Authored by Erin Skibbens and Fair Shake Team
Lobbying, the practice of trying to influence government decisions, can be an incredibly impactful way to support the passage of some proposed legislation, or to educate the public about how to advocate for the government changes they wish to see. Lobbying is regulated by federal, state, and local laws. The rationale behind the regulations for lobbying is to inform the general public about who exactly is working to influence the government, and how they are going about doing it.
For nonprofits, it is vital to ensure compliance with federal, state, AND local lobbying restrictions. Failure to ensure compliance creates risk of various legal, financial, and administrative penalties. To assist nonprofit leaders in gaining a basic understanding of lobbying regulations, we have created this blog.
We hope the blog can be a useful general education tool for guiding conversations in your organization. However, this blog is not an exhaustive list of all lobbying regulations and does not constitute legal advice. If you have concerns that your organization may be in violation of lobbying regulations, you should seek the advice of legal counsel to discuss your specific situation.
IRS LOBBYING LIMITATIONS For Nonprofits
In general, nonprofits cannot maintain tax-exempt status under Section 501(c)(3) if a substantial portion of its activities qualify as attempting to influence legislation, which is also referred to as lobbying.
IRS lobbying limitations regulate lobbying at all levels of government, including federal, state, and local.
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According to the IRS, an organization will be regarded as attempting to influence legislation if it contacts, or urges the public to contact, members or employees of a legislative body for the purpose of proposing, supporting, or opposing legislation.
Legislative body includes: Congress, a State Legislature, or a local governing body
Legislative action includes: acts, bills, or resolutions.
Thus, any time your organization is engaging legislative bodies about legislation, you should take time to both ensure it aligns with your organization’s mission, and that lobbying does not become a substantial portion of the organization’s activities.
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It is not defined in the law! Without a proper definition, disagreements have arisen over what constitutes a substantial amount. Thus, the IRS allows organization to opt-in to a definition which clearly defines the limits. Below is a summary contrasting the two options for measuring lobbying activities:
Default Substantial Activities Test
unclear definition for what constitutes vague
best practice for lobbying not to exceed 3-5% of activities
Included limits on paid and unpaid persons
Opt-in Expenditure Test
Clear definitions and limits
Allow any organization with less than a $500k budget to spend up to 20% of its budget on lobbying
Includes limits only on paid persons
Must opt-in by submitting form to IRS
For non-profits that intend to engage in lobbying activities, it is likely best to opt-in to the Expenditure Test by submitting a Form 5768 so that you can operate under clear guidelines and more flexibility.
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Generally, the IRS states that non-profits may engage in limited lobbying activities if it (1) is aligned with the mission of the organization, (2) is non-partisan, and (3) the lobbying activities are an insubstantial amount of the organization’s activities. If a non-profit engages in any lobbying, all time and resources spent (including preparation) should be internally tracked. These detailed logs may be required for disclosures or audits required by the government or funders.
Additionally, the IRS requires that all nonprofits abide by the state laws that they operate in. So be sure to check that your organization is complying with any state lobbying regulations you may have! Failure to do so could also result in revocation of the organization’s federal tax-exempt status.
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FEDERAL LOBBYING DISCLOSURE Regulations
The federal Lobbying Disclosure Act does not limit an organization’s ability to lobby, but it does require organizations who lobby the federal government to register and file quarterly reports. Failure to do so can result in a civil fine or criminal penalty.
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Direct communication with federal legislative or executive offices regarding legislation, agency rule-making, executive orders, nominations of persons subjected to confirmation of Senate, any policy, or any program.
Organizations must register when:
an employee makes more than one ‘lobbying contact’,
that employee spends or reasonably anticipates to spend at least 20% of their time during a 3-month period on lobbying activities, AND
the employer spends or reasonably expects to spend more than $14,000 in a calendar quarter on lobbying, including employee compensation.
