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When Does Your Activity Become Lobbying?
What Y our Nonprofit Needs To Know
501(c)(3) public charities are legally allowed to engage in a limited, but generous, amount of lobbying
activity. Many people are surprised to learn that preparation and research time spent in anticipation of
lobbying counts as reportable lobbying.
The Internal Revenue Code offers two ways for 501(c)(3) public charities to measure lobbying
activities: (1) the “501(h) expenditure test,” or (2) the “insubstantial part test.” No matter how you
measure your lobbying, preparation for lobbying work counts.
If your organization measures its lobbying under the 501(h) Expenditure Test
If your organization is a 501(h) electing charity, IRS regulations clearly state that costs, such as
transportation, photocopying, and other similar expenses, spent in support of lobbying are
expenditures for lobbying communications. This includes all staff time and overhead costs that
support lobbying.
When does the clock start ticking?
You must begin measuring your lobbying activity when the primary purpose of your preparation or
research is to engage in lobbying activity.
Example: An organization researches, prepares, and prints a safety code for electrical wiring. The
organization sells the code to the public where itis widely used by professionals in the installation of
electrical wiring. A number of states codify all, or part, of the code of standards as mandatory safety
standards. On occasion, the organization lobbied state legislators for passage of the code of
standards for safety reasons.
Because the primary purpose of preparing the code of standards was the promotion of public safety
and the standards were specifically used in a profession for that purpose, separate from any
legislative requirement, the research, preparation, printing, and public distribution of the code of
standards is not an expenditure for a direct (or grassroots) lobbying communication.
Example: The same organization prepares the safety code primarily to have it codified in the state
legislature. All of the preparation costs, including staff time spent on research, transportation costs,
photocopying, and other similar expenses, incurred in lobbying state legislators for passage of the
code of standards into law are reportable direct lobbying expenditures.
If your organization measures its lobbying under the Insubstantial Part Test
If your 501(c)(3) charity has not chosen to measure its lobbying under the 501(h) expenditure test, the
courts have made it clear that supporting activities are included as attempts to influence legislation.
This includes research, discussion, and similar activities.
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When does the clock start ticking?
Attempting to influence legislation does not necessarily begin at the moment the organization first
addresses itself to the public or to the legislature. All of the facts and circumstances are considered
when determining when preparation and research is considered in support of lobbying
communications.
Time spent in discussing public issues, formulating and agreeing upon positions, and studying them in
preparation of adopting a position all count as lobbying.
Example — An organization is active in promoting legislation on education and health issues. The time
spent on the lobbying activity counts towards the “insubstantial part” of the organization's activities. All
time spent preparing publications that indicate a position on legislation are included as lobbying
preparation. Prior statements or articles setting forth the organization’s general positions that do not
relate to any specific legislation is not included as lobbying.
The information contained in this fact sheet and any attachments is being provided for informational purposes only and not
as part of an attorney-client relationship. The information is not a substitute for expert legal, tax, or other professional advice
tailored to your specific circumstances, and may not be relied upon for the purposes of avoiding any penalties that may be
imposed under the Internal Revenue Code. Alliance for J ustice publishes plain-language guides on nonprofit advocacy
topics, offers educational workshops on the laws governing the advocacy of nonprofits, and provides technical assistance for
nonprofits engaging in advocacy. For additional information, please feel free to contact Alliance for | ustice at 866-NPLOBBY.
www.bolderadvocacy.org | www.allianceforjustice.org
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