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Advocacy - Public Charities

Neo Legal Team14 min read

Introduction to Nonprofit Advocacy

Public charities play a vital role in American democracy by educating the public and policymakers about important social issues. Understanding the legal framework for advocacy activities is essential for nonprofits that want to advance their missions through policy engagement while maintaining their tax-exempt status.

Legal Framework Overview

Constitutional Foundation

The First Amendment protects the right of organizations to:

  • Petition government for redress of grievances
  • Exercise freedom of speech
  • Associate for common purposes
  • Participate in democratic processes

Tax Law Restrictions

IRC Section 501(c)(3) imposes two key limitations:

  • Lobbying Limitation: No "substantial" lobbying activities
  • Campaign Activity Prohibition: Absolute ban on political campaign intervention

Types of Permissible Advocacy

Issue Education and Advocacy

Public charities may engage in extensive issue advocacy:

  • Educating the public about policy issues
  • Providing factual information to policymakers
  • Analyzing proposed legislation
  • Advocating for positions on issues
  • Building coalitions around policy issues

Grassroots Education

Organizations may:

  • Educate constituents about issues
  • Encourage civic participation
  • Provide voter education (if nonpartisan)
  • Conduct candidate forums (if structured properly)
  • Publish voting records (if presented objectively)

Administrative Advocacy

Advocacy before executive agencies is generally unrestricted:

  • Commenting on proposed regulations
  • Meeting with agency officials
  • Participating in rulemaking processes
  • Providing technical expertise
  • Advocating for enforcement actions

Advocacy Activities Not Considered Lobbying

Advocacy is a powerful tool underutilized by nonprofits to advance their respective missions. While advocacy covers a broad array of activities, nonprofits that are subject to restrictions on lobbying or political campaign intervention activities often avoid other areas of advocacy because of fears they may be violating those restrictions. This is unfortunate and partly due to a lack of clear guidance and bright lines on what is and is not permitted. While different types of tax-exempt organizations are subject to different limitations, we'll focus this post on the advocacy of 501(c)(3) public charities.

Here is a list of 10 advocacy activities that are generally not considered lobbying:

  1. Request for technical advice or assistance: This communication must be made in response to a written request by a legislative body or a legislative committee or subcommittee and made available to all members of the requesting body.
  2. Making available nonpartisan analysis, study, or research: This communication can refer to or reflect a particular view on specific legislation, but if it (a) provides a sufficiently full and fair exposition of the underlying facts, (b) is made available, and (3) doesn't directly encourage a recipient to take action, then it is not considered lobbying.
  3. Examinations and discussions of broad social, economic, and similar problems: These communications can address the public, members of legislative bodies, or governmental employees on general topics which are the subject of specific legislation, but must not refer to specific legislation or directly encourage the recipients to take action.
  4. Self-defense communications: These communications with a legislative body address matters that might affect the existence of the organization, its powers and duties, its tax-exempt status, or the deduction of contributions to the organization. Such communications, even if they constitute lobbying, are not counted against any lobbying limits.
  5. Certain communications with members: A charity may inform its members of the issues and its stance on a specific piece of legislation, without encouraging them to contact their elected officials.
  6. Certain communications with the general public: A charity may communicate with individuals or groups that do not refer to a specific legislations and/or issues.
  7. Certain direct communications with a legislative body: A charity may inform a legislator how an agency grant received has helped its constituents or educate a legislator about the effects of a policy on her or his constituency.
  8. Communications with non-legislative bodies: A charity generally may contact an executive or administrative body on issues regarding implementation of its regulations and/or policies.
  9. Fact sheets: A charity may develop and distribute fact sheets that educate the general public on important issues that impact their community but that do not include a call to action encouraging the recipient to take action with respect to specific legislation.
  10. Litigation activity: A charity may engage in litigation to obtain a favorable judicial interpretation of the law.

Lobbying Activities

Definition of Lobbying

Lobbying includes attempts to influence specific legislation through:

  • Direct Lobbying: Communications with legislators or staff about specific legislation
  • Grassroots Lobbying: Communications with the general public that encourage contact with legislators about specific legislation

Lobbying is generally defined as activities that attempt to influence, whether in direct support of, or opposition to, specific legislation.

