Posts Tagged ‘direct lobbying’

Tax Issues in Advocacy

Wednesday, April 13th, 2011 by Brittany

Differences Between Lobbying and Advocacy

 There is much confusion in the government relations community about the differences between “advocacy” and “lobbying.”  This is in part because the terms are used one way in the legal and tax context by the IRS (as applied to non-profit organizations) and another in the practical development of advocacy networks.  Following is an overview of these differences:

 2.2.1. Legal / Tax Differences

  •  “Advocacy” is often seen as arguing for a cause without referring to a specific piece of legislation.  This definition is important to any organization structured as a private foundation because they are, for all intents and purposes, restricted from direct lobbying but may undertake “policy education” or “advocacy.”
  • “Grassroots Lobbying” is defined by the I.R.S. more specifically as encompassing the activities that an organization undertakes to ask the public (not members) to support or oppose legislation. 
  • “Lobbying” or “Direct Lobbying” is defined by the I.R.S. as encompassing the activities that an organization undertakes to communicate its position on legislative proposals directly to elected and executive branch officials and staff.  This includes communications an organization sends to its own members asking them to communicate with an elected official about legislation.

Nonprofits are limited in both the amount of grassroots lobbying and direct lobbying they may carry out and still maintain their exempt status.  The rather vague term “substantial” (as in whether an organization’s lobbying work constitutes a “substantial” part of its activities) has led many organizations to seek further clarification. 

The 1976 Lobbying Law provided this clarification.  Non-profits that elect to come under this law (by filing a Section 501 h form) have Tramadol Online very specific monetary limits on their lobbying-related expenditures, as follows:

1976 Lobbying Law Limits

Annual Expenditures Direct Lobbying Ceiling Grassroots Lobbying Ceiling
Up to $500,000 20% of expenditures 25% of the direct lobbying costs
$500,001 to $1 million $100,000 + 15% over $500K $25,000 + 3.75% over $500K
$1 million to $1.5 million $175,000 + 10% over $1million $43,750 + 2.5% over $1 million
$1.5 million to $17 million $225,000 + 5% over $1.5 million $56,250 + 1.25% over $1.5 million
Over $17 million $1 million $250,000

Note that these limits are based on actual monetary expenditures.  The advocacy activities of volunteers do not count toward these expenditures, although any funds the organization spends to solicit action would.

In Practice Definitions

Standard government relations practice defines these terms in slightly different ways.  These are the definitions that will be utilized in this manual:

  • Advocacy:  The act of pleading or arguing for a cause, or more specifically for or against a piece of legislation, through the use of grassroots, grasstops or coalition networks.  These networks may be comprised of members of the organization itself or the general public.
  • Lobbying:  Communications with elected officials and others conducted on behalf of an organization by professional staff or directors of the organization.

Note, however, that because the question of what constitutes lobbying (whether direct or grassroots) is so important to the functioning of nonprofit organizations, care is taken throughout this manual to highlight when an organization needs to be aware of the potential tax ramifications of a particular activity or advocacy network structure.

For more information or to purchase the Advocacy Handbook click here.