Lobbying and Political Campaign Activities Do s and Don ts

Transcription

1 Lobbying and Political Campaign Activities Do s and Don ts Connecticut Friends of Libraries Boot Camp 2013 April 20, 2013 Pro Bono Partnership, Inc.

2 What is the Pro Bono Partnership? Pro bono legal assistance for not for profit organizations through the services of our staff, and corporate and private attorneys To be eligible, the organization must be: nonprofit and tax-exempt (or seeking that status) primarily serving the poor & disadvantaged, focusing on health and human services, affordable housing, community revitalization, arts, the environment unable to pay for legal services without significant impairment of program resources Visit us at 2

3 Overview 1. What is Advocacy? 2. Types of Friends Organizations 3. Lobbying A. Federal Rules B. State Rules 4. Electoral Activities 5. Ballot Measures See also Resources Handout 3

4 1. What is Advocacy? Wide range of activities by which a group moves its agenda forward Issue Advocacy Can include educating public and policy-makers attempting to influence legislation working on development of regulations litigating on public policy issues voter registration giving voice to under-represented groups Important way to shape our community Lobbying is a subset of advocacy 4

5 2. Types of Friends Organizations Friends of a Public Library Separately incorporated; own 501(c)(3) recognition; own board of directors often classified as supporting organizations requires some level of control by supported organization; i.e., the Library itself Not a separate legal entity; no 501(c)(3) recognition has own bank account, using Library s EIN has own bank account with separate EIN 5

6 2. Types of Friends Organizations cont d Association Library technically, an Association Library has less need for a Friends group Friends may be a separate legal entity as above, or operate more as a fund raising committee For purposes of this presentation we will assume you have 501(c)(3) recognition 6

7 3. Lobbying 501(c)(3) Organizations A. Federal Rules IRS Rule: No substantial part of a 501(c)(3) s activities can be directed towards influencing legislation at the federal, state and/or local level. In other words, a (c)(3) may engage in lobbying if not a substantial part of organization activities Lobbying is activity directed at supporting or opposing the passage of specific legislation For IRS purposes, Legislation includes: Ballot initiatives, bond issues, and referenda Bills and other legislative proposals Judicial confirmations Resolutions Does not include administrative rules and regulations 7

8 When Does Lobbying Become a Substantial Part? 501c3s can lobby up to a point the point at which its lobbying activities become a substantial part of its activities Two alternative tests to see when this point is reached: the substantial part test the lobbying expenditure test 8

9 Substantial Part Test Vague standards subject to inconsistent application Not quantitative; contextual examines $ and soft factors such as goals and success in achieving, as well as time and energy devoted to legislative matters and the importance of the legislation 9

10 Substantial Part Test (continued) Activities by volunteers may be included (which may be difficult to quantify) Risk losing tax-exempt status entirely if violated in a single year Also, liability to managers ($ penalties) if actions are willful 10

11 Lobbying Expenditure Test - the 501(h) Election Establishes a safe harbor allowing 501(c)(3)s to spend a % of their budgets on lobbying activities Clear definition of lobbying Unreimbursed volunteer activities not included No penalties unless the NFP exceeds certain allowable amounts; no penalties against managers 11

12 Lobbying Expenditure Test - the 501(h) Election (continued) Risk of losing tax-exempt status entirely is based on four years of lobbying expenditures Most NFPs will never reach the amounts they are allowed to spend on lobbying activities The election is easy to do IRS Form 5768 Election is retroactive Revocation is prospective Not available to churches and private foundations 12

13 Two Types of Lobbying Direct Direct Lobbying: communication directly with legislators or their staff or with executive branch officials participating in the formulation of legislation two elements: Refers to specific legislation Expresses a view on that legislation 13

14 Types of Lobbying Grassroots Grassroots Lobbying: trying to influence the general public three elements: Refers to specific legislation Expresses a view on that legislation Includes a call to action states that recipient should contact legislator; gives address and phone number; supplies a tear-off card; or identifies legislators to target 14

15 Special Lobbying Situations Communications to the members of the NFP to encourage them to engage in direct lobbying are direct lobbying Communications to the members of the NFP to encourage them to urge non-members to engage in direct or grassroots lobbying are grassroots lobbying Communications to the public regarding ballot initiatives and referenda are direct lobbying 15

16 Expenditure Test Dollar Limits 20% of first $500,000 of Exempt Purpose Expenditures (EPE) 15% of next $500,000 of EPE 10% of next $500,000 of EPE 5% of remaining EPE Overall limit on total lobbying expenses of $1 million 16

17 Expenditure Test Dollar Limits (continued) Grassroots lobbying expenditures may not exceed 25% of the NFP s total allowable lobbying expense ceiling, regardless of what is actually spent on direct lobbying Penalty for exceeding allowable limits is a 25% tax on excess expenditures for a given year 17

