February 24

Nonprofits and Lobbying: Indeed!

We ask nonprofits who value investments in arts and culture and know they improve our state to help advocate for public funding for the arts.

As a former executive director, I know that it’s hard to know the rules for advocacy and lobbying as a nonprofit. So, here’s a brief overview with links to more information.

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In general, know that you can take action. In fact, 501(c)3 public charities may lobby with limits and advocate limitlessly.

The IRS gives guidelines on lobbying by public charities (501(c)3) based on the “insubstantial part test.” Organizations are automatically considered under the “insubstantial part test” unless they file something to change it. Past rulings estimate that spending under 10% of the organization’s budget on lobbying is allowable.

If audited, the IRS would analyze all resources used for influencing specific legislation, like direct expenditures, volunteer time, staff time and publicity. These expenditures are reported on the annual IRS 990 form already. The resources must be used to influence elected officials about current or future legislation.

If a nonprofit wants to spend more time and money on direct lobbying, the organization may submit a 501h election to the IRS. This is a 1-time form that allows organizations to define grassroots and lobbying clearly and guidelines focus solely on direct expenditures (not time, etc.).

Under the 501h, organizations with budgets under $500,000 may spend up to 20% expenditure on lobbying. Again the charity reports these expenditures on the annual 990 form.

Yes!Of course 501(c)3 public charities may advocate without limits! This means organizations may (and should!) influence public policy through things like coalition building, education, media outreach, research and communication with elected officials.

Here is my Oklahoma Arts Conference presentation with a little more of an overview about advocacy and lobbying as a 501c3 organization.

You can see an overview of the guidelines from Independent Sector or this Do’s and Don’ts List from Oklahoma Center for Nonprofits.

This is intended as an overview of advocacy rules, not legal advice. If in doubt, please consult a legal professional.