Lobbying Series Part 4 – Lobbying Exceptions


Leslie Barnes, Tim Mooney, Shyaam Subramanian


Our attorneys for this episode:

Leslie Barnes Tim Mooney Shyaam Subramanian


On this episode, our fourth in our on-going lobbying series, we’ll focus on lobbying exceptions for all 501(c)(3)s, even private foundations.   

The Basics  
  • Reminder to check out the last two episodes on direct and grassroots lobbying for the definitions under 501(h). 
  • We’ve spent a lot of time talking about the importance of lobbying as a matter of good policy. You know who else agrees? Congress and the IRS! 
  • The law and regulations set up several lobbying exceptions – specific activity that is so important for policymaking that even though it would count as lobbying under the definitions, Congress and the IRS specifically exclude it from the tally. 
  • Even better – remember when we mentioned private foundations are heavily taxed if they engage in lobbying? These exceptions are available to them as well! 
  • Are you an organization that uses the insubstantial part test to measure lobbying? You may use some of these exceptions, but there are differences. Give us a call!
The Exceptions 

Nonpartisan Analysis, Study, or Research (“The 50 Page Report Exception”) 

    • An exception to grassroots and direct lobbying 
    • Probably the most important exception – many charities do a ton of advocacy work, and may report no lobbying because they use this. 
    • Full and fair discussion 
    • Distributed widely 
    • May contain a view on legislation 
    • May also contain an indirect call to action (and only an indirect one!) 
    • Typically, this is a written report, but the regulations don’t mandate that. Could be a podcast or a YouTube video, so long as the two prongs are met. 
    • The synergy effect: non-lobbying report aids parallel lobbying efforts. 
    • Watch out for subsequent use! 
    • Don’t use this exception, then slap a cover letter on the report and include a direct call to action. This negates the whole exception for the report and then it all counts as grassroots lobbying. 
    • That’s a rebuttable presumption, so there are some ways to back out of it, but it’s very narrow.  

Examinations of Broad Social, Economic, or Similar Problems (“The Less Helpful Than It Seems Exception”) 

    • You discuss broad social, economic, or similar problems but do not express a view on specific legislation. 
    • Example: You about the problems uninsured people have accessing healthcare, without discussing legislation to fund a national healthcare program that provides health insurance for all Americans. Could think of it as, “we’re talking about the problems, not the solutions.” 
    • You might think – wait, if we’re not talking about legislation, how is this an exception? And we agree. But I think it is useful in the sense that you know you can comfortably talk about problems if you don’t talk about specific legislative solutions. You could even talk about administrative solutions! For example, President Biden should block the Keystone XL pipeline through an Executive Order. Not legislative! Or “Corporations should prioritize climate and energy efficiency goals, not just profit.” Not even about policy but could be impactful. 

Technical Advice or Assistance (“The Permission Slip”) 

    • Providing testimony to legislative committees will often count as lobbying. But Congress wanted to ensure they had access to experts on subject matter relating to legislation. So, they included the Technical Advice or Technical Assistance exception as one of the activities that will not as lobbying for public charities or private foundations. 
    • So when you hear us say Nonprofits are trusted messengers” this is part of what we mean. Congress wants to hear from you!!

The elements or requirements of this exception are:

    • Written request from a governmental body (e.g., legislative committee or subcommittee); 
    • Response is available to every member of the body; 
    • Response is limited to details of request; and 
    • Response can include opinions or recommendations if requested. 

What it’s not: 

    • Responding to a request from one or two legislators or a caucus of House Democratic lawmakers for input on a bill draft. 
    • Responding to a general public notice for an upcoming city council meeting for which members of the public are invited to testify.  

One example of how it could be used: 

The Chair of the House Health and Public Policy Committee sends an email to your organization asking the Executive Director to testify next week on the specific portions of a bill dealing with parental notification of minors prior to medical procedures. Your staff could spend time compiling data needed for the ED’s testimony as well as preparing a large visual display and preparing a section by section analysis of the parts of the bills the Chair’s inquiry pertained to and copies for each committee member. The staff and ED’s times spent preparing to testify as well as the time and resources spent to testify would NOT count as a lobbying expenditure.

Self-Defense (“The Not as Available as it May Seem at First Exception”) 

    • An exception to direct lobbying 
    • communications with legislators regarding possible actions of that body which could affect the organization’s existencepowersdutiestax-exempt status, or the deductibility of contributions to the organization. 
    • So long as the subject matter of the communication is limited to these specific areas, an organization may communicate with legislative bodies, their staff or even their individual members, and may also make expenditures to initiate legislation dealing with these specific topics. 
    • What it’s not: hey, we’re neighborhood group opposing development of the farm next door into a cement plant because it will effectively destroy our neighborhood. Important advocacy, but not impacting the existence or powers of the organization. 
    • What it’s not part 2: A bill pending in Congress would raise the bulk mailing postage rates for nonprofits. Important to lobby perhaps, but just impacts your costs not your power. 
    • What it could be: any attempts by Congress to limit (for example) civil rights organizations or environmental groups from qualifying as charities. Or limiting tax deductibility of donations to groups that lobby (sidebar: you can’t earmark donations for lobbying and get a deduction). 
    • This exception can be used prospectively as well as defensively. So a bill to temporarily increase deductibility of donations through the end of COVID would qualify. 

Jointly Funded Project Exception 

    • If private foundations communicate with legislators about legislation impacting programs they jointly fund with government, it’s not lobbying under IRS rules. To use this exception, private foundations must not discuss specific legislative issues unrelated to the jointly funded program. 
    • Example: Regional Census Fund. The Seattle Foundation contributed money to this effort and administered the fund. The City of Seattle and King County each invested resources in the effortThe fund supported community-based organizations to conduct Census outreach in hard-to-count communities. They reached out to residents in historically underrepresented communities, including communities of color, immigrants and refugees, native people, LGBTQ residents and others. Note: Seattle Foundation is a public charity.  
    • This exception also applies to PROSPECTIVE jointly funded projects! So, if the private foundation is considering jointly funding a project with the govt. they could engage in conversations w lawmakers under this exceptions. 
    • Also, if a private foundation makes a grant to an organization on the condition that the organization receive matching support from a governmental body, that fact does not make the grant a lobbying expenditure. 
How are these reported?  

They aren’t – track these as you would any other non-lobbying activity. 

Junk drawer of final thoughts 

Reminder: private foundations can use these exceptions. 

These aren’t lobbying, so often you can use restricted funds on these.  

Prep work for these activities also does not count as lobbying. 

We’re not sure if the advocacy we want to do is an exception or not

Get in touch!