on Candidate’s Statements?
Question: A candidate running for office in our city recently made the following statement during the course of her campaign for office: “Cigarettes are neither addictive nor unhealthy.” Our 501(c)(3) public charity is a health organization that is working on a campaign to prohibit smoking in bars and restaurants. Is there a way we can correct this candidate’s misstatement and remain nonpartisan?
Answer: Nonprofit organizations with 501(c)(3) status often want to respond to candidates or political parties and remain nonpartisan. The only way a 501(c)(3) can respond to factually incorrect statements made by candidates is by being very deliberate and careful with their statements, because a 501(c)(3) cannot communicate something that could be perceived as attempting to influence voters. The 501(c)(3) should determine who will speak for the 501(c)(3) and think through how to phrase its response—both what to say and what to avoid saying. We offer a number of practical tips on how to draft a careful responses to statements made by candidates in our fact sheet Commenting on Candidates and Campaigns. By comparison, 501(c)(4)s—which are allowed to support and oppose candidates for elected office—have much greater latitude in commenting on statements made by candidates during the course of an election campaign.
Can You Give a Candidate Your Email List?
Question: May a 501(c)(3) let a 501(c)(4) or a candidate use its email list?
Answer: A 501(c)(3) organization may not provide an email list for free to candidates, political parties, or even a politically active 501(c)(4) organization because to do so would allow 501(c)(3) resources to subsidize the activities of the candidate, party, or 501(c)(4). If the 501(c)(3) makes a list available for rent at fair market value to anyone who wants to rent it, then the charity may make its list available on that basis to 501(c)(4)s, candidates, and political parties. A 501(c)(3) may not allow a candidate or political party to use its lists, even with fair compensation, unless the charity also is willing to make its lists available to all candidates and to all political parties. To ensure the list is equally available to all candidates, the 501(c)(3) organization should inform the other candidates that the list is available. Income from list rentals is generally not subject to unrelated business income tax (UBIT) because it is exempt as royalty income. For more information, see the AFJ publication: Influencing Public Policy in the Digital Age.
Does taking a stand on executive actions qualify as lobbying under federal tax law?
Question: In July, New York Governor Cuomo issued an executive order that requires insurance companies in the state to cover emergency contraception. We want to urge governors in other states to do the same. Would our efforts constitute lobbying and count against our lobbying limit?
Answer: No. Federal tax law imposes limits on the ability of public charities and private foundations to lobby, but lobbying is narrowly defined and requires a communication about legislation. Executive branch actions that do not require the vote of a legislative body, are not deemed to be legislation. As such, public charities, and even private foundations can engage in executive advocacy and speak out about executive orders that affect their constituents, without having to count those activities and expenses as lobbying. They may, however, need to disclose those activities under the Lobbying Disclosure Act, state law, or local law. In addition, 501(c)(3)s must always be cautious about the rules prohibiting them from supporting or opposing candidates and should focus on addressing actions that are germane to their mission and charitable purpose. For more on this topic, check out our factsheet: Administrative Advocacy: Influencing Rules, Regulations and Executive Orders.
Foundations, Grants, and Lobbying
Question: When a private foundation makes a general support grant to a public charity, does it need to restrict the funds from being used for lobbying?
Answer: NO! Private foundations may support public charities that lobby, but they must follow specific rules. Most importantly, the grant may not be “earmarked” for lobbying, as earmarked funds create a taxable expenditure to the foundation. A grant is considered earmarked for lobbying if it is conditioned upon an oral or written agreement that the grant be used for lobbying purposes. The prohibition on earmarking does not mean that private foundations must require grantees to refrain from using grant funds for lobbying; in fact, a grant agreement that forbids use of the funds for lobbying is unnecessarily restrictive. Under federal tax law, private foundations may make two types of grants that avoid creating taxable expenditures – general support and specific project grants – while permitting grantees flexibility in the use of their funds. A general support grant is not earmarked for a particular purpose and specifically is not earmarked to be used in an attempt to influence legislation. The public charity may use the grant funds for any purpose, including lobbying. If the grantee uses the money for lobbying, the private foundation will not incur a taxable expenditure. For more information, see Private and Public Foundations May Fund Charities That Lobby.
Impeachment? What’s that all about?
Question: We do not agree with most of President Trump’s policies. Can we support efforts to impeach him?
