Starting and Managing a Nonprofit Organization: A Legal Guide

By Bruce R. Hopkins | Go to book overview

CHAPTER FOURTEEN
Lobbying Constraints—And Taxes

Congress has long been concerned with attempts to influence legislation—lobbying— by nonprofit organizations. This concern is particularly evident in the federal tax law pertaining to charitable organizations and trade, business, and professional associations. The Treasury Department and the IRS have promulgated extremely stringent regulations and rules in an attempt to restrict lobbying by nonprofit organizations— most notably, charitable groups. The federal courts are upholding the government in its efforts to enforce these constraints.

Regulation in this area is currently active. Congress, in 1987, introduced rules in an effort to further limit lobbying by charitable organizations and, to some extent, other nonprofit organizations. The Treasury Department and the IRS issued sweeping regulations in an effort to curb lobbying by public charities and related organizations. (The tax law generally prohibits lobbying by private foundations.)

In addition to the tax law, other federal law imposes meaningful constraints on lobbying by nonprofit organizations. For example, the U.S. Postal Service will not allow the use of the nonprofit mailing rates by nonprofit groups whose primary purpose is lobbying. Under authority of the Federal Regulation of Lobbying Act, lobbying organizations or individual lobbyists are required to register with the clerks of the House of Representatives and the Senate. Still other laws may have an impact in this area; among them are the law requiring registration and reporting by lobbyists for foreign governments and the laws restricting the use of federal funds for lobbying (such as various rules of the Office of Management and Budget and the Byrd Amendment). Also, most states have laws regulating lobbying by nonprofit and other organizations.

The principal laws regulating lobbying by nonprofit organizations, however, are the federal tax laws. They are explored in this chapter.


LOBBYING RESTRICTIONS ON CHARITABLE
ORGANIZATIONS

Organizations that are tax-exempt because they are charitable in nature (this classification includes educational, religious, scientific, and similar entities) must, to preserve the exemption, adhere to a variety of requirements. One of these is that “no substantial part of the activities” of the organization may constitute “carrying on propaganda, or otherwise attempting, to influence legislation.” Because of the considerable and continuing uncertainty as to the meaning and scope of this rule, many nonprofit organizations have experienced much anguish in attempting to fathom this substantial part test.

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