Nonprofits that engage, or are thinking about engaging, in lobbying and political activities need to know what the tax laws will allow. Charities are limited by 501(c)(3) in the amount of legislative lobbying they may conduct, and absolutely prohibited from participating or intervening in an election for public office, while organizations exempt under other sections of the Internal Revenue Code like social welfare organizations, unions, and trade associations are unlimited in lobbying and may engage in some candidate electoral activity (but may be subject to tax on expenditures for these purposes). Private foundations are prohibited from lobbying entirely, and must ensure any lobbying conducted by their grantees is not attributed to them. As one of a few centers of legal expertise in the United States, Adler & Colvin has built a national reputation for advising charities and other nonprofits about the complex tax laws that regulate lobbying and political activities they conduct. We coordinate our representation with election law attorneys as needed.
Areas of Focus
- Safe ways nonprofits may advocate for social change.
- Ballot measure activities, which could subject a nonprofit group to campaign disclosure rules in addition to tax laws limits and disclosures.
- Charities relating to, educating the public about, and commenting upon, candidates for public office.
- Grants and donations to organizations that may lobby or activate voters.
- Protecting private foundation funders from attribution of grantees’ lobbying.
- Using private foundation funding in public policy work.
- Grass roots lobbying.
- The Section 501(h) lobbying expenditure election, an IRS test that sets specific dollar limits a charity is allowed to spend on lobbying.
- The “no substantial part” test for lobbying, an IRS test for charities that do not elect to have dollar lobbying limits under Section 501(h).
- The “primary purpose test” that 501(c)(4), 501(c)(5), and 501(c)(6) organizations must meet in order to retain their exemptions.
- The member notice of nondeductible dues or proxy tax requirements under Section 6033(3) that apply to many 501(c)(4), 501(c)(5), and 501(c)(6) organizations.
- Tax issues for political organizations, such as the tax-exempt Section 527 groups created primarily to influence nominations, candidate elections, and appointments.
- Tandems, families of nonprofit entities that share the same brand and are formed specifically to engage in a full range of political activities using 501(c)(3), 501(c)(4) and 527 tax exemptions.
Related Blog Posts (65)
April 9, 2014
Top 25 Comments on IRS Proposed Political Activity Rules: #23 – Over 25,000 Public Citizen Activists
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Related Publications (5)
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April 2019
Practitioner Perspectives on Using Section 501(c)(4) Organizations for Charitable Lobbying: Realities and an Alternative
This paper, originally published in the NYU Journal of Legislation and Public Policy, discusses a wide array of issues arising from the use of Section 501(c)(4) social welfare organizations to conduct the lobbying necessary to advance charitable goals. The paper goes on to propose an innovative legislative change that would allow the creation of a…Authors
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February 2018
Lobbying Overview for Private Foundations
Private foundations’ expenditures for legislative lobbying are prohibited as “taxable expenditures” by Section 4945 of the Internal Revenue Code. For the purpose of deciding what is prohibited lobbying, private foundations may rely on the definitions found in Sections 501(h) and 4911 of the Internal Revenue Code, which define lobbying for those public charities that have…Author
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May 2013
Summary of Proposals for Federal Tax Law Simplification Relating to the Political and Lobbying Activities of Tax Exempt Organizations
These proposals were originally developed during the first half of 2011, with valuable assistance from many colleagues, by the authors, who are (and were at the time) the co-chairs of the Political and Lobbying Activities Subcommittee of the Exempt Organizations Committee of the Tax Section of the American Bar Association, in anticipation of an Administration…Author
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April 2010 (Tax Analysts)
Political Tax Law After Citizens United: A Time for Reform
When the U.S. Supreme Court announced its decision in Citizens United v. Federal Election Commission on January 21, 2010, the immediate and still resonant reaction from many quarters has been: "this will open the floodgates" for corporate spending to influence the democratic election process in America. We hear outrage at the concept that "corporations are…Author
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Past Events
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Presentation October 5, 2018
2018 Public Health Law Conference: A Public Health Approach to Gun Violence, Legally Speaking
Phoenix, AZ
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Webinar September 6, 2018
International Center for Not-for-Profit Law - Get Loud, Stay Safe: Nonprofit Advocacy in an Election Year
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Presentation June 5, 2018
CalCPA Not-for-Profit Conference: "Lobbying, Legislative and Political Activity (Tax)"
Moderator: Deborah Kaminiski, Squar Milner LLP
Co-presenter: Dinah Stephens, Planned Parenthood Los Angeles
Burbank, California
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Presentation May 1, 2018
Center for Volunteer and Nonprofit Leadership, Emerging Leaders Program: “Nonprofit Legal Compliance”
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Panel April 25, 2018
Nonprofit Governance – Charitable Advocacy: What Nonprofit Organizations Need to Know "Issue Advocacy: Special Considerations in an Election Year"
Co-panelists: John Pomeranz and Eric Rodriguez
Co-sponsored by Independent Sector and the Council on Foundations
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Presentation March 8, 2018
The California Endowment’s Center for Healthy Communities Oakland - “Enhancing Policy Capacity”
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Related Forms & Exemplars
Fiscal Sponsorship (Model C) Letter to Vendors
This letter could be important in the event that a Model C fiscal sponsor disburses grant funds for the benefit of a grantee, not by cash grants to the grantee, but by writing checks directly to the grantee’s vendors.
Fiscal Sponsorship Grant Agreement (Model C), short form
Short form of Fiscal Sponsorship Grant Agreement between a fiscal sponsor and a Model C fiscally sponsored project.
