Advocating as a Member of a 501(c)(3)
Members of Prosperity Indiana have a right and a duty to be engaged in public debate on important policy issues. This is especially true of the nonprofit members.
All nonprofits have a vital role to play in democracy. For 501(c)(3) nonprofit organizations (public charities), this role can include advocacy and lobbying. Building relationships with elected officials is permitted and strongly encouraged to support Prosperity Indiana's efforts on behalf of members and the community economic development industry.
What is advocacy?
Advocacy involves identifying, embracing and promoting a cause. There is no limit to the amount of advocacy you can do. Advocacy is not lobbying! It is only when this advocacy deals with specific legislation that limits come into play. Lobbying is defined by federal tax law as any attempt to influence specific legislation. Legislation means a bill that has been introduced, or a draft bill that may be introduced in any legislative body such as a city council, state legislature or Congress.
How much lobbying can a public charity do? What is the 501(h) election?
Public charities may engage in a limited amount of legislative lobbying under either the “substantial part” test or by electing to operate such activities under the Section 501(h) of the tax code. The IRS evaluates the “substantial part” test on the basis of the facts and circumstances, such as the time (by both paid and volunteer workers) and the expenditures devoted to lobbying by the organization.
Under 501(h) expenditure test, public charities may spend:
Direct lobbying is defined as an attempt to influence legislation by stating a position on specific legislation to legislators or other government employees who participate in the formulation of legislation, or urging your members to do so.
Grassroots lobbying is defined as an attempt to influence legislation by stating a position on specific legislation to the general public and asking the general public to contact legislators or other government employees who participate in the formulation of legislation.
What does not count as lobbying? There are five activity categories that are excluded from the term "influencing legislation." They are:
These links are PDF summaries prepared by Prosperity Indiana's advocacy team to guide your efforts.
Search for federal and state legislators and bills on our action page.