Public charities are permitted to lobby within limits. Accordingly, where lobbying would be an effective and efficient strategy to further a charity's mission, the charity should strongly consider incorporating lobbying in its overall plan. Often, this never happens because leaders of the charity are concerned about violating the prohibition against substantial lobbying imposed by IRC 501(c)(3). But the amount of lobbying that is permitted without crossing the substantiality threshold can be very generous for charities that make the 501(h) election, something we generally recommend for all but the largest charities.

Elements of Lobbying

For an activity to constitute lobbying, it must include:

  1. Reference to Specific Legislation: Communication must refer to particular bill, amendment, or proposal
  2. View on Legislation: Communication must reflect a view on the merits of the legislation
  3. Call to Action (Grassroots): For grassroots lobbying, must encourage recipient to contact legislators

The Law

IRC 501(c)(3) provides that no substantial part of the activities of an otherwise qualified organization may be the carrying on of propaganda or otherwise attempting to influence legislation (i.e., lobbying). Violation of this prohibition may result in, among other consequences, loss of the organization's tax-exempt status. It is therefore critical to avoid violating the substantial lobbying prohibition. But the key is not to rule out engaging in any or all advocacy activities, but to better understand what is (and is not) lobbying and what amount of lobbying is considered substantial. These terms may have different meanings depending on the charity's decision on the standard by which it chooses to measure its compliance:

The Substantial Part Test

Under the default test, lobbying is prohibited if it constitutes a "substantial part" of activities:

  • No precise definition of "substantial"
  • IRS considers both time and resources
  • Generally interpreted as more than 5-20% of activities
  • Risk of losing exempt status for violations

Substantial Part Test. Under this test, little guidance is offered with respect to what activities are considered lobbying and how much lobbying is substantial. In one early case, devotion of less than 5% of an organization's time and effort was found to be insubstantial. However, the test appears to have evolved with later cases and it generally is thought to consider all the facts and circumstances of an organization's lobbying activities (including cash expenditures, volunteer efforts and donated resources). Accordingly, charities must document all of their lobbying activities and expenses. If a charity engages in substantial lobbying in any one year, it may have its tax-exempt status revoked. In addition to revocation, violation of the substantial part test may result in the imposition of (i) a 5% tax on the organization on all lobbying expenditures, and (ii) a 5% tax on organizational managers (e.g., directors and officers) who permitted such expenditures knowing that it would jeopardize the organization's tax-exempt status.

The 501(h) Election

Organizations may elect specific lobbying limits under IRC Section 501(h):

501(h) Expenditure Test. Under this test, which is available to most public charities (churches being a significant exception) that make the 501(h) election (electing charities) by filing Form 5768 (http://www.irs.gov/pub/irs-pdf/f5768.pdf), an otherwise qualified public charity will not be denied exempt status as a 501(c)(3) organization because of substantial lobbying so long as its total lobbying expenditures and grass roots expenditures do not normally exceed certain defined limits. Accordingly, an electing charity is not subject to limits on lobbying activities that do not require expenditures (e.g., unreimbursed lobbying by volunteers).

Expenditure Limits

  • Total Lobbying: 20% of first $500,000 of exempt purpose expenditures, plus decreasing percentages of amounts above
  • Grassroots Lobbying: 25% of total lobbying limit
  • Maximum Limits: $1 million total, $250,000 grassroots

- Expenditure Limits Under 501(h)

Total Lobbying Expenditures (direct and grassroots):
• 20% of the first $500,000 of Exempt Purpose Expenditures (defined on the next page), plus
• 15% of the next $500,000 of Exempt Purpose Expenditures, plus
• 10% of the next $500,000 Exempt Purpose Expenditures, plus
• 5% of the remaining Exempt Purpose Expenditures up to a total cap of $1 million (reached when total Exempt Purpose Expenditures are at $17 million).

Grass Roots Expenditures:
• 25% of the Total Lobbying Expenditures Limits.

If an electing charity exceeds either the total lobbying or grass roots expenditures limit in any one year, it must pay an excess lobbying expenditures tax equal to 25% of the excess. If an electing charity exceeds both limits in any one year, it must pay 25% of whichever excess is greater. An electing charity will be subject to revocation of its tax-exempt status if, over a four-year period, either its total lobbying or grassroots expenditures exceed the appropriate aggregated annual limit over the period by more than 50%.

