Since 2016 is a presidential election year, many public charities may be wondering to what extent they can support candidates who back their charity’s missions. Public charities must be wary of political campaign activities and activities intended to influence legislation, as IRC Section 501(c)(3) organizations are expressly prohibited from participating in a political campaign and will lose their tax exemption for doing so. However, IRC Section 501(c)(3) public charities can engage in lobbying activities, provided the lobbying activity is not a substantial portion of its activities.
Lobbying involves efforts to influence legislation at the federal, state or local level. There are two types of lobbying that are allowable if they are not excessive: direct lobbying and grassroots lobbying. Direct lobbying is when an organization advocates the adoption or rejection of legislation through a member or employee of a legislative body. Grassroots lobbying is any effort to influence legislation through an attempt to affect the opinions of the general public or any part of the general public.
Lobbying expenditures are required to be reported annually on an organization’s Schedule C of its Form 990, Return of Organization Exempt from Income Tax. Given the fact that neither Congress nor the IRS has defined what “substantial” lobbying activities are, organizations conducting lobbying activities may want to consider filing Form 5768, Election/Revocation of Election by an Eligible Section 501(c)(3) Organization to Make Expenditures to Influence Legislation, with the IRS. This is the easiest and most effective way an exempt organization can monitor and protect itself from overstepping the IRS limitations on lobbying activities.
Keep in mind that IRC Section 501(c)(3) organizations must stay neutral and that deliberately supporting a particular candidate is impermissible. Information can be posted on an organization’s website or printed material, but it must be neutral and contain information on all candidates.