Complying with Restrictions on Your Ability to Lobby
Caplin & Drysdale
Complying with Restrictions on Your Ability to Lobby

The same rules that provide for federal income tax exemption also impose restrictions on a charity's ability to lobby. Failure to comply with these rules can result in penalty tax or loss of exemption. Alternatively, with the right advice and creative thinking, you can use the rules to support an effective lobbying strategy and advance your cause.

Caplin & Drysdale attorneys are intimately familiar with the unique rules and exceptions that affect a charity's ability to lobby. Indeed, our attorneys have played an active role in shaping various aspects of the rules. We have counseled and trained a broad range of charities in lobbying activities. We also work with exempt organizations to ensure that they are in compliance with the Lobbying Disclosure Act. From our location in Washington, D.C., we have the additional advantage of being in frequent contact with IRS and Treasury Department officials. From this exposure, we are able to learn of new developments in the interpretations of the law and more importantly, how the IRS will treat lobbying activities when implemented.

Representative Engagements

  1. A large national advocacy group organized as a 501(c)(4) organization but with a 501(c)(3) affiliate needs guidance on how to manage its day-to-day lobbying activities so that both organizations remain in compliance with the law. Questions regarding allocation of expenditures, staff time, and the permissibility of certain activities for the respective organizations arise on a regular basis.

    Result: Caplin & Drysdale establishes a relationship so that staff can call regularly and get quick responses that enable them to go forward without having to wait for formal written guidance. Caplin & Drysdale develops guidebooks for the board and staff to use as reference sources and provides training sessions for staff who need a more in-depth understanding of the rules.
  2. In 1995, the House of Representatives passed the "Istook Amendment," that would have prohibited charities receiving federal grant funds from using their private funds to lobby or engage in other advocacy activities.

    Result: Caplin & Drysdale helped Independent Sector (IS) establish that the self-defense exception under the federal tax rules for charities allowed IS members freedom to work against the Istook Amendment. We then articulated the case against the Istook Amendment and helped develop and implement the coalition's lobbying strategy. Following defeat of the Istook Amendment, we helped design, and secure funding for, a follow-up initiative to ensure the defeat of future challenges to the advocacy rights of charities.

  3. A private foundation supports work in a number of controversial areas where grantees frequently raise electoral or legislative issues that need to be resolved sometimes within a day.

    Result: Caplin & Drysdale assigns an attorney to staff a "hotline" to answer the Foundation's questions as quickly as possible. Issues include whether it is permissible to conduct advocacy activities in advance of a ballot initiative on a controversial topic, whether a paid mass media ad scheduled to run the next day is grassroots lobbying, and whether staff can be involved in political campaigns on their own time.

Our Services

To help our clients understand and master the lobbying rules that apply to tax exempt charities, we provide the following services:

    • Training sessions for staff and/or board members
    • Development of guidebooks and handbooks
    • Regular telephone consultations
    • Formal written advice
    • Assistance in preparation of annual information returns with respect to lobbying

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