How to embrace the h

If you read my last blog, you know the 501 (h) is a magical one-line form that makes it easier for most 501 (c) (3) nonprofits to LEGALLY lobby.*

Now I’ll help you understand how it works in the simplest way possible. 

Keep in mind, I’m not an attorney. I don’t even play one on TV. So, this blog doesn’t contain legal advice.

When your nonprofit was a newborn, it was immediately given the right to lobby.

However, that gift came with strings-attached – ambiguous IRS guidelines.

However, the vast majority of (c) (3) nonprofits can escape the ambiguity by choosing the “h” which your organization can obtain by filling out a ONE-LINE FORM.

The h has CLEAR guidelines on how much your nonprofit can lobby, what it can do, and what it can spend lobbying. 

And, while most lobbying can be done for the cost of transportation and a leaflet – the h allows your org. to spend 20% of the first $500,000 of your annual expenditures on lobbying ($100,000), 15% of the next $500,000, and so on, up to $1 million dollars a year!

WOWZA. As if most of us would ever do that! 

Now I don’t need to tell you that Congress isn’t famous for making things simple. When it created this law, it decided that whatever lobbying you do has to be sorted into two different buckets – “Direct” lobbying and “Grassroots” lobbying.

That’s because the law allows you to spend different amounts on each type of lobbying.

Huh? What does that mean?

Direct lobbying means exactly what it sounds like. It’s when you take your case directly to elected officials or their representatives (like, someone on their staff) to communicate a position on legislation.

When you, your board, or your members (if you have any) contact a specific legislator about, say, supporting or opposing a particular bill, that’s direct lobbying. The IRS permits you to spend 100% of your lobbying allotment on direct lobbying.

Grassroots lobbying is when you issue a “call to action” to the general public – urging them to call their electeds to take action on a specific piece of legislation.

You are allowed by law to spend ¼ of your permissible expenditures on grassroots lobbying.

Either way if there’s contact – either by yourself, by someone affiliated with your organization, or, if you’re encouraging the public to have contact, then you are lobbying. This includes communications on a ballot initiative or referendum. In those cases, the public IS the legislature and therefore, any communication with the public in that type of situation is considered DIRECT lobbying.  

Under the 501 (h) election, you’re NOT lobbying when you are...

• Communicating with your members as long as there is no call to action.

• Testifying (including the time you spend preparing the testimony as long as you have been asked in writing by the committee to testify)

• Researching your issue (as long as your research is objective)

• Engaging in self-defense lobbying (which means communicating with legislators on possible actions which could affect your nonprofit’s existence, powers, duties, tax-exempt status, or the deductibility of contributions to the organization).

• Communicating to the public (such as in a letter to the editor) without a call to action.

The only thing you absolutely cannot do as a (c) (3) nonprofit is endorse a candidate for office!

Where can your nonprofit get money for lobbying?

• Membership dues

• Donations from individuals

• Special events

• Some foundations give grants to partially underwrite campaigns or they allow general operating funds to be used for lobbying. This is legal as long as the letter doesn’t state that the money can’t be used for lobbying.

• And, community foundations are legally able to earmark funds for lobbying!

📣 If you’ve been losing sleep wondering how you can take action during these difficult times, take a breath and learn how to lobby! 📣

For more information, go to patlibby.com to check out my FREE videos on the legal rules for nonprofit lobbying, and the 10 steps to creating an effective lobbying campaign.

You can also visit: Bolder Advocacy, which contains lots of FREE resources and access to attorneys who can guide you through the h.

If not now, when?

Pat

*Religious institutions can’t take the h.

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Pat Libby is a change management consultant working principally with nonprofit corporations. She is author of The Empowered Citizens Guide: 10 Steps to Passing a Law that Matters to You, Oxford University Press, The Lobbying Strategy Handbook, second edition, Oxford University Press, and Cases in Nonprofit Management, SAGE. She has served as an academic, senior executive, board member, and consultant to innumerable nonprofit organizations and foundations for more than three decades.

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