Public Policy Advocacy
Bibliography & Resources: A Selection
(Version 7.0
2011)
with a thank-you for early initial work (& none of the later errors) to John
Terry Miller, terry@terrymiller.biz
Pomeranz, jpomeranz@harmoncurran.com,
Harmon, Curran, Spielberg & Eisenberg, LLP
I. SELECTED FEDERAL TAX LAW RESOURCES
A. Federal Tax Statutes
Selections from Title 26 (Internal Revenue Code) of the U.S. Code
(26 U.S.C. § 501, 527, 4911, 4912, 4945, 6033.)
IRC 501(c) has the primary codes for (c)(3), (4), (5) and (6) organizations. IRC 501(c)(3)
contains the prohibition on electioneering, and the optional language for lobbying as no
substantial part unless conducted under IRC 501(h), which is the primary code section
for public charity lobbying.
IRC 527 covers most so-called “PACs” (other than state-level ballot measure organizations
sometimes required to register as PACs for state purposes, particularly in the Western
states.)
IRC 4911 defines IRC 501(h) by covering excise taxes on excess lobbying by public charities,
also explains “controlled grant” rules for transfers from (c)(3) public charity to
(c)(4,5,6).
IRC 4912 penalties on managers who knowingly exceed 501(h) by so much as to wreck the
(c)(3) exemption.
IRC 4945 taxable expenditures by private foundations including lobbying, also expenditure
responsibility grants, multi-state voter registration efforts.
IRC 6033(e) requires reporting and notice by (c)(non-3) organizations where the organization
cannot demonstrate that substantially all of its dues are non-deductible to its members.
This requirement is tied to the IRC 162(e)(3) disallowance of business deductions under
IRC 162 for portion of dues paid to tax-exempt organizations (c 4,5,6) used for lobbying
(or political activity). IRC 6033(3) provides option that exempt organization pay proxy
tax (on lobbying portion) on behalf of its members if it chooses not to notify them of
non-deductible portion of dues. Rev. Proc. 98-19 contains some exemptions for certain
types of (c)(4) and (5) organizations.
2. Federal Tax Regulations
Selections from Title 26 of the Code of Federal Regulations
(26 C.F.R §§ 1.501(h)-1 to -3, 1.504-1, 56.4911-1 to –10.)
Reg 1.527-2(b)(1) regarding more than insubstantial non-exempt expenditures leading to the
demise of a separate segregated fund and leading to tax liability.
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3. Selected IRS Revenue Rulings and Letters
Rev. Rul. 2007-41 provides guidance regarding political campaign activities in 21 fact
situations, including three applying the law to an organization’s use of its Internet Web
site.
Rev. Proc. 2007-27 provides a safe harbor allowing a 527 organization to avoid penalties for
failure to report certain information about contributors.
Fact Sheet 2006-17 and related reporting on the IRS’ Political Activity Compliance Intiative in
the 2004 election year, especially focused on charity violations of the electioneering
prohibition. Provides some clarity on meaning of “broad range of issues” for (c)(3)
voter education but mostly repeats what was known already. Also: News Release IR2006-36: IRS Releases New Guidance and Results of Political Intervention
Examinations; Executive Summary and Final Report - 2004 Political Activity
Compliance Initiative Summary of Results. Various other educational materials
including a powerpoint and script on the IRS website.
Rev. Rul. 2003-49 summarizes the federal tax reporting and disclosure requirements for
section 527 political organizations.
Rev. Proc. 98-19, describing compliance procedures for Notice of Disallowance of [Business]
Deduction to members of IRC 501(c)(4), (5) and (6) organizations, or payment of IRC
6033e proxy tax on political and lobbying expenditures in lieu of notice of
disallowance.
Rev. Rul. 2004-6, describing criteria under which 501(c) organizations messages will be
evaluated for candidate electioneering. Includes multiple factors under which the
Service will evaluate the potential electioneering of a given message or issue campaign.