Benefits of 501(h) Election
  • Clear spending limits
  • Penalty taxes instead of revocation for minor violations
  • Volunteer time not counted toward limits
  • Self-defense exception for organizational matters
Definitions Applicable Under 501(h)

A Direct Lobbying Communication is any attempt to influence legislation through communication with (A) any member or employee of a legislative body or (B) any other government official or employee who may participate in the formulation of legislation, but only if its principal purpose is to influence legislation, and it reflects a view on specific legislation (proposed or pending law or bill).

A Grassroots Lobbying Communication is any attempt to influence legislation through an attempt to affect the opinion of the general public (or any segment), but only if it reflects a view on specific legislation and encourages the recipient to take action (contact legislators) with respect to such legislation.

Legislation includes action by a legislative body (e.g., Congress, county board of supervisors) or by the public in a referendum, ballot initiative, constitutional amendment or similar procedure.

Exempt Purpose Expenditures include all amounts a charity expends to accomplish its exempt purpose (e.g., program expenses, administrative overhead expenses, lobbying expenses, and straight-line depreciation of assets used for an exempt purpose). They do not include fundraising expenses of a charity's separate fundraising unit or an outside fundraiser, capital expenditures, unrelated business income expenses, nor investment management expenses.

Activities That are Not Lobbying Under 501(h)

Nonpartisan analysis, study or research, which may advocate a particular position or viewpoint so long as: (a) there is a sufficiently full and fair exposition of the pertinent facts (and not just unsupported opinions) to enable the public or an individual to form an independent opinion or conclusion; (b) the distribution of the results is not limited to, or directed toward, persons who are interested solely in one side of a particular issue; and (c) subsequent use does not cause it to be treated as a grass roots lobbying communication (e.g., direct encouragement for recipients to take action within 6 months).

Examinations and discussions of broad social, economic, and similar problems; provided that: (a) they do not address themselves to the merits of a specific legislative proposal, and (b) they do not directly encourage recipients to take action with respect to legislation.

Technical advice or assistance provided to a governmental body or committee in response to a written request from such body or committee.

Communications pertaining to self-defense by the organization, to a legislative body or its representatives, and with respect to a possible action by such legislative body that might affect the existence of the organization (or an affiliate), its powers and duties, its tax-exempt status, or the deductibility of contributions to the organization. Under this exception, a charity may similarly make expenditure in order to initiate legislation if such legislation concerns the matters listed above.

For more information on the 501(h) election, see Worry-Free Lobbying for Nonprofits: How to Use the 501(h) Election to Maximize Effectiveness (Alliance for Justice).

Political Campaign Activities

Absolute Prohibition

Public charities are absolutely prohibited from:

  • Endorsing or opposing candidates
  • Contributing to candidates or political parties
  • Participating in political campaign activities
  • Making expenditures on behalf of candidates
  • Allowing campaigns to use organizational resources

Political Campaign Intervention Activities

Public charities are prohibited under 501(c)(3) from engaging in any political campaign intervention activities. In simple terms, a 501(c)(3) organization may not directly or indirectly engage in or sponsor any activity that supports or opposes any candidate for public office.

A "candidate" for purposes of this prohibition includes "an individual who offers himself [or herself], or is proposed by others, as a contestant for an elective public office…". The prohibition applies not only to declared candidates, but also to third-party movements and efforts to encourage or discourage someone from running for office.

"Public office" for these purposes refers to any position that is filled by a vote of the people. This includes elected offices at the local, state, and federal level, as well as party nominations, and is not limited only to partisan positions. However, it does not extend to appointed public official positions, such as some judges and executive nominees (although note that activities related to such appointments may constitute lobbying if the appointments are subject to legislative confirmation).

The prohibition on election intervention includes publishing or distributing written statements or making oral statements on behalf of or in opposition to a candidate, including on social media. It also includes using any of the organization's resources to support or oppose a candidate, such as by making a contribution to a campaign, preparing a research report for the use of only one campaign or certain campaigns, or sharing the organization's mailing list with a specific campaign for free. However, it generally also includes less obvious activities, such as coordinating activities with a campaign, distributing campaign materials at an organizational event, or using code words in a communication to refer to a candidate other than by name.