18 Advantages to making the 501(h) election Unlimited use of volunteers (assuming no reimbursed costs) Straightforward spending yardstick Ability to plan Soft factors are irrelevant; only expenditures count Only the organization is penalized for violating; not managers Less likely to lose exemption unless the NFP exceeds lobbying limits by 50% average over rolling 4 year average Who shouldn t make the election? Groups that expect to exceed the limit 18

19 Four Activities That Are Exceptions To Lobbying 1. Making available the results of nonpartisan analysis, study or research on a legislative issue 2. Discussions of a broad social, economic, or similar policy issue 3. Responses to written requests for technical advice or assistance from a legislative body Does not include requests from individual legislators 4. Self-defense communications pertaining to legislation that might affect the NFP s tax-exempt status, rights, duties, and existence, or the tax-deductibility of contributions to it 19

20 Final Thoughts on Lobbying Generally it is impermissible to lobby using federal government funds, such as monies provided pursuant to grants and contracts Review county and local ordinances and the terms of government requests for proposals (RFPs) and contracts for additional lobbying restrictions/disclosures There are additional registration and reporting requirements for organizations that engage in lobbying at the federal level (Lobbying Disclosure Act). 20

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22 Lobbying - cont d B. State Rules - Office of State Ethics enforces. Very detailed. - Lobbyist: Anyone that spends or receives more than $2000 per calendar year for the following activities: - Legislative lobbying - Administrative lobbying - Activities in furtherance of lobbying (extremely broad) - Lobbying: Communicating directly or having others communicate with any official or her staff in the legislative or executive branch or in a quasi-public agency for the purpose of influencing any legislative or administrative action. - Note: broader than federal definition, which does not include administrative and executive actions. 22

23 Lobbying State Rules cont d Two Kinds of lobbyists: Client Lobbyists (basically, the entity that pays) Communicator Lobbyist (basically, the person or entity that gets paid) In-house Retained Rules for Client Lobbyists i.e. the nonprofit organizations must register if spend or will spend $2,000 or more in a calendar year for lobbying. Register every odd year: $150 ($75 for 1 year) Register once regardless of number of communicator lobbyists 23

24 Lobbying State Rules cont d Client Lobbyists Must Report: Compensation, sales tax and reimbursement allocable to lobbying greater than $10 Expenditures, gifts, benefits for benefit of public official greater than $10 Note, even if individual gifts are less than $10, if exceed $50 in the aggregate, need to report, and need to file written notice to OSE All other expenditures for lobbying or in furtherance of lobbying (e.g. research, reports, polls, media, etc.) Does not include expenditures for publication and to bona fide members Terms of any contract related to lobbying Reports are filed quarterly (3Q and 4Q are combined); and are filed monthly when the legislature is in session, regardless of whether registrant engaged in any lobbying What about Coalitions/Alliances? May need to register even if not a legal entity 24

25 Lobbying State Rules cont d Communicator Lobbyists must register: A person who lobbies and who receives more than $2,000 in connection with the lobbying in a calendar year Includes employees of organizations (in-house communicator lobbyists) $2,000 includes allocated salary and benefits (subject to 5 hour safe harbor) Does not include person who gives expert testimony to legislative or administrative body Reports similar to those for client lobbyists Banned from making campaign donations for state and local candidates 25

26 4. Electoral Activities A) Political Campaign Intervention 501(c)(3) organizations cannot participate in or intervene in any political campaign on behalf of, or in opposition to, any candidate seeking public office (federal, state, or local) This rule is absolute no de minimis exceptions, thereby giving IRS broad range of discretion Violation can lead to loss of tax exemption and/or imposition of excise taxes on the nonprofit and its managers 26

27 Electoral Activities Political Campaign Intervention, cont d Political Campaign Activity includes: Endorsements Contributions to campaigns Public statements for or against Distributing statements made by others Allowing candidates to use the organization s assets or facilities (unless also offered to other candidates) 27

28 Electoral Activities Political Campaign Intervention, cont d Candidate includes people: - officially running - thinking about running - being bandied about in the press Public Office characteristics: - created by statute - on-going position; not occasional or contractual - requires oath of office Note candidate does not include federal judges; IRS considers activity to oppose or support federal judges as lobbying 28

29 Electoral Activities Political Campaign Intervention, cont d The prohibition on an organization does not restrict free expression of organization leaders who are speaking for themselves, as individuals. But: Do not make partisan comments at official organization functions or in organization publications Use disclaimers (i.e., These views are mine personally and are not intended to represent to views of the organization. Be off-the-clock Note Certain state laws might restrict individuals (e.g., CT s ban on campaign contributions applicable to lobbyists and their families) 29

30 Electoral Activities Political Campaign Intervention, cont d Internet Activities IRS will look at links from (c)(3)s to other websites Is material on linked site attributable to the (c)(3)? Is the (c)(3) doing indirectly what it is not permitted to do directly? Facts and Circumstances Test. IRS will consider: Context for link Links relation to org s exempt purpose Directness of links (# of clicks) Related vs. unrelated organization Normal Business Activities Must provide equal access and equal terms and conditions 30