Rev. Rul. 81-95, holding that (c)(4) social welfare organizations may engage in less than
primary participation in political campaigns; Marker V. Schultz, 485 F.2d 1003
(D.C. Cir. 1973) and G.C.M. 36286 (May 22, 1975) for (c)(5) labor organizations;
G.C.M. 34233 (Dec 3, 1969) for (c)(6) business leagues, and PLR 83-42-100 (July 20,
1983) for (c)(8) fraternal benefit societies.
Field Service Advice 200037040 in which the Service suggests that an IRC 501(c)(4)
organization that allows its political (candidate) intervention to become primary will be
treated as an IRC 527 political entity. (This seemed to create a problem where, if the
political intervention becomes primary but the entity conducts substantial lobbying
activity, it could become both subject to the high disclosure standards of an IRC 527
organization, and also have much of its income taxed at the high corporate rate because
its 527-non-exempt activities render it a taxable organization. However, I am now told
that a 527 that isn’t political enough has come back more to a primary purpose test
rather than a non-substantial test – i.e. how much of the activity is NOT electioneering
and still qualify as a 527.)
LTR 2001-03-084 described in CPE Election Year Issues article as holding that “So long as the
organizations are kept separate (with appropriate record keeping and fair market
reimbursement for facilities and services), the activities of the IRC 501(c)(4)
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organization or of the PAC will not jeopardize the IRC 501(c)(3) organization’s exempt
status.” Ruling describes tight controls and safeguards.
Rev. Rul. 2000-49, Q&A explanation of new 527 filing requirements, reprinted in its entirety
in CPE 2002 Election Year Issues article cited below.
LTR 1999-25-051 describing how an organization can select ballot measures and other work
that might otherwise be merely lobbying, and by documenting the nexus to candidate
races, have that work treated as 527 exempt function.
LTRs 98-08-037 & 97-25-036 both flip (c)(3) electioneering prohibition around and identify
that activities too political for a (c)(3) are thereby exempt function under 527 while
stopping short of express advocacy (targeted grassroots lobbying, voter guides, voting
records, graded & targeted questionnaires & forums, pledges – reverse “facts &
circumstances” from Rev Ruls 86-95, 80-282, 78-248, 76-456, 66-256 discussed below)
TAM 93-20-002 (Jan 14, 1993) analyzes several different types of expenditures made by a
political organization to determine if they are made in furtherance of the organization’s
exempt [political] function.
Rev. Rul. 86-95 Voter Education, nonpartisan candidate forums. Discusses facts &
circumstances in appropriate forum.
Rev. Rul. 80-282 Political activity; newsletter publication. Certain publications of
congressional incumbents’ voting records on selected issues in a nonpartisan newsletter
do not constitute participation or intervention in any political campaign within the
meaning of section 501(c)(3) of the Code.
Rev. Rul. 78-248 Educational; political activity. Certain “voter education” activities conducted
in a nonpartisan manner by an organization recognized as exempt under section
501(c)(3) of the Code will not constitute prohibited political activity disqualifying the
organization from exemption.
Rev. Rul. 76-456 Prohibits 501(c)(3)s from using candidate pledges because of implicit
endorsement involved.
Rev. Rul. 66-256 A nonprofit organization formed to conduct public forums at which lectures
and debates on social, political, and international matters are presented qualifies for
exemption from Federal income tax under section 501(c) (3) of the Internal Revenue
Code of 1954, even though some of its programs include controversial speakers or
subjects.
4. IRS Guidance
Recently, especially in election years, IRS has been releasing various educational materials and
doing targeted audits under its “PACI” – Political Activity Compliance Initiative. These
memoranda and tools work to clarify and remind charities of the rules. The growth of “issue
ads” targeted to strengthen or weaken candidates for office have come to blur the lines between
lobbying and political activity (candidates) in a way which is dangerous from added
complexity. The Memorandum which can be found on the IRS website for the most recent
PACI (2008), dated July 28, 2008 provided some comfort to linked (c)(3)/(c)(non-3) tandems
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about how IRS would view website links between related organizations (more lenient)
compared to UNrelated organizations (more strictly).