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The following communications do not constitute lobbying:
a public official acting in the public official’s official capacity;
a representative of a media organization if the purpose of the communication is gathering and disseminating news and information to the public;
a speech, article, publication or other material that is distributed and made available to the public, or through radio, television, cable television, or other medium of mass communication;
a request for a meeting, a request for the status of an action, or any other similar administrative request, if the request does not include an attempt to influence a covered executive branch official or a covered legislative branch official;
participation in an advisory committee;
testimony given before a committee, subcommittee, or task force of the Congress, or submitted for inclusion in the public record of a hearing conducted by such committee, subcommittee, or task force;
information provided in writing in response to a request from a federal office which solicited specific information;
required by subpoena, civil investigative demand, or otherwise compelled by statute, regulation, or other action of the Congress or an agency, including any communication compelled by a Federal contract, grant, loan, permit, or license;
made in response to a notice in the Federal Register, Commerce Business Daily, or other similar publication soliciting communications from the public and directed to the agency official specifically designated in the notice to receive such communications;
made to an official in an agency with regard to—
judicial proceedings,
required by statute/regulation,
a written comment filed in the course of a public proceeding or any other communication that is made on the record in a public proceeding;
a petition for agency action made in writing and required to be a matter of public record pursuant to established agency procedures;
made on behalf of an individual with regard to that individual’s personal matters
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PENNSYLVANIA Disclosure REGULATIONS
In Pennsylvania, the PA Lobbying Disclosure Act provides guidance on how nonprofits engaging in lobbying can comply with the law. This law requires organizations and individuals who lobby the state to register as a lobbyist and file quarterly expense reports. Failure to do so can result in civil or criminal penalty.
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It’s unclear! The State of Pennsylvania’s defines lobbying as “An effort to influence legislative action or administrative action in this Commonwealth” which includes direct or indirect communication that may have a “foreseeable effect.”
Examples of Legislative Actions: bills, resolutions, commission votes, or similar action.
Examples of Administrative Actions: any agency rule, policy-making, or similar action.
This definition is significantly more expansive than the IRS limitations for nonprofits because it:
Regulates not only lobbying of legislators, but also administrative bodies,
Regulates more activities than the IRS, and
Includes vague definitions (what is a foreseeable effect?)
Therefore, it is often a gray area whether certain activities constitute lobbying in the Commonwealth.
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The exceptions that are most likely to be pertinent to environmental advocates include:
An organization which expends less than $4,000 for any lobbying efforts in a quarterly reporting period (view reporting periods here). (Please note that while the act states the threshold is $2500, the Department of State provided notice on their website that they increased the threshold, utilizing their authority under the act).
An individual who limits lobbying to only providing testimony to committees or participating in administrative proceedings
An individual who does not get paid or receive any reimbursements for lobbying (including travel expenses)
An elected official acting in their official capacity
An individual who does not lobby for their employer more than 20 hours in a quarterly reporting period
If your nonprofit takes efforts to influence state level governmental bodies, please be sure that your organization clearly falls within the above exceptions. If you are unsure, we recommend the organization should proceed with caution and seek the advice of legal counsel or the State Ethics Commission.
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As you can see from the long discussion below—it is unclear! For nonprofits in Pennsylvania, the key factors that determines whether an activity counts as lobbying is whether the organization is attempting to influence some legislative or administrative action, and how likely it is that the activity in question will have a foreseeable effect of influencing the action. However, this is not always easily definable. Federal and state lobbying laws, as well as Pennsylvania State Ethics Commission opinions on lobbying-related inquiries, can help shed some light for nonprofits questioning whether a certain activity falls under the lobbying laws.
The state of Pennsylvania regulates direct and indirect communication. Direct communication is defined as an effort, whether written, oral, or by another medium, made by a lobbyist or principal, directed to a state official or employee, the purpose or foreseeable effect of which is to influence legislative or administrative action. Indirect communication, defined as an effort, whether written, oral, or by another medium, to encourage others including the general public to take action, the purpose or foreseeable effect of which is to directly influence legislative or administrative action. Regardless of whether the activity in question is a direct or indirect communication, it will be considered lobbying as long as it has a foreseeable effect of influencing some government action.
But how can an organization know that a certain activity will have a foreseeable effect of influencing legislative or administrative action? This can be a particularly gray area, especially considering that education-aimed activities performed by a nonprofit might not be classified as lobbying, although arguably, education about a particular law or policy might result in public support for it. Take the following hypothetical as an example: in Pennsylvania, there is a nonprofit that advocates for safer gun regulations. Let’s say that the nonprofit presents a completely scientific briefing to legislators on gun violence generally. Does this amount to direct communication that qualifies as lobbying? Does the answer change if the presentation was given right before a gun rights bill was about to be voted on by the legislators attending the presentation? At what point does an educational presentation cross the line into lobbying, based on the fact thatit might have a foreseeable effect on influencing legislative or administrative action?
If we consider the IRS lobbying guidelines in conjunction with Pennsylvania’s lobbying laws, it seems that one significant factor in the analysis is whether the educational material in question pertains to a topic generally, or to specific pieces of legislation, either in support of or against that legislation. This could be one way to differentiate between what kinds of educational activities might have a foreseeable effect on influencing legislative or administrative action; education on a topic generally might be okay, but education about a proposed bill or law very likely has a foreseeable effect on influencing some government action, and would almost certainly be considered lobbying.
