I. Can Non-Profit Organizations Engage in Lobbying? YES! Non-profit organizations have the constitutional 1 st Amendment right to speak out about issues that concern them or the people whose interests they serve. However that right is not without conditions and limits when speaking to a public official; state & federal reporting and registration requirements may apply, and organizations should track how much staff time and resources are used to remain within legal thresholds. It is important to note that what constitutes lobbying, and the related implications and requirements are different federally and within New York State. We ve included information on both levels throughout the document. II. What is the difference between lobbying and advocacy? Although most people use the words interchangeably, there is an important distinction between advocacy and lobbying. When nonprofit organizations advocate, they seek to affect some aspect of society: An appeal to individuals about their behavior, employers about their rules, or the government about its laws. Lobbying, however, refers specifically to advocacy efforts that attempt to influence legislation. This distinction is important because it means laws limiting lobbying done by nonprofit organizations do not govern advocacy activities. III. What Activities Do Not Qualify as Lobbying? Under the FEDERAL TAX CODE the following would clearly NOT be considered lobbying:. Truly non-partisan analysis, study, or research that is made available to a cross section of the public or to a nonpartisan cross section of the applicable legislature, and does not encourage a decision to support or oppose specific legislation;. Technical assistance requested by a legislative body by written invitation from the legislative body, i.e. not from a single legislator;. Lobbying on legislation that would affect the existence of the organization at a policy level, i.e. when not focused solely on budgetary concerns;. Non-legislative communication with government officials;. Informational communications with members that do not include a call to action urging the adoption of a specific position about a piece of legislation;. Communications examining issues of broad social, economic or similar problems. Under NY STATE LAW the following would clearly NOT be considered lobbying:. An attorney or other professional drafting or advising clients on proposed legislation, rules, regulations or executive actions;. Publication or broadcast of editorials or comments or paid advertisements about proposed legislation, rules, regulations or executive action; 1 P a g e M a r c h 2 0 1 6
. Staff time and expenses incurred in producing an organizational newsletter that includes an article referring to legislation, regulatory or executive action as long as it does not also contain a call-to-action for supporters of the organization;. Appearing as a witness in public proceedings of a state or municipal agency when such participation is part of the public record, and all preparation for such appearances;. Staff time spent analyzing provisions of proposed or existing legislation or executive action;. Staff time and expenses devoted to organizing a grassroots event so that members of the public can show their support or opposition to proposed or existing legislation or executive action, especially when no elected official is invited to take part in the event;. Submitting a response to a request for information or comment by a public official. IV. What Activities Qualify as Lobbying? Lobbying is an attempt to influence legislation, whether in support or opposition, when such attempt is aimed at proposed or existing legislation. This includes:. Attempts to influence proposed or existing legislation;. Legislative resolution;. Ordinance or local law;. Attempts to ensure that such legislation is introduced;. The adoption or rejection of any rule or regulation that has or would have the force and effect of law. In NY State this can include any rule-making or regulation or order proposed, enacted or enforced by a state, county, or municipal executive or agency. As of April 2015, the meaning of municipality under NY State laws regarding lobbying was expanded to include lobbying at the local level, i.e. any attempt to influence legislative or administrative action by a county, city, town or village legislature or executive, by a school district, by a local public authority or public benefit corporation, or by an industrial development agency or special district with jurisdiction in an area that has a population exceeding 5,000. At the federal level, legislation does not include administrative rule making or other executive action, unless it is subject to federal or state legislative approval. Neither does it include local actions by special local public decision making bodies such as zoning or school boards. However, in both state and federal law, all work an organization does towards the goal of influencing specific or proposed legislation should be considered lobbying activity. This can include time spent drafting legislation that does not yet exist or has not yet been officially introduced, as well as planning and strategy sessions and meetings to coordinate lobbying efforts related to a specific legislative solution. However, what is considered legislation is different under NY State law vs. federal law and between two different sets of federal law, and may include legislative resolutions, regulation and rule-making by government agencies and authorities, as well as executive actions. Under NY State law, the definition of what constitutes lobbying is especially broad. 2 P a g e M a r c h 2 0 1 6
