Would it be proper to complain to the IRS if a nonprofit engages in an active lobbying effort? This nonprofit has a 501(c)(3) status. It has come to my attention that a nonprofit must have a 501(c)(4) status in order to lobby.
It is a shame that so many people have the idea that a 501(c)(3) charitable organization may not lobby. It needlessly cripples many organizations that ought to play a vigorous role in the formation of public policy through legislation.
A 501(c)(3) charity may not spend a “substantial” part of its time lobbying. But it is clearly permitted to lobby on legislation at any level of government. (See Ready Reference Page: “Lobbying Rules Create Opportunity for Charities.”) A whole lot of advocacy is not “lobbying” within the Tax Code definition and groups that do a lot of lobbying can make an election to spend up to 20% of their first $500,000 of annual expenditures on lobbying activities (See Ready Reference Page: “Should Your Organization Elect Under 501(h)?”) Very few charities find that the (c)(3) limits significantly curb their program.
Lobbying, of course, is very different from “electioneering” and charities should not get involved in supporting or opposing candidates for public office at any level. (See Ready Reference Page: IRS Issues New Guidance on Electioneering”)
A 501(c)(4) community or social welfare organization does not face such limitations, and some organizations have been formed as (c)(4)s if their primary activities are lobbying and increasingly in order to publish independent campaign advertising.
In our view, if a charity is not lobbying on the issues it deals with, it probably isn’t doing its job.
Tuesday, October 16, 2012