But what about educational material that is not about a specific piece of legislation? Outside of the applicable lobbying laws, there is very little case law in Pennsylvania that considers this “foreseeable effect” standard when it comes to classifying what activities might be viewed as lobbying. There are, however, some Pennsylvania State Ethics Commission opinions that can provide some guidance.
In a confidential 2009 opinion, the State Ethics Commission considered whether, pursuant to Pennsylvania’s lobbying disclosure law, a nonprofit would be engaged in lobbying where it endeavored to “facilitate an educational program to educate policymakers about a topic generally,” at one of the facilities where the activity, which is the subject of the educational material, takes places. (The opinion, in an effort to retain anonymity, does not delve into the specifics of the organizations involved or the topic of the organization’s educational program. It’s helpful for the reader to imagine that the topic at hand is some means of energy production, and that the facility where the educational presentation takes place is one that produces the type of energy in question, i.e., the topic is wind power, and the facility is a wind farm.)
The organization here seeking the Commission’s opinion stated that the purpose of the program would be to educate participants on the nature, the uses of, and the conduct related to the topic. The invitees for the event would include legislators, legislative staff, and staff from state agencies and departments. Importantly, the nonprofit would only be handling the logistics of the program, which included publicizing the event, inviting participants, arranging food and transit, and coordinating with the facility. The facility is the entity actually responsible for preparing the educational presentation, conducting tours on site, and conducing the presentation, which would cover the topic generally, and provide information about applicable regulations and the benefits of the activity. The nonprofit stated that it would not advocate for the participants to take any action, and would only discuss background information about the industry and subject matter; the nonprofit would also not endorse or oppose any legislative or administrative action.
In its analysis of the provided facts, the Commission founds that regardless of the claimed purpose of the program, it would have the foreseeable effect of influencing legislative or administrative action involving the topic. The Commission was not swayed by the nonprofit’s argument that the program shouldn’t be considered lobbying, since there would be no effort to influence a specific, definite legislative or administrative action. In making its finding, the Commission relied on the definition of “indirect communication” provided by the PA lobbying law, relaying that: “There is nothing in the statutory language to suggest that lobbying may only occur as or is constrained to a specific, definite item; to the contrary, the term ‘indirect communication’ specifically includes educational campaigns on public issues as one example of lobbying.” Thus, the Commission rejected the argument that for an educational program to be considered lobbying, it must include an effort to influence some specific, definite item.
It is likely that several factors were influential in the Commission’s decision. It’s notable that the invitees of the event were exclusively legislators and other government staff. The foreseeable effect of any activity to influence legislative action is undeniably increased when the receiver of the information is a legislator. Additionally, because the presentation was being conducted by the facility, it’s easy to imagine that the information would be more biased in favor of the activity being conducted at the site, than if it were presented by a neutral party for purely educational purposes. While the facts of this example are not universal, it does highlight the key point that educational material need not be explicitly tied to a piece of legislation, and can indeed be generally broad, to still be considered lobbying activity.
While unsatisfying, it seems the best answer to the question of whether some educational activity will have a foreseeable effect on legislative or administrative action, and thus, whether the activity qualifies as lobbying in Pennsylvania, is that “it depends.” Factors including the specify of the educational material, and whether or not it pertains to proposed or existing legislation, will likely have a large impact on whether the activity is considered lobbying. As a general rule, educational material that is tied to a specific proposed legislation will likely be considered lobbying. But even educational material that is more general in nature can be found to constitute lobbying, if it has the foreseeable effect of influencing government action. Overall, the analysis will depend on the specific circumstances of the case.
Unfortunately, the vagueness and unpredictability of this standard could have a negative impact on nonprofit advocacy work. Legal counsel for such organizations would likely, and justifiably, err on the side of caution when advising a nonprofit on what activities to report as lobbying, encouraging reporting whenever the activity falls in the gray area. However, this ambiguity could have a chilling effect on the willingness of such groups to engage in educational or similar, more informal activities, which can often account for a large segment of a nonprofit’s advocacy work. The worst outcome would be if the vagueness of the standard prevented organizations from participating in what would otherwise be considered perfectly legitimate, non-lobbying activities, for the sake of striving to remain in compliance with the law. A clearer, more easily definable standard for determining what kinds of activities have a foreseeable effect on influencing legislative or administrative action would only benefit Pennsylvania’s nonprofits engaged in important advocacy work.