The IRS website (www.irs.gov/charities) is very useful, and if you simply type “lobbying” into
the search box it comes up with a range of useful articles and tools.
5. IRS CPE Manuals: “Exempt Organizations Continuing Professional Education
Technical Instruction Program.”
Although the IRS reminds reader that these documents are not to be relied upon for legal
guidance, the CPE texts are nonetheless the single best compilation of IRS thinking on these
issues and a valuable entry point into the key primary law resources. Particularly in light of the
very limited guidance in the area of lobbying and election-related activity by affiliated taxexempt organizations, every practitioner should acquire the complete text of these CPE
chapters and have them available for regular reference. They serve as excellent treatise sources
which discuss the history and framework of a given issue, acknowledge difficulty the IRS itself
has in interpretation and enforcement, and are the guides that IRS auditors are provided to help
them think about issues that arise. These articles are enormously helpful, and the 2002 article
in particular is current, and contains a helpful overview and synthesis of new 527 compliance
rules. Unfortunately, the IRS has announced it no longer has the resources to publish these
texts so they will slowly grow more out of date, but they have replaced them with
“Guidesheets.” As of this writing, there are no Guidesheets on the IRS website that concern
policy advocacy.
CPE articles are available on the web at the IRS’ page for tax exempt organizations
(www.irs.gov/charities/index.html). Over time, their exact location has tended to move but is
currently linked on the main tax exempt page under “EO Tax Law Training”
CPE 2003, Political Campaign and Lobbying Activities of IRC501(c)(4), (c)(5), and (c)(6)
Organizations, John Francis Reilly and Barbara A. Braig Allen, (64 pages). The best
overview of the whole 6033e/162e lobbying and non-deductibility issue.
CPE 2002, Election Year Issues, Judith E. Kindell and John Francis Reilly (153 pages). An
excellent, accessible discussion, in question and answer format, of issues concerning
political activities by tax-exempt organizations and the taxation of political
organizations, as well as interrelationships between them. This is the first update of this
text since 1993.
CPE 1999, Affiliations Among Political, Lobbying, and Educational Organizations, Ward L.
Thomas and Judith E. Kindell, (11 pages). Good overview of (c3)/(c4,5,6) and
(c3)/(c,4,5,6)/PAC arrangements.
CPE 1997, Lobbying Issues, Judith E. Kindell and John Francis Reilly, (106 pages). An
overview of lobbying issues, comparing and contrasting the complex interplay of
regulation of lobbying by four types of reporting organizations: (c)(3) public charities,
(c)(3) private foundations, (c)(non3) organizations, and businesses.
CPE 1997, Education, Propaganda and the Methodology Test, Ward L. Thomas and Robert
Fontenrose, (21 pages). A discussion of the methodology test for determining when
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advocacy activity continues to be educational and when it crosses the line into
impermissible propaganda.
6. Key IRS Forms
(Forms preceded with * have been affected by recent changes to IRC 527)
Form 1023, tax exemption application for 501(c)(3) charities
Form 5768, form with which public charities make the 501(h) lobbying election to be judged
under the expenditure test
Form 1024, tax exemption application for 501(c)(4) social welfare organizations, 501(c)(5)
labor organizations (and certain agricultural/horticultural organizations), 501(c)(6)
business leagues, trade associations and professional associations, and others.
* Form 990, annual information return for all 501(c) organizations other than public charities,
and particularly Schedule C – Political Campaign & Lobbying Activity.
* Form 990-PF, annual information return for private foundations.
* Form 990-T, for payment of unrelated business income tax, and also for any 6033e proxy tax
by 501(c)(4,5,6) organizations.
