MEMORANDUM
Hogan Lovells US LLP
One Tabor Center, Suite 1500
1200 Seventeenth Street
Denver, CO 80202
T +1 303 899 7300
F +1 303 899 7333
www.hoganlovells.com
TO
CRED
FROM
Hogan Lovells US LLP
DATE
November 20, 2013
SUBJECT
501(c)(3) Support of CRED’s Public Policy Initiatives
Question
To what extent can a 501(c)(3) educational/charitable nonprofit organization publicly
support or endorse the initiatives of a 501(c)(6) trade association?
Brief Answer
In general, a 501(c)(3) organization can publicly support or endorse the educational,
public policy initiatives of a 501(c)(6), so long as the activities do not constitute political
intervention, electioneering, or otherwise fall outside the scope of the (c)(3)’s exempt
purpose.
Legal Principles
By definition, a 501(c)(3) is organized and operated primarily for religious, charitable,
scientific or educational purposes. A 501(c)(6) is an organization of persons having
some common business interests (the “members” of the association who pay dues),
whose purpose in forming the association is to promote such common business interests.
A fundamental distinction between these two categories of tax-exempt organizations is
that the primary purpose of a (c)(3) is to serve the public, whereas a (c)(6) serves its
members. Despite this distinction, these organizations frequently engage in the same
types of activities (such as conferences and publications), which often provide dual
benefit to a (c)(6)’s members and the general public. This latter category of activities
presents opportunities for these organizations to work together. So long as the (c)(6)’s
activities do not constitute political intervention, partisan electioneering, or otherwise fall
outside the scope of the (c)(3)’s exempt purpose, the (c)(3) can endorse those activities in
public statements.
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There are two categories of activities that require scrutiny by the (c)(3): political
intervention and lobbying.
1. Political Intervention
A 501(c)(3) is strictly prohibited from engaging in political intervention, or partisan,
electoral activities. Thus, to the extent a 501(c)(6) is supporting or opposing candidates
for elected office, a 501(c)(3) may not endorse or otherwise participate in those activities.
A 501(c)(3) may, however, take positions on public policy issues, even if those issues
divide candidates in an election. The (c)(3) must be careful to focus on the issue without
giving the impression, directly or indirectly, that one candidate is preferred over another
based on his or her position on the issue.
2. Lobbying
With respect to lobbying, a 501(c)(3) may engage in an insubstantial – although not
unlimited – amount of lobbying. Thus, to the extent a 501(c)(6) is engaging in direct or
grassroots lobbying on an issue related to a (c)(3)’s exempt purpose, the (c)(3) may
express its mutual support for the issue. Such an expression of support for the (c)(6)’s
position on the issue without engaging in lobbying itself or expending funds towards
those efforts will not count against the (c)(3)’s permissible amount of lobbying.
Examples
With these principles in mind, a 501(c)(3) may express support for public policy issues
and positions shared in common with a (c)(6). For example, a public health or
environmental nonprofit could add their names to a list of organizations that support
responsible energy development, or proposed agency rules designed to protect air quality.
In addition, a (c)(3) may post or issue statements such as:

Coloradans for Jobs Nonprofit stands behind the oil and natural gas industry
because it supported over 110,000 well-paying Colorado jobs. Visit CRED.org
and get the facts about fracking.

Parents for Fracking Nonprofit supports responsible energy development in
Colorado because it generates approximately $1.6 billion in tax revenue for things
that are important – like Colorado’s schools, parks and roads. Visit CRED.org and
get the facts about fracking.

Ballot Measure X will cost Colorado thousands of jobs and billions in much-need
tax revenue. Get the facts at CRED.org.
When and if the (c)(6) engages in political intervention or other activities not consistent
with the (c)(3)’s exempt purpose, the (c)(3) should consult with its counsel to determine
whether the endorsement suggests tacit support for those activities.
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