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WEST VIRGINIA LOBBYING Disclosure REGULATIONS
In West Virginia, the Governmental Ethics Act provides guidance on how nonprofits engaging in lobbying can comply with the law. This law requires organizations and individuals who lobby the state to register as a lobbyist and file periodic expense reports.
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West Virginia defines lobbying as “a person who is compensated . . . to communicate directly or through an agent with any elective state official, or legislative official for the purpose of promoting, advocating, opposing, or otherwise attempting to influence” legislative or agency action.
Legislative bodies include: state legislature, Governor’s Office, any state commission, any state board, and in some case’s state agencies.
Legislative actions include: acts, bills, resolutions, executive vetos, executive orders, and any agency quasi-legislative actions.
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The exceptions that are most likely to be pertinent to environmental advocates include:
Persons who limit their lobbying activities to attending receptions, dinners, parties or other group functions and make no expenditures in connection with such activities.
Persons who lobby without compensation or other consideration for acting as lobbyists and whose total expenditures in connection with such lobbying do not exceed $150 during any calendar year.
Persons who limit their lobbying activities to appearing before public sessions of committees of the Legislature or public hearings of state agencies.
Persons who lobby without compensation for a nonprofit organization and who restrict their lobbying activities to no more than 20 days, or parts thereof, during any regular session of the Legislature and make no expenditures.
Any person or organization which spends less than $1,000 in one month or less than or less than $5,000 in a three-month period presenting a grass roots lobbying program need not register.
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OHIO LOBBYING Disclosure REGULATIONS
In Ohio, several codes govern lobbying and respective reporting requirements. The relevant codes are as follows:
R.C. 101.70-79; Adm.Code 101-9 (Legislative Lobbying)
R.C. 121.60-69; Adm.Code 101-11 (Executive Agency Lobbying)
R.C. 101.90-99 (Retirement System Lobbying)
When persons exceed specific lobbying limitations, they will be required to file periodic disclosures.
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As stated in Ohio Lobbying Handbook, the relevant codes are primarily concerned with direct communication with:
State legislators or their staff in the attempt to promote, advocate, oppose, or otherwise influence the passage, modification or defeat of any matter pending before the General Assembly, controlling board, or attempts to veto legislation. This is considered Legislative Lobbying.
Any elected executive official, heads of any agency or department, or any agency or department staff in the attempt to influence financial arrangements (includes contracts, grants, leases, etc.) or agency decision (includes rules, bulletins, directives, and policy statements). This is considered Executive Agency Lobbying.
If someone engages in:
Legislative Lobbying for at least 5% of the time they are compensated, or
Executive Agency Lobbying for at least 25% of the time they are compensated,
then they must file a disclosure statement, called an Activity & Expenditure Report (AER). This disclosure is submitted through the Ohio Lobbying Activity Center (OLAC). You may also have to report expenses for gifts, events, or similar expenditures that impact lobbying activities.
For non-profits and their staff to maintain compliance, it is key to maintain a record of when persons engage in direct communication with state employees or officials. These records can help the organization track when persons are reaching the reporting thresholds and disclosures are required.
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As stated in the Ohio Lobbying Handbook, lobbying does not include any of the following:
Grassroots efforts. Grassroots lobbying are efforts by those who are not compensated, that have a direct interest in Legislation, Executive Agency Decisions . . . and who petition public officials and employees for the redress of their grievances. [R.C. 101.70(E), 121.60(I)(1), and 101.90(I)(1)].
Contacts made for the sole purpose of gathering information contained in a public record. [R.C. 121.60(I)(2) and 101.90(I)(2)].
Appearances before public hearings of the general assembly, the controlling board, or an Executive Agency to give testimony. [R.C. 101.76(A)(1), 121.60(I)(3), 101.90(I)(3)].
News, editorial, and advertising statements published in bona fide newspapers, journals, magazines, or broadcasts and the gathering and furnishing of information for such news, editorial, and advertising statements. [R.C. 101.76(A)(2), 101.76(A)(3), 121.66(A)(2), 121.66(A)(3), 101.96(A)(2), 101.96(A)(3)].
Publications primarily designed for and distributed to members of bona fide associations or charitable or fraternal nonprofit corporations. [R.C. 101.76(A)(4), 121.66(A)(4), 101.96(A)(4)].
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LOCAL GOVERNMENT REGULATIONS
Please note that while we have provided an overview of federal and state regulations, you may also be subjected to local regulations. Be sure to check your county and city ordinances. We linked a few below for your convenience:
Want help navigating this?
Feel free to reach out to our legal team! We provide our services on a sliding scale based on the annual budgets of our clients.