* Form 4720, Return of Certain Excise Taxes on Charities and Other Persons Under Chapters
41 and 42 of the Internal Revenue Code, used to pay excise tax on taxable expenditures
of private foundations. (To be avoided at all costs).
* Form 8871, Notice of Section 527 Status [Formation], must be filed with 24 hours of
formation, both electronically and in writing, or serious tax consequences result.
All 527 tax entities must file except for 1) those that reasonably expect annual gross
receipts to always be less than $25,000, 2) political committees already required to
report to the FEC or equivalent detailed reporting to state and local regulators, and 3)
501(c)(non-3)1 organizations with political organization taxable income under 527(f)(1).
* Form 8872, Political Organization Report of Contributions and Expenditures. All 527
organizations that are not exempted from filing Form 8871 and are not a state or local
committee of a political party or political committee of a state or local candidate. Note
that 8872 is almost always due more often than annually.
* Form 1120-POL, annual tax return for 527 organizations, due March 15 for calendar fiscal
years, even for filers who also have 990 due May 15. Form due from all 527
organizations and 501(c)’s with 527(f)(1) income1; only exemption is for political
organizations with zero taxable income [usually interest] AND gross receipts under
$25,000 (this is a recent change – formerly there was a $100 exemption and no filing
requirement if no taxable income, no matter the size of gross receipts).
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This will ordinarily not include 501(c)(3) organizations, because they are prohibited from electioneering. However,
see also CPE 2002 Election Year issues summary discussion of status of IRS’ position that activity in support or opposition
to an appointment (i.e. the infamous Bork fight) is permissible lobbying activity for a public charity but also taxable
activity under 527(f).
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II. FEDERAL ELECTION LAW RESOURCES
A. Federal Election Statutes and Regulations
Federal Election Campaign Act (FECA), 2 U.S.C. §§ 431, et seq. Statute governing federal
elections, including recent amendments made by the Bipartisan Campaign Reform Act
of 2002 (BCRA, better known as “McCain-Feingold”).
Federal Election Regulations, Title 11 of the Code of Federal Regulations. See especially parts
109 (coordinated and independent expenditures) and 114 (corporate and labor
organization activity).
B. Key FEC Forms
Form 1: Statement of organization for political committees and other entitites.
Form 3x: Report of receipts and disbursements for political committees.
Form 5: Report of independent expenditures made and contributions received.
Form 7: Report of communications costs by corporations and membership organizations.
Form 9: 24-hour report for electioneering communications
C. Other FEC Resources
Campaign Guide for Corporations and Labor Organizations (available from the FEC or online
at www.fec.gov/pdf/colagui.pdf).
Campaign Guide for Corporations and Labor Organizations (available from the FEC or online
at www.fec.gov/pdf/colagui.pdf).
BCRA Resource Material on FEC Website at
http://www.fec.gov/pages/bcra/major_resources_bcra.shtml
III. ESSENTIAL CASES
Citizens United v. Federal Elections Commission, 130 S.Ct. 876 (2010). Supreme Court
controversial ruling protecting “free speech” rights of corporations in political
campaigns, essentially wiping out the Bipartisan Campaign Reform Act (a/k/a McCain
Feingold). From Harmon Curran Spielberg & Eisenberg’s Nonprofit Navigator: “The
decision is controversial both for its holding and the unconventional way in which the
issue came before the Court, and it will no doubt lead to more spending in federal and
eventually state elections. But it will also allow incorporated nonprofit advocacy
organizations to engage in more potent electoral speech by freeing them from the need
to carefully (and sometimes awkwardly) craft their campaign ads to avoid certain words
and phrasing that could subject them to the now-defunct corporate spending ban.
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Importantly, the decision leaves intact existing federal disclaimer and disclosure rules
that apply to express advocacy and certain broadcast communications featuring
candidates.”
