LOBBYING
and the use of previously created material

As most know, there are limits on how much lobbying a nonprofit can do without jeopardizing its tax exemption. The rules on nonprofits and political activity are vast and can only be briefly touched upon here. See note at the end of this article about getting more information on the general subject.

This article addresses a question raised by the following circumstances. Time and money are spent on research and policy work that was originally done without any clear intention of using the work at a future time for lobbying. Later on, however, the work is in fact used for lobbying. Does the original work count as lobbying? This is an important question for many groups doing policy work. Frequently a staff member, the Director of Policy & Advocacy, for example, will analyze various general policy options or more particularly bills filed with legislatures (for example, the Governor's or Mayor's budget bill) and prepare reports for their organization's executive director or board that are used to make decisions about what initiatives and policies to promote. Sometimes it may be decided to engage in a lobbying effort to get some bill passed or the budget item changed and the earlier work, or some part of it, will be used in the later lobbying effort. Does the earlier work count as lobbying? For clarity, we will refer to this early work as "early policy work."

To begin, it depends on whether the organization for which the early policy work was done has made the 501(h) election (referred to hereafter as the h election). The h election answers the question of whether an organization has engaged in too much lobbying by determining what percent and amounts of all the money it has spent was spent on lobbying.

If the organization has not made the h election, the question will be answered by a test which says that as long as no substantial part of an organization's activities consisted of lobbying (the no-substantial-part test), its tax exemption will not be jeopardized. There are few clear answers to any questions under the no-substantial-part test and none that are known that address the question posed here. There is a good chance, however, that early policy work that is later used for lobbying would be counted as lobbying for those organizations that have not made the h election.

However, if the h election has been made, there are clear rules and under many circumstances money spent on the early policy work would not count as lobbying expenditures. Below we provide a highlight of these rather intricate and detailed rules. These rules are sometimes referred to as the "subsequent use" rules. Keep in mind that for groups that have made the h election, the question depends on how much is spent and on what. Thus, the question comes down to whether a particular expenditure is a lobbying expenditure.

To understand what follows, keep in mind the distinction between early policy work and the material that is later tacked on to the early policy work to make it useful as a lobbying tool. This later material will frequently consist of a call to action (generally asking the recipient of the communication to contact legislators to urge them to take action for or against some legislation). Here are some of the subsequent use rules:

-- If the expenses incurred in connection with the early policy work were incurred more than six months before it was used in connection with a later lobbying communication, even if the later communication has a call to action tacked onto it, the earlier expenses will not count as lobbying expenditures.

-- If the early policy work does not refer to specific legislation and does not reflect a view on such legislation, then expenses incurred in preparing the early policy work will not count as lobbying expenditures even if the early policy work is later used in connection with a lobbying communication and the later communication has a call to action tacked onto it. Thus, all research data, preliminary research, analysis of policy issues without reference to legislation, etc., are protected.

-- Even if the early policy work refers to specific legislation and reflects a view on such legislation, expenses incurred in preparing the early policy work will not count as lobbying expenditures if the early policy work is used only for direct lobbying (e.g., for meetings with legislators.)

There are other rules, but to explain them would occupy too much space. Suffice it to say that there are circumstances in which the expenses incurred in connection with preparing early policy work that refers to specific legislation and reflects a view on it and is later coupled with a call to action will still not be considered lobbying expenditures.

Memos are available to NPCC members explaining the subsequent use rules, the h election, and the lobbying and electioneering rules in general. Go to NPCC's website at www.npccny.org, and click on the Information Databank section, and then view the Advocacy and Lobbying section. Also, visit Charity Lobbying in the Public Interest's website at www.clpi.org.

Copyright 2001 Nonprofit Coordinating Committee of New York, Inc.

Revised May 2003