Your Organization Has The Right To Lobby
and It Must To Ensure The Future of the Arts and Culture Industry
Every not-for-profit organization has the right to lobby political representatives at the city, county, state, and federal governmental levels on legislation that impacts its organization. Not only do organizations legally have this right, they should incorporate a “will lobby philosophy” throughout their organizations. In today’s uncertain political environment, it’s more important than ever for staff, directors, volunteers, and audience members of cultural organizations to know what the key political cultural issues are, the status of these issues, and what advocacy efforts are needed at various stages of the political process. Go here to review a PowerPoint presentation developed by Jay Dick of Americans for the Arts that describes what your nonprofit can and cannot do regarding lobbying efforts.
Don’t Confuse Lobbying With Political Activities
Lobbying and political activity is sometimes confused by not-for-profit cultural organizations. Congress enacted in 1976 legislation which gives 501(c)(3) not-for-profit organizations the right to influence the outcome of legislation (lobbying). The law actually encourages not-for-profits to lobby — it’s perfectly legal for your organization to work for the passage of legislation that furthers the cause of the arts and cultural community.
Political Activities Your Organization MAY DO
The federal tax law does impose restrictions on political campaign activities by not-for-profit organizations, particularly those classified by the Internal Revenue Service as 501(c)(3), which includes most cultural institutions; however, your organization may:
► Educate political candidates on issues of concern to the arts and cultural community.
► Focus candidates’ attentions on cultural issues by attending political events.
► Arrange meetings to learn candidates’ positions on arts and cultural issues; however, avoid stating your organization’s position or commenting on the candidates’ responses. All qualified candidates must be invited.
► Invite candidates to meetings of the organization to talk about the arts and cultural concerns.
► Send candidates literature on arts and cultural issues.
► Give, sell, trade, or lend lists of its members or subscribers to political candidates. Note, however, all candidates must be made aware that these lists are available to each of them. By choosing to give or lend your organization’s mailing list to a candidate, it becomes a campaign contribution. In this case, your organization must receive something of fair value in return. If you sell or rent the list, please check with your organization’s attorney about unrelated business income rules.
► Publish candidates’ views or voting records on arts and cultural issues provided all candidates for a particular office are represented. When publishing this information, cultural institutions should avoid distributing the literature beyond their membership or close to election day.
Political Activities Your Organization MAY NOT DO,
Especially “During A Campaign”
► Work against or for candidates for public office.
► Endorse or oppose candidates for public office.
► Collect or distribute funds for political campaigns.
► Use facilities of not-for-profit organizations for political fund raising.
► Form or maintain a political action committee.
► Engage in legislative activities to a “substantial” extent. See additional information below.
► Publish material that favors the views of one candidate over another.
The Internal Revenue Service (IRS) is primarily concerned with what an organization does “during a campaign,” defined as the time when someone announces either by public statement or, in the absence of a statement, by filing notice with the election commission that he or she is a candidate for that office. The IRS may levy fines against the organization, and its staff and volunteers who knowingly make or approve political expenditures which are against the law. If your organization is unsure of the legality of any political activity, the FCA recommends you get legal advice.
Lobbying For 501(c)(3) Organizations
Under the Old and New Laws
Under the New Law: The Tax Reform Act of 1976 set standards outlining what lobbying is legal without fear of losing one’s not-for-profit tax status and being fined. The final federal regulations on lobbying appeared in the August 31, 1990,Federal Register. The nationally based Independent Sector, an organization dedicated to the not-for-profit community, recommends that 501(c)(3) organizations file under the new law, which it believes is easier to understand and protects the organization from the vagueness of the “substantial” rule used under the old law.
To come under the new law, an organization must elect to register with IRS and report annually its lobbying expenditures. Complete IRS Form 5768 if your organization decides to operate under the new law.
Under the new law, the law sets a spending limit for total lobbying expenditures. The cap varies according to the organization’s budget, but cannot exceed $1 million annually. Grassroots-lobbying expenditures are limited to 25% of total lobbying expenses and cannot exceed $250,000 annually.
Direct lobbying is defined as “any attempt to influence any legislation through communication with (1) any member or employee of a legislative body or (2) any government official or employee (other than a member of employee of a legislative body) who may participate in the formulation of the legislation, but only if the principal purpose of the communication is to influence legislation.” A direct lobbying communication “refers to specific legislation and reflects a view on such legislation.” Lobbying on referenda issues decided by voters is also considered direct lobbying.
Grassroots lobbying is “any attempt to influence any legislation through an attempt to affect the opinions of the general public or any segment thereof.” Grassroots-lobbying communication includes direct mail and telephone campaigns which refer to “specific legislation, reflects a view on such legislation, and encourages the recipient of the communication to take action with respect to such legislation.”
An organization which exceeds the limits must pay an excise tax of 25% of its excess lobbying expenditures; and if it exceeds the limits over a four-year period, it may lose its tax-exempt status.
Under the Old Law: If an organization has not elected to register under the new lobbying law, it remains covered by the old law, which states an organization cannot spend more than a “substantial” amount on lobbying. “Substantial” has not clearly been defined by the IRS. The general rule seems to be approximately 5% of your annual budget. Again, you might want to “elect” to register by completing the one-page IRS Form 5768, and be on the safe side of the law.
FCA appreciates the information provided for this section of the website by Independent Sector; Bruce R. Hopkins, author of The Law of Tax-Exempt Organizations; and Americans for the Arts.