In general, according to the IRS, "no organization may qualify for section 501(c)(3) status if a substantial part of its activities is attempting to influence legislation (commonly known as lobbying). A 501(c)(3) organization may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status."

Whether a 501(c)(3) nonprofit's activities constitute a "substantial part" of their overall activities is ultimately up to the IRS to decide on a case-by-case basis. The IRS makes its determination based upon the amount of time spent (by both volunteers and staff), as well as the amount of money expended for such activities. Organizations that fail to meet the substantial part test and/or the expenditure test are at risk of losing their tax-exempt status and may be subject to excise taxes.

Keep in mind that 501(c)(3) nonprofits are strictly prohibited by the IRS from participating in campaigns for (or against) political candidates to public office. The IRS page on political activities explains this rule more thoroughly.

You will need to seek counsel from a legal consultant in the event that your organization has specific legal questions pertaining to these federal rules. For more information on locating legal help for your nonprofit, please see our Knowledge Base article, Where can I find technical assistance or a consultant for my nonprofit?

Topic(s) Trust & Transparency Management Advocacy

Have a question about this topic? Ask us!

Foundation Center's Ask Us service will answer your questions within one business day.

Ask Us

Foundation Directory Online: Everything you need in one grantseeking tool. Subscribe now.