Answer: The Constitution permits Congress to remove a president before the end of their term if enough members vote to say that the President committed “treason, bribery, or other high crimes and misdemeanors.” This removal process begins when the House of Representatives votes on one or more articles of impeachment. If any one article receives a majority vote, the President is impeached. At this point, the proceedings move to the Senate, where the Senate essentially puts the President on trial. This proceeding is overseen by the Chief Justice of the Supreme Court. If at least two- thirds of the Senate finds the President guilty, the President is removed and the Vice President becomes President. Although the IRS has not directly addressed the question, we believe it’s probably permissible for 501(c)(3)s to call for the impeachment of the President. However, 501(c)(3)s should keep in mind that because the impeachment process requires a vote by a legislative body, advocacy around it would likely count as lobbying, subject to the organization’s lobbying limits. 501(c)(3)s should also remember that partisan political activity (broadly speaking, supporting or opposing a candidate for public office) is not allowed for 501(c)(3)s, and they cannot legally comment on who should be elected to succeed an outgoing official. The fact that the President has filed for a re-election run in 2020 does not change our analysis. The impeachment process is about his actions as a sitting official—NOT a candidate. It is this distinction that would make it permissible for 501(c)(3)s to support impeachment. Moreover, 501(c)(3)s can absolutely comment on any elected official, including the President, so long as they focus on his or her official actions and statements.
Is it Lobbying to Suggest Appointees to the Governor?
Question: If my organization– which measures its lobbying using Section 501(h) — posts an open letter to the governor suggesting potential candidates for the next Attorney General (which the governor appoints), does that count as lobbying under federal tax law?
Answer: That communication would not count as grassroots lobbying as long as the communication does not contain any “call to action” to the public (in other words, encouraging the communication’s recipient to take lobbying action). Note that while the communication is addressed to the governor-elect, since the real audience for the communication is the general public, and not the governor or president-elect, it would not be treated as direct lobbying. For more information see Transitions of Power.
Is Tweeting About Legislation Lobbying?
Question: I work for a nonprofit – a 501(c)(3) – that supports comprehensive immigration reform. We would like to tweet about immigration reform. Is this permissible?
Answer: Yes, but depending on what you say you may have to report it as lobbying. If you have made the 501(h) election, communications on Facebook, Twitter, or a publicly accessible website that express a view about specific legislation and include a “call to action” likely will be considered grassroots lobbying by the IRS. For example, it would be grassroots lobbying to tweet (or retweet) a link asking people to send a letter to legislators supporting a Comprehensive Immigration Reform Bill. Additionally, it would be direct lobbying to send a tweet to a legislator’s Twitter address — “We need immigration reform, @SenWarner. The Senate votes tomorrow.” However, a tweet about the importance of passing immigration reform without a “call to action” would not be lobbying under 501(h). If you have chosen to track your lobbying under the insubstantial part test, then a tweet that calls on lawmakers to take a specific action will be considered lobbying. Under the insubstantial part test, communications on social media that attempt to influence legislation will be considered lobbying regardless of whether the communication contains a call to action. For more information, see: Legal Tips on Using Social Media for Advocacy and Influencing Public Policy in the Digital Age.
May We Talk About Candidates and Officeholders in Tweets, Texts, and Status Updates?
Question: May we talk about lawmakers and candidates in tweets, texts, and status updates?
Answer: Maybe. Keep in mind that an organization should discuss officeholders and candidates in tweets, texts, and status updates only to the extent they would do so in other communications channels. Public charities may tweet, send texts, or post status updates about public officials, as long as those messages do not intervene in the officials’ elections. For example, a public charity could use Twitter and Facebook to rally its supporters to take action on grassroots lobbying, providing the names of particular legislators to contact, but only if such activity is truly lobbying in nature and is not political activity in disguise. If the message is focused only on the legislation and does not communicate support for or opposition against the candidate, the IRS may consider the message to be lobbying and not political intervention. For more information, see our fact sheets Tips for Using Social Media and Praising and Criticizing Incumbents.
OK to Mix Issue Advocacy and Voter Registration?
Question: I’m part of a 501(c)(3) nonprofit environmental group and we want to register voters in the next month. Can we combine advocacy on our issues with voter registration?
