Lobbying Activities for Nonprofit Organizations
The tax code permits trade, labor, agricultural, and advocacy organizations to engage in unlimited lobbying activities. However, lobbying cannot be a substantial part of a charitable organization’s activities.
Since Congress passed legislation last December to expand the PPP to include many 501(c)(6) organizations, ASAE has urged the SBA to clarify qualifying conditions for associations and other 501(c)(6) groups seeking a PPP loan. The law stipulates that qualifying 501(c)(6) organizations must have not more than 300 employees.
501c3 private foundations cannot engage in lobbying but can provide funding for nonprofits used for lobbying. A charitable organization that fails to abide by the limits on lobbying can lose its tax-exempt status. 501(c)(3) nonprofits can advocate and lobby for their causes within reason. The IRS does not see 501c6 organizations as charitable organizations. Instead, these organizations are formed to support their members’ business activities.
Limitations on 501(c)(6) Organizations
What can a 501c6 not do?
In gaining 501(c)(6) status, an organization must show how it will improve its members’ business. Real-world examples of such organizations include chambers of commerce and sports leagues. But like other noncharitable nonprofits, a 501(c)(6) cannot directly offer services to the public.
Lobbying by 501(c)(3) Entities
How much lobbying can a 501(c)(3) do?
Federal tax law has always permitted lobbying by 501(c)(3) organizations, defined as activities to influence legislation and to support or oppose ballot initiatives, as long as lobbying is not a “substantial part” of an organization’s total activities.