In the spirit of building a social enterprise that addresses all possible areas for social change interventions (individual, interpersonal, organizational, community, policy), I'm going to speak to the policy level in today's post - lobbying and advocacy. Note that this post is primarily for nonprofit entities as they have very different lobbying rules than do for-profits. I'll explain what lobbying is, how nonprofits can identify it, and how they can use it within their limits as tax-deductible entities. Let's get legal!

what's the difference?

Lobbying is an attempt to influence specific legislation, whereas advocacy is arguing in favor of a cause or policy unspecific to legislation. 501(c)(3)s are what we traditionally call nonprofits, but there are actually many different kinds of nonprofits than those defined under section 501(c) of the Internal Revenue Code. If you're interested in learning about all of the different kinds of nonprofits, check out this handy 501(c) listing from Charity Navigator. 501(c)(3)s can engage in unlimited advocacy, but limited lobbying as defined by the formal requirements listed here and the abbreviated requirements below.

So what does that mean?

A 501(c)(3) has the option of being governed by the “insubstantial part” default in the tax determination law or the 501 h election. When subject to the insubstantial part test, there is not a defined list of things that count as lobbying, so the organization would need to keep track of every public policy activity. The term “insubstantial part” is extremely vague, subjective, and arbitrary. In addition, volunteer time spent engaging in direct lobbying (talking directly to legislators) or grassroots lobbying (encouraging the public to take action) must be counted as dollars spent. The penalty for exceeding the arbitrary limit is a 5% excise tax on all all lobbying expenses and potential revocation of the tax exempt status. With these things in mind, most nonprofit organizations choose to avoid any lobbying or advocacy for fear of consequences. However, If the organization chooses to take the 501 h election, there are clear definitions of lobbying and advocacy, so the risk of consequences becomes much less. The 501 (h) limits for lobbying are 20% of the first $500,000 of “exempt purpose expenditures” with decreasing percentages up to $1 million which can be spent on lobbying. If your eyes just glazed over, I've got the translation: If your organization's budget is less than $500,000, you are allowed to spend up to $100,000 (20%) on lobbying. If it has a larger budget, the limits are set as follows:

Under this system, activities undertaken by volunteers are not considered lobbying. 501(c)(4)s, in contrast, are allowed unlimited lobbying as they are considered an action organization. However, the portion of the funds devoted to lobbying are not tax-deductible. The Center for Lobbying in the Public Interest created a really easy comparison of the 'insubstantial part test' and the 501(h) election:

This is complicated ... why should we do this?

Consider a nonprofit environmental organization who is trying to preserve a specific piece of land. They know that they can get their message out to people in the surrounding area by running awareness campaigns and programs. When a manufacturer moves into the area and begins dumping poisonous waste water on the surrounding area, plants and animals begin to die. The organization decides to run campaigns to stop this abuse of natural resources through the use of community-based advocacy groups and large-scale campaigns. Their efforts are valiant, and the law is on their side, but the large manufacturer has the power of lobbyists to influence local and regional government to support their work because it's bringing more jobs into the area. At this point, it's a David vs. Goliath situation with the small nonprofit galvanizing people, but the large manufacturer influencing law-makers and -enforcers. I'm sure you've seen this movie - it does not end well. To make this end significantly better, the nonprofit could have organized groups to not only get the people on their side, but to encourage people to put pressure on community representatives to protect the local environment (grassroots lobbying). Furthermore, had they employed a lobbyist or even supported a partner action organization - a 501 (c)(4), they would have stood a much better chance of getting their intended outcome. A David vs. Goliath situation could be morphed into a David in a mecha + villagers with pitchforks vs. Goliath. I don't know about you, but bring on the mecha!

Oh snap! how do I get started?

Kat, I'm glad you asked. ;D Here's a short list of ways you can get your social change codified in law through advocacy and lobbying efforts:

Fill out the 501 (h) election form: It's super easy. You can get it here. Also, Bolder Advocacy has a great comprehensive guide here.

Put together a voluntary advocacy group to carry out any direct or grassroots lobbying on behalf of your organization so that it does not count against the lobbying limits.

Get some recommendations for some good lobbyists to work with, but make sure their fees fall below the lobbying limits outlined in the 501 (h) guidelines. You can even use them to help you train your volunteer advocacy force, thereby improving your ability to make lasting social change.

Ensure your board is aware of the 501 (H) election and everything it entails. In fact, make a committee of the Board to do grassroots and direct lobbying. Nonprofit boards of directors are usually volunteers and can therefore lobby for the organization!

Nonprofits can and should optimize their influence to move the needle on their respective causes. By utilizing the 501 (h) election, they can put social good on the same footing as financial profit.

To get more practical steps for implementing your vision for social change, sign up for my mailing list . Change agents on my mailing list will receive early access and locked in introductory membership to my social enterprise online community The Social Entrepreneurship Hub!