Identifying Lobbying and Political Activity for Nonprofits: Excluded and Allowed Activities

Substantial participation in lobbying activities can jeopardize a nonprofit organization's tax-exempt status. The IRS states that, "In general, no organization may qualify for section 501(c)(3) status if a substantial part of its activities is attempting to influence legislation (commonly known as lobbying). A 501(c)(3) organization may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status."  And additionally, "all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office."

At the same time, specific organizations, social welfare organizations under Section 501(c)(4), for example, can participate in some political activity. By contrast, private foundations are prohibited from participating in lobbying activities. Somewhat surprisingly, the IRS announced this year that houses of worship can endorse specific political candidates.

The rules that differentiate between advocacy, lobbying, and political activities, as well as the levels at which each tax-exempt entity is allowed to participate, are complex. Nonprofit administrators and advisers need to understand the guidelines for lobbying and political activities for tax-exempt organizations. 

Listen as our tax-exempt expert explains the lobbying and advocacy rules for nonprofit organizations.