IRS Rules

Why You Should Elect to Come Under the 501(h) Expenditure Test
As discussed above, Congress and the IRS expressed support for charitable lobbying when it enacted the 501(h) expenditure test and related regulations, respectively.  Together, the law and regulations provide generous limits and eased reporting burdens on for charities that lobby.  However, currently the law only provides this latitude for charities that elect to be covered by it and is not the default option. The default test, sometimes referred to as the "substantial part" test, prohibits charities from engaging in a substantial amount of lobbying and imposes a vague test with more onerous reporting burdens.  For the vast majority of small to mid-sized charities, 501(c)(3) nonprofits should file the one-page form to elect the 501(h) test - not only because it provides generous limits on how much they can spend on lobbying, but also because it provides very clear and helpful definitions of what activities related to legislation do not constitute lobbying.  Religious institutions are not covered by the 1976 lobby law, and thus intentionally can not elect the 501(h) test.

Form 5768 - Take the 501(h) Election

IRS Letter 2000
Many nonprofits and their funders prefer to hear the words from the authority itself.  CLPI, with its attorneys at Caplin & Drysdale, sought and received this IRS letter on questions related to lobbying by publicly supported charitable organizations. The questions and IRS responses are set forth in the letter: 1) Is lobbying by section 501(c)(3) organizations permissible under federal tax laws? 2) How much lobbying may a "public charity" conduct.

Information for Tax Preparers
Some tax return preparers for nonprofits and some nonprofit organizations have been slow to recognize that the federal government, including Congress and the Internal Revenue Service, supports lobbying by 501(c)(3) nonprofits. Congress sent that unambiguous message when it enacted the generous provisions under the 1976 lobby law.  The same message came from the Internal Revenue Service in regulations issued in 1990, which support both the spirit and intent of the 1976 legislation. Following are key points about that legislation.

Exclusions from Lobbying
Critical to the 1976 law are the provisions declaring that many expenditures that have some relationship to public policy and legislative issues are not treated as lobbying and so are permitted without limit.  For example ... 

How to Estimate
Nonprofits that lobby sometimes wonder whether they are coming close to the permissible limits of lobbying activity that they may conduct. If your group has elected to come under the 1976 lobby law (see "The 1976 Law Governing Nonprofit Lobbying"), it's relatively easy to make an educated estimate about whether your organization is approaching the maximum it may spend on lobbying. 

Understanding the Differences Between Direct Lobbying and Grassroots Lobbying