Factors Considered

IRS evaluates potential campaign intervention based on:

  • Whether statement identifies candidate
  • Whether statement expresses approval or disapproval
  • Timing relative to election
  • Distribution and targeting of communication
  • Other facts and circumstances

In determining whether a particular action constitutes impermissible electioneering, the IRS will look at the all of the relevant facts and circumstances. While there is no clearly established test that will be used, the IRS has indicated that the factors it may consider in determining whether a particular communication constitutes prohibited electioneering include:

  • Whether it identifies a candidate for public office or a candidate's position on an issue that is the subject of the communication
  • Whether it expresses approval or disapproval for a candidate's position or actions
  • The timing of the message and its proximity to an election
  • Whether it makes reference to an election or voting
  • The targeted audience, including whether it targets voters in an election
  • How the message relates to candidates' and political parties' communications, and whether it discusses an issue that has been raised as distinguishing candidates for a given office
  • Whether it is part of an ongoing series of communications by the organization on the same issue that are made independent of the timing of any election
  • Whether the timing of the communication and identification of a candidate are related to a specified event other than an election (such as a scheduled vote on legislation)

Permissible Election-Related Activities

Voter Education

Organizations may conduct nonpartisan voter education:

  • Voter registration drives (if nonpartisan)
  • Get-out-the-vote efforts (if nonpartisan)
  • Distribution of candidate questionnaires (if unbiased)
  • Candidate forums and debates (if structured fairly)
Issue Advocacy During Elections

Organizations may continue issue advocacy during election periods if:

  • Consistent with historical advocacy
  • Not timed to influence elections
  • Does not mention candidates
  • Focuses on issues, not elections

Although 501(c)(3) organizations must be careful to avoid engaging in prohibited campaign intervention, not all election-related activities are completely prohibited for such organizations. Note that the IRS uses a facts and circumstances test and looks to factors such as content, timing, and scope. Thus, organizations should proceed with caution when they engage in political or election-related activities.

501(c)(3) organizations are permitted to engage in issue advocacy which is advocacy related to the charitable mission and the charity's agenda (e.g., gun-safety, sustainable practices). However, issue advocacy may cross into prohibited political campaign activity under certain circumstances, especially during election years. For example, an organization that engages in advocacy related to a particular issue only during election years and close to the election may be viewed by the IRS as engaging in political campaign activity even if the organization does not mention any candidate names or party affiliations. By contrast, it is a much more favorable set of facts and circumstances for the organization if the organization has a pattern of engaging in such advocacy during non-election years using the same means and scope.

Examples of permissible election-related activities include voter education such as voter guides and candidate debates; voter registration such as get-out-the-vote drives; and candidate education such as public policy reports created on behalf of the organization distributed to all candidates. The overarching theme of the electioneering prohibition that 501(c)(3) organizations be neutral and nonpartisan with respect to publicly elected offices must be a main consideration when undertaking any election-related activity. Thus, for example, voter education guides should not rank candidates; voter registrations should not be based on party affiliation; and candidate education should not be done in response to a candidate's request or show favoritism to certain candidates. Organizations should become knowledgeable about the 501(c)(3) prohibition on electioneering and when unsure, seek the assistance of nonprofit legal experts.

Enforcement and Penalties

If a 501(c)(3) organization engages in any amount of prohibited electioneering, it runs the risk of having its tax-exempt status revoked by the IRS, either permanently or for a specified period during which the activities occurred. The IRS also has the authority to impose a tax of 10 percent of the expenditure associated with the electioneering activities on the organization and a tax of 2.5 percent on organizational managers who knowingly and willfully approved a prohibited expenditure, up to a total of $5,000. If the IRS does impose either tax and the expenditure is not corrected within the appropriate period, an additional tax of 100 percent of the prohibited expenditure may be imposed on the organization and an additional tax of 50 percent may be imposed on the individual managers, up to a total of $10,000.

For more on certain permitted nonpartisan election-related activities that can be engaged in (if done carefully) without jeopardizing an organization's exempt-status see the following resources on the Nonprofit Law Blog:

Employee Endorsements & Election Activities
Candidate Appearances & Debates
Voter Guides & Candidate Questionnaires

Best Practices for Compliance

Organizational Policies

  • Written Advocacy Policy: Clear guidelines for staff and board
  • Training Programs: Regular education on compliance requirements
  • Review Procedures: Approval processes for advocacy communications
  • Documentation: Records of advocacy expenditures and activities

Communication Guidelines

  • Clearly separate advocacy from other communications
  • Use disclaimers when appropriate
  • Avoid partisan language or imagery
  • Focus on issues rather than personalities
  • Maintain objectivity in presentations

Financial Management

  • Track lobbying expenditures separately
  • Allocate shared costs appropriately
  • Maintain detailed records
  • Consider 501(h) election benefits
  • Monitor spending against limits

