Q&A

If you’ve got questions, we’ve got answers! Here, we’ll answer some of the most common questions asked by nonprofits regarding their legal ability to lobby:


Q Can I lobby?

A Yes, you can! Both the United States Congress and the Internal Revenue Service (IRS) have made it clear that 501(c)(3) organizations can lobby. In 1976, Congress enacted a law that clarifies the ability of nonprofits to lobby with further support coming from regulations issued by the IRS in 1990.

Q – I don’t want to read through federal law. Where has the IRS stated in writing that I can lobby?

A – Right here! In 2000, at the request of the Center for Lobbying in the Public Interest (CLPI; then Charity Lobbying in the Public Interest), the IRS answered several questions regarding the legality of nonprofit lobbying. The IRS clearly states that lobbying by 501(c)(3) organizations is permissible under federal tax law.

Q – The IRS letter discusses two sets of rules to determine how much lobbying a nonprofit is allowed to do. What is the “alternative rule” referenced in the letter?

A – The alternative rule is the 501(h) expenditure test.

Prior to the 1976 law, the only method available for nonprofits to report lobbying was the ambiguous “substantial part” test. This is a vague test with unclear definitions that prohibits nonprofits from engaging in a substantial amount of lobbying and requires onerous reporting burdens.

The 1976 law resulted in the creation of the 501(h) expenditure test, which must be affirmatively elected by a nonprofit. This test provides generous limits on the amount of money a nonprofit can spend on lobbying, as well as very clear and helpful definitions of what actions constitute lobbying. See the chart below, courtesy of CLPI, for the clear spending limits of the 1976 law. 

Lobbying Ceilings under the 1976 Lobby Law

Annual Exempt-Purpose Expenditures Total Direct Lobbying Expenditures Allowable Total Grassroots Lobbying Expenditures Allowable
Up to $500,000 20% of exempt-purpose expenditures up to $100,000 One-quarter of the total direct lobbying expenditure ceiling
$500,000 - $1 million $100,000 + 15% of excess over $500,000 $25,000 + 3.75% of excess over $500,000
$1 million - $1.5 million $175,000 + 10% of excess over $1 million $43,750 + 2.5% of excess over $1 million
$1.5 million - $17 million $225,000 + 5% of excess $56,250 + 1.25% of excess over $1.5 million
Over $17 million $1 million $250,000
 

Q – What is the difference between Direct Lobbying and Grassroots Lobbying?

A – In general, direct lobbying occurs when you state your position on a specific piece of legislation to legislators and other government employees who are involved in formulating policy, or urge your members to do so. Grassroots lobbying occurs when you state your position to the general public and ask them to contact legislators on a certain issue.

Click here* for more details on direct lobbying vs. grassroots lobbying, courtesy of CLPI.
*Note: If you are a registered lobbyist in Connecticut (and ONLY if you are a registered lobbyist), please note that Connecticut state law does not differentiate between direct and grassroots lobbying. Both must be reported if the total amount spent on any combination of the two equals more than $2,000 per calendar year. Thresholds for registering as a lobbyist in CT are discussed in more detail below.


Q – What do I have to do to elect the 501(h) expenditure test?

A – You need to complete this form and send it to the IRS. Your accounting firm should be familiar with this election and be able to offer you additional guidance of how it will help your agency both in terms of ease of reporting and greater latitude for advocacy efforts.

Q – Are there any expenditures that I do not have to consider lobbying?

A – Yes! There are several exclusions under the 1976 law. For instance, if you simply state your position on an issue to your members, but do not ask them to contact elected officials on the issue, then that is not considered lobbying.

Click here* for more exclusions, courtesy of CLPI.

*Note: If you are a registered lobbyist in Connecticut (and ONLY if you are a registered lobbyist), please note that the section on “Executive Branch Contacts” in CLPI’s document, Important Lobbying Exclusions under the 1976 Law, does not apply to you in terms of reporting on your state-level lobbying activities. One important difference between federal and Connecticut state law is that the CT Office of State Ethics requires registered lobbyists to report administrative lobbying, which includes lobbying of the Executive Branch on regulatory matters. Again, this difference only pertains to registered lobbyists in Connecticut who report to the Office of State Ethics.


Q – Do I have to register as a lobbyist in Connecticut?

A – CT General Statutes §1-91(k) defines lobbying as “communicating directly or soliciting others to communicate with any official or his staff in the legislative or executive branch of government or in a quasi-public agency, for the purpose of influencing any legislative or administrative action...” In CT, individuals or entities that expend or agree to expend $2,000 or more in a calendar year on lobbying must register with the Office of State Ethics.

To determine if you or a staff member should be registered in CT, first add up all of the time spent by each employee in question on “lobbying” activities (e.g. – 5 minutes spent composing and sending an email to a legislator; 30 minutes spent having a face-to-face meeting with a legislator; 15 minutes spent composing an email to members or clients asking them to contact legislators; etc.) and then apply the hourly rate of the employee to the amount of time spent “lobbying.” If it comes out to more than $2,000 for the calendar year, that employee should be registered as a lobbyist with the CT Office of State Ethics.

For more information on registration requirements in CT, check the Office of State Ethics’ Fact Sheet .


Q – Why should I lobby?

A – Because if you don’t, who will? The saying goes, “If you’re not at the table, you’re on the table.” By not making your voice heard, you are allowing others who likely do not share your beliefs to control the discussion. For example, if no one is there to speak in support of funding for mental health services, then it quickly becomes the easiest target for policymakers looking to close a budget gap because there will be no resistance from anyone for that cut.

See the Top 10 Reasons to Lobby for Your Cause


Q – I’m a busy Executive Director and don’t have dedicated policy staff. How can I possibly have an impact on policy with my limited time?

A – We understand how thinly stretched nonprofits are these days. Advocacy does not have to be a full-time job. Every little bit counts! Once you have a clear grasp on an issue or piece of legislation, calling your legislator to voice support or opposition doesn’t take a great deal of time.

Also, as an Executive Director, you know you can’t go it alone. You couldn’t provide direct services without your staff and you shouldn’t advocate without them either. Having your staff send a quick email to their legislators on an issue of critical importance to your services will help increase the impact of your organization’s advocacy efforts, which in turn will allow you to better serve your clients and consumers.

Most importantly, CT Nonprofits can help! Our staff is an extension of your team and that includes our dedicated policy staff. We keep members informed on issues being considered by the Connecticut General Assembly that affect all nonprofits, as well as bills that impact services for specific populations including:
• children & youth services
• services for individuals with developmental disabilities
• mental health and addiction treatment
• community justice services for the re-entry population
• arts & culture

Our team is here to make the advocacy process as simple as possible for your team. We help members meet with key policymakers, write testimony, send targeted mailings and much more. So please, don’t hesitate to contact us.


Q – I’ve still got questions. Where can I go for more information?

A – For more questions on federal regulations, the Center for Lobbying in the Public Interest has a list of FAQs with some more helpful information.

For more questions on Connecticut regulations, please contact the Office of State Ethics.