Nonprofit Advocacy is LEGAL

First Amendment, U.S. Constitution:

“Congress shall make no law respecting … the right of the people peaceably to assemble and to petition the government for a redress of grievances” – linking both the freedom of association and the right to petition government in the same provision.

The U.S. Congress says it’s legal for nonprofits to lobby:

• In 1934:
  Congress enacted a statute allowing nonprofits “organized and operated exclusively for religious, charitable … or educational purposes” to be exempt from federal income taxes, provided that, among other things, “no substantial part of the activities of” the nonprofit organization is for “carrying on propaganda, or otherwise attempting, to influence legislation….” 26 U.S.C. § 501(c)(3).
  
  By setting a limit (no “substantial part”) rather than imposing an outright ban, Congress recognized the rights of nonprofits to do some lobbying. 
• In 1976:
  Congress enacted statutes clarifying beyond all doubt that § 501(c)(3) charitable nonprofits may lobby, establishing generous limits, providing clear guidelines, and creating other benefits:
  
  → 26 U.S.C. § 501(h), which allows nonprofits the option to elect to use the bright-line “expenditure” test rather than the vague “no substantial part of activities” test; and
  
  → 26 U.S.C. § 4911, which – just for those nonprofits electing to use the expenditure test – sets generous dollar limits on the amounts those nonprofits can spend on lobbying (a sliding scale that starts with 20% of the nonprofit’s first $500,000 in expenditures), provides clear definitions, and exempts certain activities from consideration as “lobbying.”¹

The good news is that nonprofits now “can check a single box on a tax form and choose to be regulated by“ a policy that “allows for virtually unlimited lobbying.” The bad news is that “most nonprofits have no idea that there is such a thing as the [expenditure test], and only 2.5 percent of all 501(c)(3)s filing a tax return choose this path.” 

The IRS says it’s legal for nonprofits to lobby:

• Form 5768: 
  “Section 501(h) … permits certain eligible 501(c)(3) organizations to elect to make limited expenditures to influence legislation.”
• June 26, 2000, IRS Letter to the Center for Lobbying in the Public Interest (which had submitted questions to get these answers on IRS letterhead so nonprofits could relax and know that the IRS agrees that nonprofits may legally lobby)   

“Your questions and our answers are spelled out below.

Q.  Is lobbying by section 501(c)(3) organizations permissible under federal tax laws?

A. Yes... 

Q.  Does making the [501(h)] election expose the organization to an increased risk of an audit?

A.  No.  The Internal Revenue Manual specifically informs our examination personnel that making the election will not be a basis for initiating an examination.”

1. Jeffrey M. Berry, with David F. Arons, A Voice for Nonprofits (The Brookings Institution 2003), pages 54, 57.