In these exciting times of disruption and rapid change, nonprofits and their inspired staff members often strive to advocate is a more amplified, louder way. Signing a petition, walking in a march or taking a stand as an organization in one form or another – this is when nonprofits need to consider the legal ramifications as there is often a very fine line between advocacy and lobbying and political engagement.
Today, I have researched some limitations to advocacy (and have luckily stumbled upon a bookmarking-worth source on legal information on advocacy for non-profits, Bolder Advocacy by Alliance for Justice). So, can a typical 501c(3) nonprofit engage in political activities and lobbying?
My main takeaways from today’s exercise:
501(c)(3) organizations can engage in lobbying only unsubstantially, and the legislation does not stipulate precisely what “unsubstantial” is. Certain sources suggest that might be approximately 5% of organization’s activity. If organization scales up its engagement in lobbying (to approximately 20% of activity), such activity becomes taxable. And once the limit is reached, organization risks loosing its tax-exempt status altogether.
The regulation is much less flexible in regard to engagement in political activity: 501c(3) is prohibited from engaging in any political campaign on behalf of, or in opposition to, any candidate for public office (with the exception for nonpartisan voter education and participation encouragement).
As an alternative, IRS suggests considering a 501 c(4) form of registration. While it does not enjoy the same breadth of tax exemptions, a 501 c(4) organization can do both lobbying and engage in political activities provided that such are not primary activities of the organization.