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Non-profit Organizations, Advocacy and Lobbying: What does the IRS Permit?

The extent to which 501(c)3 charitable nonprofit organizations can legally participate in advocacy and lobbying while still retaining tax-exempt status is not well-understood. It's a question which seems to come up a lot these days in the philanthropic/nonprofit world, especially here in Illinois where the lack of a state budget over the past two years has prevented $12.8 billion from being released, with no end in sight (Responsible Budget Coalition). I attended an educational meeting at Forefront that featured a sobering prognosis on the state of the State and how the nonprofit sector can participate in Revenue Advocacy, the fight for the crucial funding necessary to provide important and often life-saving services to the people of Illinois.


Forefront’s Vice President of Strategy and Policy, Delia Coleman, introduced and clarified several key concepts that I found extremely useful as a funder. Then I did a little research of my own.

Is there a difference between Advocacy and Lobbying? Yes, lobbying is a specific type of advocacy that includes directly asking a legislator to vote “yes” or “no” on a specific bill. Coleman pointed out that In order for advocacy to qualify as lobbying, (which matters to the IRS), there have to be four components in play: an already established bill, a legislator, the statement of opinion/a case by the lobbyist and a clear request by the lobbyist to the legislator to support or not support the bill in question.

Can a 501(c)3 designated public charity participate in advocacy? Lobbying? Yes to both! Here’s how it works. While there really are no restrictions on general advocacy, there are regulations around how much time nonprofit organizations can participate in lobbying. If an organization has 501(c)3 charitable status, it can lobby but spend “no substantial part” of its time on lobbying. Vague language? Absolutely. Many nonprofit organizations steer clear of lobbying for fear of losing their tax exempt status; however, the voices of these organizations are sometimes the most important and knowledgeable.

What about Private Foundations? Most private foundations have a single source of funding such as a family or a corporation and make grants to other charitable organizations. Private foundations can participate in advocacy, but not lobbying.

Throw in an H. Some 501(c)3 organizations can apply to become 501(h)organizations for which the lobbying rules are much clearer. It’s a free and easy process called the 501(h) Election. This process allows the organization to report lobbying to the IRS by expense instead of by hours with well-defined limits based on the size of the organization. If an organization exceeds the maximum lobbying activities over a 4-year period, the organization may lose its tax-exempt status. Private foundations and religious institutions may not apply for 501(h) status and organizations that receive federal or state funds may not use those funds for lobbying. (

What does this mean? The nonprofit voice should be one of the loudest when it comes to policy but many nonprofit organizations are scared to participate in advocacy or lobbying due to vague laws and fear of losing their tax-exempt status. However, I urge nonprofit organizations to learn more about how they can not only be a part of policy-making, but leaders as the experts they are on the needs of the people they serve. Not sure where to find information? The Alliance for Justice “Bolder Advocacy” initiative can help!


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