Nonprofit Lobbying Rules: What 501(c)(3) Organizations Can and Can't Do

Can 501(c)(3) Organizations Lobby?

Yes. This is one of the most common misconceptions about nonprofits. 501(c)(3) organizations can legally engage in lobbying activities — but the amount of lobbying is limited, and certain types of political activity are absolutely prohibited.

The absolute prohibition: 501(c)(3) organizations cannot engage in political campaign activity — supporting or opposing candidates for public office. This is a hard rule with no exceptions.

The limit: Lobbying can be conducted, but it cannot be a "substantial part" of the organization's overall activities.

What Counts as Lobbying?

The IRS defines lobbying as activity that attempts to influence specific legislation. Not all advocacy is lobbying.

Direct Lobbying

Communications directed to legislators or their staff that:

• Refer to specific legislation (pending or proposed)
• Express a view on that legislation

Examples:

• Meeting with a state representative about a pending nonprofit tax bill
• Calling a congressional office to support or oppose specific legislation
• Submitting written testimony on a proposed state regulation
• Asking board members to write legislators about specific bills

Grassroots Lobbying

Communications to the general public that:

• Refer to specific legislation
• Reflect a view on that legislation
• Include a "call to action" — asking the public to contact legislators

Examples:

• Newsletter urging readers to call their senators about a specific bill
• Social media post asking followers to oppose pending legislation
• Action alert sent to your email list about an upcoming vote
• Website petition asking visitors to contact legislators

What Is NOT Lobbying

Many advocacy activities do not count as lobbying under IRS rules:

Nonpartisan analysis, study, or research — Educational content that presents multiple sides of an issue

Responses to legislative requests for technical advice — When a government body asks for your expertise

Self-defense activities — Addressing legislation that would affect the organization's own existence, operations, or tax-exempt status

Discussions of broad social or economic problems — Without specific legislative solutions

Public education about policy issues — Without calls to action on specific legislation

Voter registration and get-out-the-vote activities — If conducted on a nonpartisan basis

Candidate forums — Where all candidates are invited and questioned equally

How Much Lobbying Is Allowed?

501(c)(3) organizations can choose between two tests for measuring lobbying activity:

The Insubstantial Part Test (Default)

Under the default rule, lobbying cannot be a "substantial part" of activities. The IRS uses a "facts and circumstances" analysis considering:

• Time spent on lobbying by staff, volunteers, and board
• Money spent on lobbying
• Frequency of lobbying communications
• Continuous or occasional activity

The problem: "Substantial" is not clearly defined. Some commentators suggest 5% or less is safe; others suggest up to 10-15%. The vagueness creates uncertainty and encourages organizations to avoid lobbying altogether.

The 501(h) Expenditure Test (Election)

Organizations can file Form 5768 to elect the 501(h) expenditure test. This test provides clear, bright-line spending limits based on the organization's total expenditures:

Example: An organization with $300,000 in annual expenditures could spend up to $60,000 on lobbying, with up to $15,000 of that on grassroots lobbying.

Advantages of the 501(h) Election

Clear limits — Eliminates guesswork about what's "substantial"

Higher effective limits — Usually allows more lobbying than the insubstantial part test

Simpler reporting — Clear measurement methodology

Reduced enforcement risk — Penalties are financial (excise tax) rather than loss of exempt status

Volunteer time excluded — Unreimbursed volunteer lobbying doesn't count against the limit

Disadvantages of the 501(h) Election

Administrative complexity — Requires tracking of lobbying expenditures

Some activities now counted — Certain grassroots activities count under 501(h) that wouldn't count under insubstantial part test

Not available to some organizations — Churches and church-related organizations cannot make the election

For most organizations engaging in significant lobbying, the 501(h) election is strongly advisable. Filing Form 5768 is a simple one-page form.

What Is Political Campaign Activity?

Unlike lobbying, political campaign activity is absolutely prohibited for 501(c)(3) organizations. Violations can result in:

• Revocation of tax-exempt status
• Imposition of excise taxes on the organization and managers
• Loss of tax-deductibility for donors

Prohibited Activities

• Endorsing or opposing candidates
• Contributing to candidate campaigns or political parties
• Distributing partisan campaign materials
• Rating candidates on issues (with limited exceptions)
• Allowing candidates to campaign at organizational events or use organizational facilities selectively
• Publishing biased voter guides favoring particular candidates

Permitted Activities

Voter education — Nonpartisan forums featuring all candidates

Voter registration — Conducted on a nonpartisan basis

Candidate appearances — In a non-candidate capacity (e.g., as an expert or in their current role)

Legislative commentary — Analyzing legislation even during election season

Issue advocacy — Unless clearly linked to specific candidates

Gray Areas

Organizations should be especially cautious about:

• Statements that can be interpreted as supporting or opposing candidates
• Social media posts by staff (who should understand they cannot speak for the organization on candidates)
• Activities during election season that might appear partisan
• Voter guides that rate candidates on specific issues
• Political activities by board members who also represent the organization

When in doubt, consult legal counsel.

Documenting Lobbying Activity

If your organization engages in any lobbying, maintain records:

Staff time — Percentage of time spent on lobbying activities

Expenditures — Direct costs of lobbying (travel, materials, registration fees)

Communications — Copies of lobbying materials sent to legislators or the public

Position papers — Documentation of policy positions taken

Registration — Federal and state lobbying registration where required

Organizations that make the 501(h) election must report lobbying expenditures on Schedule C of Form 990.

State Lobbying Rules

Many states have separate lobbying registration and reporting requirements that apply regardless of 501(c)(3) status. These typically kick in when:

• Spending exceeds a threshold (varies by state)
• Employing designated lobbyists
• Representing specific organizational interests to state legislators

Check your state's lobbying disclosure laws in addition to federal rules.

Frequently Asked Questions

Can a 501(c)(3) organization write an op-ed about legislation?

Yes, if it's presented as educational content without a specific call to action for readers to contact legislators. If it includes "Call your senator today," it becomes grassroots lobbying.

Can board members personally support political candidates?

Yes, as individuals. Board members must clearly separate their personal political activity from their organizational role. They should not use organizational resources, imply they speak for the organization, or conduct personal political activity during organizational events.

Can we testify before legislative committees?

Yes, if invited by the committee (not lobbying under IRS rules) or on our own initiative (counts as lobbying if it involves specific legislation). Testifying is one of the most effective ways to influence policy.

What's the difference between lobbying and advocacy?

Advocacy is broader — it includes education, awareness building, and promotion of policy positions. Lobbying is a subset of advocacy involving specific legislation. Most advocacy is not lobbying.

Can we endorse a ballot measure?

Yes. Ballot measures (initiatives and referenda) are considered legislation for lobbying purposes, not candidates. Organizations can support or oppose ballot measures within their lobbying limits.

Strategic Advocacy Support

Effective policy advocacy requires both understanding the rules and developing strategic influence. Giddings Consulting Group helps nonprofit organizations engage policy-making bodies while maintaining compliance with all applicable regulations.

Contact us to discuss your organization's advocacy strategy.