31 Electoral Activities cont d B) Other Election Year Activities - Voter Education - Voter Registration and GOTV - Issue Advocacy - Candidate Education Keyword: Non-partisan 31

32 Electoral Activities cont d Voter Education - Permitted to conduct certain voter education activities if non-partisan - Candidate questionnaire/voter education guides - Public forums - Candidate questionnaires/voter education guides - unbiased questions; broad range of questions - no pledges - distribute to all candidates - present responses equally - same format - no editing 32

33 Electoral Activities cont d Public Forums and Debates Forums and debates OK if non-partisan - invite all viable candidates (different from questionnaire) - fair rules - impartial moderator - unbiased audience - questions on broad range of issues - questions unbiased - No fundraising! 33

34 Electoral Activities cont d Scorecards Risky if close to an election OK if: - include all legislators - distributed to organization s members only - See IRS definition of members - not close to an election - commentary permitted but be careful 34

35 Electoral Activities cont d Voter Registration and Get Out the Vote (GOTV) Voter Registration Recruiting and enlisting unregistered voter GOTV Getting voters to the polls Both are permissible if non-partisan Permissible goal: access to democratic process helping people exercise their right to vote Important role of nonprofits that have direct, trusting relationship with members of public 35

36 Electoral Activities cont d All such activities must be nonpartisan The motivation for all such activities must be education and voter participation, not shaping the outcome of an election Do not indicate a preference for a candidate or a political party and avoid code words (e.g., conservative, pro-choice, anti-gay, referencing an election) Must select target on non-partisan basis. But can target low income, homeless or students but not a particular party or group who will be expected to vote a certain way (e.g. Cranston election) Watch out for timing of events Be able to document/demonstrate all nonpartisan steps taken 36

37 Electoral Activities cont d Issue Advocacy 501(c)(3)s may take positions on public policy issues, including those that divide candidates But communications must be non-partisan: Does it look like the organization is supporting or opposing candidate for public office? Facts and Circumstances Test Features of Non-Partisan Communications: issues related to organization s purpose no coordination with candidate or political party disclaimers timing: not tied to election 37

38 Electoral Activities cont d Criticizing incumbents OK if non-partisan: - Continuing on-going criticism - Focus on organization s issues Partisan characteristics: - Timing (e.g., start around election and/or ramp up close to election) - Discuss incumbent as candidate 38

39 Electoral Activities cont d Educating Candidates OK if: - offered to all candidates - information was already gathered Do not create or gather information for a candidate 39

40 Electoral Activities cont d Special Issues: Candidate appearing at a nonprofit s special event Candidates on the board of trustees Nonprofit supporting issues related to a campaign position When officers and employees of nonprofit are working on a campaign On their own time Not using NFP s resources (e.g., photocopier, staff) Not associating themselves with the NFP. 40

41 Electoral Activities Impact of Citizens United on Nonprofits It does not affect 501(c)(3)s. Federal tax law that prohibits 501(c)(3)s from supporting or opposing candidates still applies. 501(c)(3)s still cannot endorse candidates or make independent expenditures suggesting who is the "better" candidate. It does not allow corporations to make monetary or inkind contributions directly to candidates for federal office or to coordinate communications with candidates. The prohibition on corporate contributions to candidates and coordinated communications remains intact. 41

42 Electoral Activities Impact of Citizens United, con t. Corporations, including nonprofit corporations such as issuebased 501(c)(4)s, 501(c)(5)s (labor unions), and 501(c)(6)s can make independent expenditures containing express advocacy to support or oppose candidates for the U.S. House, U.S. Senate, and President. But nonprofits remain subject to federal tax law, including primary purpose restriction [political activities cannot be the primary purpose of a 501(c)(4), 501(c)(5), and 501(c)(6)] and possible tax on political activities. It allows corporations to make "electioneering communications." 42

43 Election Year Activities Impact of Citizens United, con t. Although corporations may now make independent expenditures and electioneering communications, they must comply with existing disclosure and disclaimer requirements. It allows corporations to make unlimited contributions to independent expenditure only PACs (aka Super PACs). 43

44 5. Ballot Measures Allow citizens to engage directly. Include: ballot initiatives constitutional amendments bond measures budget and other referenda Your work in support or opposition to a ballot initiative will be deemed to be direct lobbying 44

45 5. Ballot Measures cont d Ballot initiatives are overseen by State Election Enforcement Commission(SEEC) fall within election and campaign finance concerns Groups that expend money to influence elections including ballot measures must file certain information with the SEEC regarding expenditures PACs Other groups Note if a non-pac group makes expenditures in coordination with an already established PAC, the PAC is responsible for making financial reports, not the group 45

46 5. Ballot Measures cont d PACs must also register with the SEEC Expenditures by PACs are limited, based on the number of residents in the jurisdiction. Spending by non-pacs if in coordination with a PAC are similarly limited There have been recent statutory changes regarding campaign finance; SEEC is still working out details SEEC Staff are available for questions and consult write down names, date of call, and information exchanged 46

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