Answer: Issue advocacy and nonpartisan voter registration—both proper 501(c)(3) activities by themselves—are, not always an easy fit together. In determining the permissibility of a voter registration slogan, ask yourself: Why are we mentioning this issue in connection with voter registration? Are we trying to encourage people to vote for candidates who agree with our view? Even if we are only trying to overcome voters’ apathy, is the slogan susceptible to being seen as biased for or against any candidate? A 501(c)(3) group can conduct nonpartisan voter registration and GOTV activities, or even operate a nonpartisan voter registration or GOTV drive. However, the activities must be designed solely to encourage voting by all those eligible, such as by educating the public about the importance of voting, and must not evidence any bias for or against any candidate or party. Additionally, during the voter registration campaign, a 501(c)(3) must instruct its employees and volunteers to avoid saying or writing anything that would indicate any partisan purpose, motive, or hoped-for result. Learn more on pages 40-43 of Rules of the Game: A Guide to Election-Related Activities for 501(c)(3) Organizations.
Paperwork Increase Under 501(h)?
Question: My public charity is considering switching to using the 501(h) method for tracking and reporting lobbying. Will our paperwork increase if we elect to measure our lobbying using Section 501(h)?
Answer: No. In fact, it may be easier to track and report lobbying under Section 501(h). Public charities that have made the 501(h) election must maintain records showing expenditures for grassroots and direct lobbying (including expenditures for preparation for such lobbying). These expenditures are reported on Schedule C of Form 990—organizations not required to complete schedules should still track their lobbying in case of an audit. Charities that do not use Section 501(h)—instead using what is commonly referred to as the insubstantial part test—must also maintain records of lobbying expenditures and report these expenditures on Form 990, but must also include a “detailed description” of certain lobbying activities, including volunteer lobbying activities. Please take a look at our publication Keeping Track for three simple steps your organization can take to develop a record-keeping system that tracks lobbying expenditures under Section 501(h). To learn more about making the 501(h) election, see AFJ’s guide: Worry-Free Lobbying for Nonprofits: How to Use the 501(h) Election to Maximize Effectiveness.
Private Foundations and Amicus Briefs
Question: Can my private foundation sign on to an amicus (friend of the court) brief challenging the constitutionality of a law?
Answer: Yes. Private and public foundations can engage in litigation, including by signing on to an amicus brief. Litigation is one of the many non-lobbying advocacy activities. See Investing in Change: A Funder’s Guide to Supporting Advocacy for more information about the advocacy rules for nonprofits.
Questionnaires and Linking to Candidates’ Website?
Question: May our 501(c)(3) website include candidates’ answers to our issue questionnaire?
Answer: Yes, but the organization should take care not to indicate that it views one candidate’s answers to be the “right” ones or the “wrong” ones. The IRS has said 501(c)(3) organizations may publish candidate questionnaires if they select issues solely on the basis of their importance and interest to the electorate as a whole; if the questionnaire and any subsequent voter guide do not contain any biases or show preference for any candidate; and as long as the organization publishes all candidates’ responses in their entirety. If an organization publishes answers to its questionnaire online, it may include links to each candidate’s website. The IRS might find even an unbiased, neutral questionnaire to be problematic if an organization posts the candidates’ responses on its website, and other sections of the organization’s website advocate for a particular position on the issues mentioned in the questionnaire. The IRS might argue that by including the organization’s own viewpoint on the website, the organization is telling readers the “correct” position on each issue, and from that readers could then infer which candidates the organization would support. For more, see our guide:Influencing Public Policy in the Digital Age.
What Do We Need to Know About Lobbying at the State Capitol?
Question: Our state legislature will be debating an issue this year that is critical to the clients of our public charity. We have talked with AFJ in the past about how the tax law permits us to lobby for policy change, but are wondering where there were any state laws we need to know about before hiring a new employee to help us at the State Capitol?
Answer: Yes, there are. Charities that lobby must comply with two distinct sets of laws:
- Federal tax law setting the amount a charity can lobby; and
- State and federal disclosure laws that impose certain reporting and disclosure obligations.
Most states have separate laws regulating lobbying activities which add another layer of compliance to consider as you develop your advocacy plans. However, these state laws can be fairly straightforward and simple to follow, so should not be viewed as an impediment for an organization with proper recordkeeping procedures. If you need an introduction to these rules, check out our easy-to-read overview of these state rules.