Lobbying Limits for 501(c)(3) Tax Exempt Organizations

By Liz Baumgarten, Program Director and Counsel of Charity Lobbying in the Public Interest

2040 S Street, NW, Washington, DC  20009 / www.clpi.org

BASIC RULE: It is absolutely legal for a 501(c)(3) to participate in, lobby for, and contribute to, a ballot initiative campaign. This is considered direct lobbying.

Can arts orgs make direct contributions to a ballot initiative campaign?  Yes - such contributions would be considered a lobbying expenditure. 

Can arts orgs make contributions to an arts 501(c)(6) if the 501(c)(6) makes contributions to the initiative campaign? Yes. If the money the 501(c)(3) contributes to the 501(c)(6) is for the ballot initiative campaign, it will count as a lobbying expenditure for the 501(c)(3). 

Can arts orgs collect contributions for the campaign? Yes, however individual contributions for a lobbying campaign are not tax deductible. Also, a private foundation cannot earmark grant money for lobbying efforts. However, a community foundation can make grants for lobbying efforts - although, some are hesitant to do so.

Can arts orgs distribute information about the initiative to audiences? Yes, this would be considered part of their direct lobbying effort because the public is serving as the legislators in this circumstance. Any expense associated with information distributed regarding the ballot initiative is part of the organizations direct lobbying expenditure.

Are there other questions we should be asking? If you all are going to be involved in something like a ballot initiative campaign, and playing an active role, I would suggest that you consider making the 501(h) election - which will give you definite expenditure limits. The alternative is to follow the "substantial part" test (all 501(c)(3)s follow this test unless they make the (h) election) - and there are no definitions of what is “substantial" - it is very vague. http://www.clpi.org/lobbying_is_legal.html & http://www.clpi.org/ballot_initiatives.html will give you more information. The IRS Form to elect to adopt the 501(h) standard is Form 5768.

The above answers are intended as general guidance and do not represent a formal legal opinion.