Advocacy and Lobbying
As a watershed group considering the possibility of lobbying on current legislative issues there are a number of questions that may arise concerning what your group can and cannot do. If your group is a tax-exempt organization there are guidelines under section 501(c)3 of the Internal Revenue Code pertaining to the amount of lobbying that your organization is permitted to participate in.
Lobbying is the act of attempting to influence legislation, which is done in two different ways. Attempting to influence legislation by affecting the opinions of the general public is considered grass roots lobbying. Attempting to influence legislation by contacting an employee of a legislative body or a government official is considered direct lobbying.
There are some activities that individuals may consider to be lobbying, that are really not, based on the IRS code, such as:
- Making available the results of nonpartisan analysis, study, or research.
- Examining and discussing broad social, economic, and similar problems.
- Providing technical advice or assistance (where the advice would otherwise constitute the influencing of legislation) to a governmental body or to a committee or other subdivision thereof in response to a written request by that body or subdivision.
- Appearing before, or communicating with, any legislative body about a possible decision of that body that might affect the existence of the organization, its powers and duties, its tax-exempt status, or the deduction of contributions to the organization.
- Communicating with a government official or employee, other than: a) A communication with a member or employee of a legislative body (when the communication would otherwise constitute the influencing of legislation), or b) A communication with the principal purpose of influencing legislation.
Also, the activity of an organization discusses legislation or proposed legislation that is of direct interest to the organization, with its bona fide members is not considered lobbying unless these communications directly encourage the members to attempt to influence legislation or directly encourage the members to urge nonmembers to attempt to influence legislation.
The IRC sets limits (both in time and money expended) on how much an exempt organization can lobby in a given year. The way this is determined is based on a number of rules set forth in the IRC. The IRS determined that for an exempt organization to maintain its status it cannot have a substantial part of its activities be lobbying. A rule of thumb is that if 20% of an exempt organization’s activities are lobbying then a substantial part of its activities are lobbying. An exempt organization may file an election to have their lobbying limits be based upon different constraints if they feel that they will participate in a large amount of lobbying.
Grassroots lobbying (influencing the general public to contact legislators) can only be 25% of the total lobbying activities by an organization, or 5% of their total activities.
Assuming a person works 40 hours a week, 52 weeks a year that is a total of 2080 hours worked per year. If an organization has five employees there are a total of 10,400 hours worked per year. Within that organization, there can be up to 2,080 hours spent on lobbying. Of those 2080 hours spent on lobbying, 104 hours can be spent on grassroots lobbying.
Your organization has a total of 10,400 hours worked per year (5 employees at 2080 hours each). Your operating budget for 200x is $50,000. As long as you spend no more than 2080 hours and no more than $10,000 on lobbying you should be within IRS regulations. If the organization in this example only spends 40 hours in 200x lobbying, but that lobbying is a golf outing with legislators to the Bahamas costing $25,000 you are not within IRS regulations. Although your hours worked are well within the substantial part rule, your expenditures are far beyond the limitations of that rule.
If your organization is exempt, but is largely a volunteer organization, you may not have to file a Form 990 (Return from Organization Exempt from Income Tax). IRC section 501(c)3 declares that if you are an Exempt Organization having gross receipts in each tax year that normally are not more than $25,000 you are not required to file a Form 990. As a result of this, you are not required to report your lobbying activities. Generally speaking, it is still a good idea to follow the substantial part rule because your contributors still have a right to see where your money is being spent.
Assume that your organizational funding is restricted and you cannot spend any of it on lobbying. In that case if you were to approach your legislator on your own time you are not lobbying on behalf of your organization, unless you are contacting your legislator as a representative of xyz organization. When you enter that situation as a representative from xyz organization you are then required to abide by the lobbying rules set forth in IRC section 501(c)3. If you approach the situation as a private citizen (not on company time) you are not bound by IRC rules.
If your group has been denied 501(c)3 status it is assumed that the IRS will treat your group as a corporation. In this case, you are not required to abide by any of the lobbying guidelines set forth in this document.
This document is, in no way, intended to be used as a substitute for legal advice, nor should it be considered legal advice. A lawyer should be consulted to ensure that the individual needs and requirements of your organization are considered.
For more information, visit “What can you do to protect your watershed?” on PA Department of Environmental Protection’s website.