Emily’s List vs. Federal Elections Commission, DC 08-5422 (2009). DC Circuit Court of
Appeals decision (again from Nonprofit Navigator: “the court also held that a
regulation subjecting funds raised in response to communications indicating some or all
of the money would be used to influence federal elections was unconstitutional. This
regulation had been used by the FEC as a tool for squashing or punishing campaign
speech by unincorporated organizations, including 527 organizations such as the nowinfamous Swift Boat Veterans for Truth, by forcing such organizations to register as
federal PACs even though they did not make contributions to candidates or expressly
advocate their election. Following on the heels of EMILY's List, the DC Circuit is
expected to rule this year in Speechnow.org v. FEC. Speechnow.org is challenging
whether the FEC may force an organization that does nothing but make independent
expenditures to register as a federal PAC, subjecting the money it raises to the
contribution limits imposed by FECA.”
Buckley v. Valeo, 424 U.S. 1 (1976). Supreme Court stated that “exacting scrutiny” is
necessary when compelled disclosure of campaign-related payments is at issue, but
nevertheless upheld, as substantially related to important governmental interests, the
reporting and disclosure provisions of the Federal Election Campaign Act of 1971.
Regan v. Taxation with Representation of Washington, 461 U.S. 540 (1983). Supreme Court
upholds limitation on substantial lobbying by (c)(3)s. Concurring opinion that (c)(3)
may establish related (c)(4) to conduct substantial lobbying activities.
FEC v. Massachusetts Citizens For Life, 479 U.S. 238, (1986). Supreme Court exempting
certain qualified nonprofit organizations from FEC reporting based on free speech
requirement; narrow qualifications including zero corporation or labor contributions, no
coordination with candidate.
American Campaign Academy v. Commissioner, 92 T.C. 1053 (1989) denies (c)(3) status to
school training campaign professionals primarily associated with Republican campaigns
based on excess private interest being served (rather than based on electioneering).
FEC v. Christian Coalition, 52 F. Supp. 2d 45; (1999 U.S. Dist.). Except for express advocacy
of election of a candidate or contributions of things of value to a candidate, a
corporation’s federal political campaign activities are protected by the First
Amendment.
Branch Ministries v. Rossotti, 211 F.3d 137 (D.C. Cir. 2000) upholds revocation of (c)(3)
status of a church for intervention in 1992 Presidential election.
Seasongood v. Commissioner, 227 F.2d 907 (6th Cir. 1955) holds that 5% of total activities of
an organization is not substantial for lobbying purposes. CPE 2002 Election Year
Issues text (Page 411) suggests this benchmark may also apply to whether non-exempt
expenditures by a 527 fund are substantial.
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Association of the Bar of the City of New York v. Commissioner, 858 F.2d 876 (2d Cir. 1988);
holds that objective nonpartisan public interest criteria do not protect communications
that show a bias towards certain candidates; activity is campaign intervention.
McConnell v. FEC: 540 U.S. 93 (2003). Supreme Court case upholding almost all of the
Bipartisan Campaign Reform Act of 2002 (BCRA, better known as “McCainFeingold”).
Ongoing FEC litigation, both resolved and pending: Shays-Meehan v. FEC, Davis v. FEC, Wisconsin
Right to Life v. FEC, Christian Civic League of Maine, Inc. v. FEC. All cases pushing on FEC
to make rules not suppressing the right of corporations to express their views on lobbying. All
summarized on FEC page. Summary of status from John Pomeranz of Harmon, Curran,
Spielberg & Eisenberg LLP: “Bottom line on 501(c)(3)s and BCRA's electioneering
communications provisions: There is no 501(c)(3) exception because the Shays I court struck it
down and the FEC didn't do anything to put it back. Nor is there any grassroots lobbying
exception, although various litigation to force such an exception continues. (The Supreme
Court in last term's Wisconsin Right to Life decision upheld the right of groups to challenge the
constitutionality of BCRA's electioneering communications provisions as applied to them, but
sent the case back down to determine whether the provision was, in fact, unconstitutional as
applied (and, hopefully, what the standard for such challenges should be).”
