Glossary

501(h) election: The IRS allows 501c(3) organizations to choose the 501(h) “expenditure test” election. All 501c(3)s are legally allowed to lobby, within limits. The law states that they may lobby as long as it equates to “no substantial part of (their) activities.” This language from 1934 is not expressly defined, which gives some uncertainty for nonprofits who lobby and seek to identify the legal parameters to that activity. This is why the IRS allows 501c(3)s to elect the 501(H) expenditure test, which gives an explicit fiscal expenditure limit for a nonprofit based on their budget size. This provides substantial clarity and assurance about lobby activities.

Administrative Advocacy

Administrative advocacy involves influencing government agencies and the policies they implement rather than directly lobbying legislators and other elected officials to impact legislation. Administrative advocacy focuses on shaping rules, regulations, executive orders, and the agency operations. This type of advocacy can occur at federal, state, and local levels. Since the IRS does not consider administrative advocacy lobbying, organizations of all types—including even private foundations—can fund or engage directly in unlimited administrative advocacy.

Advocacy

From Bolder Advocacy: “While all lobbying is advocacy, not all advocacy is lobbying. Advocacy is any action that speaks in favor of, recommends, argues for a cause, supports or defends, or pleads on behalf of others. It includes public education, regulatory work, litigation, and work before administrative bodies, lobbying, voter registration, voter education, and more.”

Lobbying

The term “lobbying” has very specific definitions according to the IRS: it is an effort to influence legislation. The IRS considers the following as “legislation”: action by Congress, any state legislature, any local council, or similar governing body, with respect to acts, bills, resolutions, or similar items (such as legislative confirmation of appointive office), or by the public in referendum, ballot initiative, constitutional amendment, or similar procedure.  It does not include actions by executive, judicial, or administrative bodies. The IRS considers the following the act of lobbying: “contact[ing], or urg[ing] the public to contact, members or employees of a legislative body for the purpose of proposing, supporting, or opposing legislation, or if the organization advocates the adoption or rejection of legislation.”

Notably, the IRS explains that many activities that impact public policy are not lobbying: “Organizations may, however, involve themselves in issues of public policy without the activity being considered as lobbying.  For example, organizations may conduct educational meetings, prepare and distribute educational materials, or otherwise consider public policy issues in an educational manner without jeopardizing their tax-exempt status.” Another activity that is not considered lobbying is administrative advocacy, which is to influence law implementation or rulemaking.  A 501c3 organization may lobby—they just need to keep track of their activities and ensure they are within the limits as outlined by the IRS.

To learn more about terms used in nonprofit organizations’ public policy engagement, check out Bolder Advocacy’s “advocacy terminology a through z”