Rules for Nonprofits

Lobbying is attempting to influence legislation, either through direct contact with legislators and government employees who participate in the formulation of legislation, or by urging others to do the same. The exact definition of lobbying is dependent upon how the nonprofit registers with the IRS.

There are both state and federal rules regulating advocacy and lobbying activities.

If your organization operates at a state or local level—exclusively, or in addition to federal work–it may be subject to these rules. Bolder Advocacy provides state law resources on campaign finance and ballot measures, lobbying disclosure and voter registration. It is important that 501(c) organizations (including 501(c)(3), 501(c)(4), 501(c)(5), and 501(c)(6), among others) can be as actively advocate while complying with both federal and state laws governing their lobbying and election activities.

In Pennsylvania, organizations are required to report lobbying activity if the organization exceeds $2,500 in lobbying expenditures per quarter or if an employee exceeds 20 hours of lobbying on behalf of the employer per quarter. Pennsylvania does not distinguish the difference between direct and grassroots lobbying.

Alliance for Justice has developed this guide on lobbying disclosure for Pennsylvania organizations. Important items to note:

Lobbying is an effort to influence ―legislative action administrative action in Pennsylvania. Lobbying includes:
- direct communications (direct lobbying) or ―indirect communications (grassroots lobbying);
- office expenses; and
- providing any gift, hospitality, transportation or lodging to a State official or employee for the purpose of advancing the interest of the lobbyist or principal. (Source: 65 Pa. C.S. § 13A03.)Lobbying – Lobbying is an effort to influence ―legislative action‖ or administrative action‖ in Pennsylvania. Lobbying includes:
Only activity that involves efforts to influence Pennsylvania legislative or administrative action give rise to a duty to register and report as a lobbyist or principal.

The Internal Revenue Code (IRC) provides two options under which nonprofits may lobby. The first is the “no substantial part” rule. Section 501(c)3 of the Internal Revenue Code allows for lobbying, provided the lobbying is not a substantial part of a nonprofit’s overall activities. The limitations established under this rule are ambiguous, creating a level of uncertainty for those relying on it. The second option, the 501(h) election, provides specific definitions of lobbying and clear spending ceilings for how much a nonprofit can spend on lobbying. By default, nonprofits fall under the no substantial part rule unless they voluntarily take the 501(h) election by filing IRS form 5768.

Additional Resources