Does your organization need to be involved politically? Advocacy and activist groups, while falling within the types of organizations described in IRC §501(c)(3), may still be directed at creating change in our society. Because government is usually targeted in that program for change, it is important to understand both the tax and non-tax rules that apply.

A threshold question is whether the organization engages in activities to either influence legislation (often called “lobbying”) or to help elect or oppose a candidate. Each of these is treated differently.

IRC §501(c)(3) provides for tax exemption only if “no substantial part of [the organization’s] activities .. is carrying on propaganda, or otherwise attempting, to influence legislation …” except as otherwise provided in §501(h). And further, such organizations may not “participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf (or in opposition to) any candidate for public office.” Therefore, while the prohibition on lobbying is subject to the “substantial part” test, that on campaigning for candidates is absolute.

What does it mean to “influence legislation,” i.e., to engage in “lobbying?” The threshold question is whether the activity is lobbying at all, and it is clear at the outset that some pressures put on government are not meant to influence “legislation.” Decisions by a person acting in an executive capacity, such as a president, governor or mayor are not legislative in nature, nor are the rule-making procedures of an administrative agency. Further, not all contacts with legislators are meant to influence their votes on legislation. And, engaging in a lawsuit to promote the organization’s position on a point of law calls the courts, not the legislature, into action and is most certainly not influencing legislation.