“The life you have led doesn’t need to be the only one you have.” —Anna Quindlen

The opportunity to analyze and assess our presidential-election process occurs just once every four years. Thankfully, from my perspective, it is not more frequent. 

In this election season, it is important for all tax-exempt organizations to be aware and knowledgeable regarding the regulatory restrictions on charitable organizations and political/lobbying activities. 

Internal Revenue Code section 501(h) provides regulatory guidance in this area and has been the subject of a previous column. As always, tax and legal advisers should be consulted if you have questions in this area.

In order to avoid a political-lobbying issue for your tax-exempt organization, I provide the following 15 examples for your consideration. Remember that the IRS considers direct lobbying and grass-roots lobbying as both being subject to the regulatory requirements of section 501(h).

Activities that are not considered lobbying

– A visit to Capitol Hill by staff to meet with legislators on issues relevant to the organization’s mission. The topics discussed, however, must not currently be the subject of any legislative proposal.

– If invited, testifying before a legislative committee on the merits of the provisions of a pending bill.

– Membership newsletters that provide updates related to pending legislation of interest to the organization’s mission, programs, and services.

– A public advertisement that may recommend the enactment of a particular bill and recommending that readers support that bill.

– Lobbying an administrative body regarding proposed regulations.

Activities considered to be direct lobbying expenditures

– Testifying before a legislative committee, at a Senator’s request, on the merits of a pending bill.

– Contacting members of Congress in an attempt to influence the Senate confirmation of a judicial or executive branch nominee.

– Training provided to the exempt organization staff on how to effectively influence members of Congress.

– A newsletter to members of the organization which describes recent lobbying efforts and encourages contact with legislators.

– A public advertisement that specifically indicates the tax-exempt organization’s support of a referendum that will be voted on by the public.

Activities that the IRS describes as grass-roots lobbying

– A public advertisement, which recommends the enactment of a particular bill and identifies the applicable legislators to be contacted by the readers.

– Any payments to a lobbying firm to influence the public regarding pending legislation.

– Any time spent by employees of the tax-exempt organization in developing or preparing a non-member mailing list for purposes
of a grass-roots lobbying communication.

– An organization newsletter that updates members on the status of pending legislation regarding issues affecting the exempt organization and urging newsletter recipients to “get involved.”

– Employee salary costs and out-of-pocket costs associated with the preparation and distribution of a membership newsletter that encourages members to directly contact specific legislators regarding pending legislation.

As you can see, there are very subtle nuances to consider when assessing a tax-exempt organization’s lobbying activities. 

As a nonprofit board or management team member, what should you do now? In my view, your number one priority is strategic assessment and positioning. In the briefest of simplistic terms, answer the question — what do we need to do to maintain long-term fiscal viability to support our organizational mission and purpose?

Start by assuming a dramatic reduction in current government funding and discuss your organizational strengths and weaknesses in the following areas:

– Private-sector fundraising and development

– Cost-effective delivery of quality service

– Affiliation/merger strategies, similar to every other American industry sector

– Recruitment and retention of the best talent available at a competitive rate of compensation

The challenges are enormous, but the opportunities are endless.        

Gerald J. Archibald, CPA, is a partner in charge of the management advisory services at The Bonadio Group. Contact him at (585) 381-1000, or via email at garchibald@bonadio.com