Being in the business of making the world a better place often requires nonprofit organizations to become politically active. The IRS rules prohibit 501(c)(3) charities from engaging in certain kinds of political activities, but there are a lot of political activities that charities can (and should) engage in to further their exempt purpose and mission.
The first step to help us understand whether an organization may take a particular political action is to understand that there are different kinds of nonprofits and each kind of nonprofit has different rules. For example, private foundations can NEVER engage in lobbying, but public charities may. Because what most people think of when someone says “nonprofit” is a 501(c)(3) public charity, and not a 501(c)(7) social club or a 501(c)(4) social welfare organization or even a 501(c)(3) private foundation, I’m focusing on the rules for 501(c)(3) public charities in this article. Public charities include schools, churches and other religious entities, public assistance organizations like United Way or the American Red Cross, zoos and symphony orchestras, amateur sports organizations like Little League, and other organizations like Girl Scouts.
Let’s start with what a public charity cannot do. They cannot support or oppose someone running for political office.
And that’s it.
Public charities can engage in political activity so long as they don’t support or oppose anyone. Thus the YMCA can host a candidate forum without jeopardizing their tax-exempt status so long as they invite all of the candidates running for the seat and make sure that none of their documents show favoritism or opposition to any particular candidate. Planned Parenthood can send out and make publicly available candidate questionnaires so long as they send it to all of the candidates and post the answers from all of the candidates, without showing favoritism or opposition to any of them.
What else can public charities do? They can lobby and seek influence legislation, so long as it is not a “substantial part” of their activities.
The IRS defines a “substantial part” as no more than 17-20% of the organization’s total expenditures, up to $17 million (so long as the organization also notifies the IRS of these activities by filling out an additional form with their annual filing). The first thing to notice with this rule is that we are talking about money — not hours. If your organization has $200,000 in annual expenditures, you could spend up to $40,000 of that on lobbying.
There are two different kinds of lobbying: direct and grassroots. Direct lobbying is a communication with a legislator that expresses a view about a particular piece of legislation. Grassroots is a communication with the public that expresses a view about specific legislation and includes a call to action. Grassroots lobbying is limited to 25% of total lobbying limitation — so the organization above can spend up to $10,000 on grassroots lobbying.
When engaging in lobbying, it is important to remember who is a “legislator.” In Washington State, we have a long history of using voter initiatives to change the law. If you want to support or oppose an initiative, then every communication with a voter is a communication with a legislator.
Similarly, the communications must be about particular legislation. If you write a letter to Senator Cantwell urging her to “do something” about micro-plastics in the ocean… well, that’s probably not lobbying because there isn’t specific legislation referenced. While the law doesn’t require you to name the bill or cite its number in your communication, if it’s a topic where the legislator is going to know which bill you are talking about when you bring up the area of concern, then you’re probably lobbying.
Nonprofit organizations may communicate with legislators for the purpose of advocacy without any limits. Advocacy is about education — this includes public education campaigns, issue papers, and issue canvassing. This “unlimited” category also includes self-defense (when the legislature is considering eliminating funding for your program or prohibiting one of your activities, for example) and situations where the legislature or one of its committees has invited your organization, in writing, to offer testimony on a particular issue. It also includes communications with legislators or the public about the status of a piece of legislation without a call to action.
Hopefully this article has calmed your fears and encouraged you and your nonprofit organizations to become a little more politically active. Feel free to write to your membership and encourage them to contact their legislators about an issue that is relevant to your organization! Invite candidates for a local election to participate in a forum on the issues you are passionate about. Create and distribute pamphlets about why your issues is important.
Next time, I’ll share with you how to legally and effectively lobby in Olympia (hint: it might require registering as a lobbyist, so read this first).