Coalition Work and Partnerships

Permissible Coalition Activities

  • Joining issue-based coalitions
  • Sharing resources for advocacy
  • Coordinating educational campaigns
  • Participating in joint communications

Restrictions in Coalitions

  • Cannot participate in partisan coalitions
  • Must maintain independent decision-making
  • Liable for proportionate share of coalition activities
  • Should have written agreements clarifying roles

Specific Advocacy Scenarios

Legislative Testimony

Permissible if:

  • Based on organizational expertise
  • Provides factual information
  • Relates to organization's mission
  • Properly disclosed as organizational position

Ballot Measures

Organizations may advocate on ballot measures because they involve legislation, not candidates:

  • Subject to lobbying limitations
  • May take positions for or against
  • Can encourage voting on measures
  • Must track expenditures

Judicial Advocacy

Generally not restricted:

  • Filing amicus briefs
  • Participating in litigation
  • Advocating for judicial nominations (with caution)
  • Commenting on court decisions

International Advocacy

Permissible Activities

  • Advocating before international bodies
  • Supporting foreign advocacy organizations
  • Educating about international issues
  • Participating in global advocacy campaigns

Special Considerations

  • Foreign Agents Registration Act compliance
  • Anti-terrorism screening requirements
  • Export control regulations
  • Currency reporting requirements

Compliance Monitoring and Reporting

Form 990 Reporting

Organizations must report:

  • Lobbying expenditures
  • Political campaign activities (none permitted)
  • Advocacy activities and positions
  • Legislative or governmental activities

State Registration Requirements

Many states require registration for lobbying activities:

  • Separate registration in each state where lobbying
  • Periodic reporting of expenditures
  • Disclosure of lobbying contacts
  • Compliance with state-specific rules

Enforcement and Penalties

IRS Enforcement

  • Warnings and corrective action requests
  • Excise taxes on excessive lobbying (501(h) organizations)
  • Revocation of tax-exempt status
  • Intermediate sanctions for private benefit

Political Activity Violations

  • Automatic revocation for egregious violations
  • Excise taxes on political expenditures
  • Excise taxes on organization managers
  • Correction and mitigation requirements

Emerging Issues

Digital Advocacy

  • Social media advocacy campaigns
  • Online lobbying and grassroots organizing
  • Digital advertising regulations
  • Data privacy and campaign finance implications

Corporate Advocacy

  • Business advocacy by nonprofits
  • Corporate partnerships in advocacy
  • Disclosure requirements for corporate funding
  • Avoiding private benefit issues

Additional Thoughts

Who Should Engage in Advocacy?

All of us who work for nonprofits are advocates of our organizations and the communities they serve. Fundraisers know this. But the role of advocacy needs to be further embedded on all levels of a nonprofit starting with the board. We should also ensure we're communicating not only with prospective donors but also with the broader public. And we can't forget about policy makers who create the rules and the playing field we operate in. Let's remember that all of the most important public policies we hold dear to us - civil rights, women's rights, disability rights, education, health, religion, environmental protection, animal welfare, etc. - result from strong nonprofit advocacy and not just individual leaders.

Potential Areas of Advocacy

  • Proposed cut in budget or public services to the people you serve
  • Proposed change in a law that will affect your core mission and the people you serve
  • Proposed change in law that will affect your organization's ability to operate or fundraise

Some Permissible Forms of Advocacy for Public Charities

  • Stating the organization's position on a public policy issue
  • Educational activities (including educating lawmakers and even candidates if done appropriately in a nonpartisan manner)
  • Lobbying within certain limits which can be fairly generous, particularly for charities making the 501(h) election
  • Advocating a change in administrative regulations

Some Impermissible Forms of Advocacy for Public Charities

  • Endorsing a candidate for public office (including by providing a link to a candidate's website)
  • Contributing to a candidate
  • Using organizational resources to support a candidate (including use of organizational emails)
  • Getting a candidate to endorse the organization's agenda
  • Evaluating or grading the candidates' positions

Some Tricky Areas to Approach Cautiously

  • Issue advocacy (generally okay) that may appear to be timed with an election
  • Legislative scorecards that may appear to be timed with an election
  • Praising, honoring, criticizing an incumbent who is also a candidate
  • Voter education (debates, forums, guides, candidate questionnaires) implemented in what may appear to be a partisan manner
  • Social media likes, favorites, follows, and third party comments related to candidates