Advocacy Rules and Nonprofit Groups

To the Editor:

As the sector scrambles to respond to budget cuts and efforts to heighten oversight, a large myth restricting nonprofits’ effectiveness still prevails — the notion that lobbying by organizations classified under Section 501(c)(3) of the tax code is illegal or discouraged by the IRS. Your article, “Bracing for a Tough Year” (January 20), raised this issue, but nonprofit leaders, staff, and volunteers must know for certain that lobbying by nonprofits on a federal, state, and local level is legal.

Lobbying is an effective means of securing government funding, defending laws important to nonprofit operations, and influencing legislation beneficial to the public interest.

Nonprofits can have the greatest freedom to impact public policy when they elect to follow the IRS’s 501(h) expenditure test. When nonprofits elect to come under the 501(h) lobby law of 1976, the organization may spend 20 percent — or $100,000 — of its first $500,000 of expenditures on lobbying, 15 percent of the next $500,000, and so on up to $1-million per year. If a nonprofit doesn’t elect, the amount permissible to spend lobbying is unclear, as are the activities that constitute lobbying.

Several activities do not count as lobbying under the 501(h) election; therefore, organizations can engage in unlimited amounts of those types of advocacy activities. Such activities include self-defense lobbying for nonprofits’ tax-exempt status. Also, a nonprofit’s communication to its members about the organization’s position on pending legislation is not considered lobbying by the IRS as long as the organization does not directly encourage its members or others to lobby on the legislation. Nonprofits must continue to advocate and lobby for their causes and in the public interest. By law, it is their right to do so.

Elizabeth M. Heagy
President
Charity Lobbying in the Public Interest
Washington

***

To the Editor:

The caption below the photograph of me that accompanies the article “Bracing for a Tough Year” describes me as concerned that Congress will cut “programs that subsidize charities and the people they serve.” The term “subsidize” can connote “handout.”

My concern is with the potential capping and block-granting of entitlement programs for people and communities in need and cuts in programs that serve them.

Other than exempting nonprofits from taxes, I am not even sure I believe that the government should subsidize nonprofit organizations per se.

However, I believe strongly that the government should continue to fund nonprofits for the delivery of services — whether for the development of art or the care of children and the elderly — that improve lives and communities.

Irv Katz
President
National Human Services Assembly
Washington