Public Charities Can Lobby!

On this episode, we’re going back-to-basics to discuss the rules that apply when nonprofits engage in lobbying activities. With legislative sessions ramping-up in several states, it’s important to take time to understand the lobbying limits and definitions that apply to your organization’s advocacy. But, it’s even more important to recognize that public charities can lobby and advocate for or against legislation at the local, state, and federal levels. So, rally your staff and volunteers, and speak up, because your nonprofit can play an important role in impacting public policy. 

 

Attorneys for this Episode 

• Brittany Leonard  

• Tim Mooney 

• Natalie Roetzel Ossenfort 

 

The Importance of Lobbying 

• Big business often pays for expensive lobbyists to represent their interests in front of legislators, but normal community members cannot foot that bill. Nonprofits who lobby can step up and fill the void.  

• 501(c)(3) public charities can use their experience, funding, and passion for their mission to represent communities by advocating for or against changes to law.  

• For example, Movement Advancement Project tracked the 2025 spring legislative session and found that every state except for Vermont had an anti-LGBTQ bill proposed but 88% of them did not become law. This was due in part to great nonprofits lobbying against these bills.

 

How Much Lobbying Can Public Charities Do? 

• Internal Revenue Code provides two ways for public charities to measure their lobbying limits 

• Default, Insubstantial Part Test: Public charities can lobby so long as lobbying is an “insubstantial part” of their overall activities (around 3-5% of total activities). 

• Activities based test, not dollar-based 

• Broad definitions of lobbying 

• 501(h) Expenditure Test: Most public charities can opt in to using this test to measure their limits (as opposed to the insubstantial part test), and when they do, it provides a mathematical formula to calculate lobbying limits. 

• Dollar-based test (unpaid, volunteer activities don’t count against limits) 

• Narrower definitions of what qualifies as lobbying 

• Many organizations can put up to 20% of their budget toward lobbying using the 501(h) election, but the exact amount depends on the organization’s annual exempt purpose expenditures. 

 

What is Lobbying? 

• The definition of lobbying depends on which of the two Internal Revenue Code tests your public charity uses to measure its limits 

• Insubstantial Part Test: anything that advocates for or against legislation at any level of government is lobbying. For example: 

• Advocating against a proposed ordinance in your city that would update the housing code in a way that would negatively impact the communities you serve 

• Supporting a ballot measure that would codify reproductive rights in your state’s constitution 

• Talking to members of Congress to oppose the "Nonprofit Killer" bill 

• Engaging in advocacy in an attempt to influence what gets included in your state’s budget 

• 501(h) Expenditure Test 

• Direct Lobbying: Communication to a legislator (or their staff) that expresses a view on specific legislation. For example: 

• Calling your Senator to encourage them to vote for an upcoming bill that will give every family a free puppy 

• Emailing your State Rep’s Chief of Staff to recommend an increase in funding for animal shelter improvements in the state’s budget 

• Grassroots Lobbying: Communicating to the general public your organization’s view on specific legislation with a call to action (only four types). For example: 

• Placing an ad in the newspaper that says “Call your Senator and express your support for legislation that would give every family a free puppy.” 

• Putting a web form on your public charity’s website that encourages supporters to input their name and zip code to have a letter in support of a state-level bill automatically sent to their legislators 

• What about a Threads post encouraging the public to vote in support of a local bond initiative or other ballot measure? 

• Direct Lobbying. Why? The public is a legislator in the ballot measure process, because the public decides whether the measure passes (and becomes law) or fails (does not become law).  

• Keep in mind that in addition to counting ballot measure advocacy against your lobbying limits, your ballot measure advocacy may also trigger state or local-level campaign finance reporting (since it happens in the election context).  

• Examples of activities that do not count as lobbying include education about legislation without expressing a view, advocating for or against executive agency action, for or against executive orders, public education with no call to action under 501h, litigation, etc. 

• Lobbying definitions can also vary according to state law. 

• State laws generally don’t limit how much lobbying a public charity can do, but they do require lobbyist registration and reporting when certain thresholds are met. 

• State laws often define lobbying differently from the Internal Revenue Code and can include both legislative and executive branch advocacy activities. 

 

Resources 

• Being a Player: A Guide to the IRS Lobbying Regulations for Advocacy Charities 

• Public Charities Can Lobby: Factsheet 

• State Law Resources: Nonprofit Lobbying Practical Guidance 

• 501(h) Lobbying Limit Calculator