IV. MATERIALS & WEBSITE OF THE ALLIANCE FOR JUSTICE
Nonprofit and Foundation Advocacy Blog. The Alliance for Justice (AFJ) advocacy blog is a
very “of the moment” listing of key happenings which could open or close the world of
policy making to participation by charities in particular. AFJ believes strongly that
better policies are made when the charitable sector is encouraged to, and actually does,
participate. Its work is all aimed to this objective.
Booklets & Publications. AFJ booklets are excellent “hands-on” guides to much of this
material, and very useful for client training. Not all publication dates are current, some
have been revised; for better information go directly to. Alliance for Justice,
www.afj.org, 202-822-6070. Some of my favorites:
E-Advocacy for Nonprofits: The Law of Lobbying and Election-Related Activity on the Net,
Elizabeth Kingsley, Gail Harmon, John Pomeranz, and Kay Guinane, (2000, 69 pages).
More nonprofits are discovering the power of the Internet to promote their public policy
agendas. This is the only guide available that comprehensively addresses the laws
governing Internet advocacy, from voter education web sites to e-mail action alerts.
Being A Player: A Guide to the IRS Lobbying Regulations for Advocacy Charities, Gail
Harmon, Jessica Ladd, Eleanor Evans, (1995, 57 pages). Plain language roadmap of the
lobbying regulations from the Internal Revenue Service as they affect nonprofit
organizations.
The Connection: Strategies for Creating and Operating 501(c)(3)s, 501(c)(4) and Political
Organizations, B. Holly Schadler, (2006, 95 pages). Managing more than one type of
exempt organization can expand activists’ influence on the policy process. The
Connection explains the advantages and issues to be considered in establishing each of
the different types of organizations.
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Worry-Free Lobbying for Nonprofits: How to Use the 501(h) Election To Maximize
Effectiveness, (1999, 12 pages). This booklet describes how nonprofits, and the
foundations that support them, can take advantage of the clear and generous provisions
in federal law that encourage their lobbying activities.
The Rules of the Game: An Election Year Legal Guide for Nonprofit Organizations, Gregory
Colvin & Lowell Finley, (1996, 52 pages). Reviews federal tax and election laws which
govern nonprofit organizations in an election year, and explains the right (and wrong)
ways to organize specific voter education activities.
Seize the Initiative, Gregory Colvin & Lowell Finley, (1996, 56 pages). Increasingly, citizens
groups are using ballot initiatives and referenda to advance their issues. This guide
answers question frequently asked by nonprofit organizations about working on ballot
measures.
Investing in Change: A Funder’s Guide to Supporting Advocacy, (2004, 58 pages). In addition
to describing the rules of how private and public foundations can support and engage in
advocacy, Investing in Change discusses strategies for building the advocacy capacity
of grantees, reporting and evaluating advocacy, and what should—and should not—be
included in grant agreements.
Myth v. Fact, Foundation Support of Advocacy, Thomas Asher, (1995, 26 pages). The
handbook dispels the myths associated with funding advocacy organizations and offers
a full range of advocacy activities that foundations can support. The book is organized
to follow the grantmaking process from proposal applications to grant agreement letters.
Foundations and Ballot Measures: A Legal Guide, Thomas Asher, (1998, 18 pages). This
guide assists foundations navigate the federal rules regarding both support of public
charities that engage in ballot measure campaigns, and the role foundations themselves
may play in supporting or opposing ballot measures.
V. OTHER MATERIALS
Fiscal Sponsorship: 6 Ways to do it Right, Second Edition, Gregory Colvin, San Francisco
Study Center Press, (2005, 82 pages). ISBN 0-888956-07-0. Useful in thinking
through how to structure (c3) “pre-approved grant relationship” sponsorship of (c4,5,6)
organizations.
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