V. Key Definitions Direct Lobbying Direct communication with elected officials (Federal court decision in U.S. v. Harris, 347 U.S. 312 (1954)), whether by phone, letter, meeting with the legislator or staff, preparing a legislative memorandum or position statement that will be used in such communication, or preparing a sample letter that is provided to members of the public to send to legislators. Drafting or negotiating the terms of a legislative bill would also be direct lobbying except when the elected official has expressly requested this input or interaction. Direct lobbying also involves a specific piece of pending or proposed legislation that the organization takes a stand in support for or opposition to. Indirect Lobbying or Grassroots Advocacy This occurs when an organization encourages others, such as members of the public, to contact legislators or other public officials to express a particular point of view regarding specific pending or proposed legislation, rules regulations or executive action. Such activity is still considered indirect lobbying regardless of whether an organization describes these activities as advocacy, community education or legislative policy, but the organization has to have taken a stand in support of or in opposition to the legislation and issued a related call to action. NOTE: When lobbying activities are pursued by bona fide members of an organization (active participants in the organization s activities, not just recipients of newsletters or email alerts), they will be considered direct lobbying rather than indirect lobbying or grassroots advocacy. NOTE: The NY State Lobbying Act ignores the distinction between direct and indirect lobbying. Although the NY State Lobbying Commission, the precursor to JCOPE, issued an advisory opinion that it would not address activities outside of direct communication, in at least 2 instances JCOPE has since investigated activities of civil rights advocates engaged in grassroots advocacy. Public Official Under NY State Law a public official can be:. The governor or Lieutenant governor, comptroller, attorney general, members of the state legislature and their employees, officers and employees of the legislature, officers and employees of state departments, boards, bureaus or divisions, commissions, councils or other state agencies, and members or directors of NY state public authorities or public benefit corporations or commissions (when at least one member is appointed by the governor) and their employees.. Municipal executives and employees, including an officer or employee of a municipal entity, whether paid or unpaid, members of any municipal administrative board, commission or other agency, as well as any officer or employee paid from county funds. NOTE: Volunteer firefighters are not public officials, but fire chiefs and assistant fire chiefs are. 3 P a g e M a r c h 2 0 1 6
Va. Additional Definitions Public Agency is defined to mean the Government of the United States; the government of a State or political subdivision thereof; any agency of the United States, a State, or a political subdivision of a State; or any interstate governmental agency. JCOPE is the NYS Joint Commission on Public Ethics. Electioneering (of a politician/political campaigner) is to take part actively and energetically in the activities of an election campaign. Lobbyist is anyone employed, retained, or designated by a person or organization to engage in lobbying activities on behalf of that person or organization. Lobbying Expenses are expenses incurred in promoting or evaluating legislation. VI. What Federal Rules May Apply When Non-Profit Organizations Choose to engage in Lobbying? Lobbying at the federal level may require registration and reporting of that lobbying activity, but what is defined as lobbying activity is much broader under federal tax laws than under the federal Lobbying Disclosure Act. The requirements under both sets of federal laws should be understood. The federal tax code (Internal Revenue Code or IRC) defines lobbying as supporting or opposing the passage of legislation, whether through direct or indirect lobbying. However, the legislation in question must be aimed at a specific law or legislative proposal. Within the IRC the definition of legislation is not as broad as it is in NY State law, but it can include some lobbying activity at the state and local level. Within the IRC legislation explicitly does include:. Actions by the U.S. Congress, state legislative bodies, local legislative bodies, public votes on referenda, ballot initiatives and constitutional amendments;. Confirmation of federal judicial nominees by the U.S. Senate;. Proposals for the enactment or amendment of international law. However legislation does not include administrative rule making or other executive action, unless it is subject to federal or state legislative approval. Neither does it include local actions by special local public decision making bodies such as zoning or school boards. For organizations granted tax exempt status under Section 501 (c)(3) of the federal tax code, lobbying activities are restricted by the IRS. 501 (c)(3) organizations are prohibited from engaging in lobbying activities that would constitute a substantial part of their activities, and can be subject to excise taxes (25% of the amount the organization exceeded permissible limits) or loss of tax exempt status for doing so. There are two ways to determine whether a 501(c)(3) organization is engaged in substantial part lobbying. The IRS can look at the facts and circumstances of lobbying activities, looking at these activities in light of the organizations overall activity, and taking into account resources beyond just financial expenditures. However it is not clear in case law exactly what factors the IRS can consider. Alternatively the organization s expenditures for lobbying activity can be examined in light of the organizations budget for tax exempt purposes under what is called the 501(h) election. This method can provide greater clarity for the organization. The IRS then allows 4 P a g e M a r c h 2 0 1 6
percentages of expenditure for lobbying from within organizational budget ranging from up to $500,000 to above $17 million. However, grassroots lobbying is limited to 25% of the organization s total lobbying allowance. Organizations granted 501 (c)(4) tax exempt status have more flexibility to engage in lobbying activities. These organizations are not restricted in how much lobbying they can do, however 501 (c)(4) organizations are not eligible to receive tax deductible donations, and they cannot engage in partisan political activity as its primary purpose. Some non-profit organizations choose to maintain both a 501(c)3 and a 501(c)4 entity, but this requires separate boards and financial recordkeeping which can be complicated and burdensome for smaller organizations. Tax exempt organizations with over $ 50,000 in revenue/income must report lobbying activities to the IRS on Schedule C of the Form 990 filed annually. Organizations that choose what is called the 501(h) election only have to provide the monetary value of their lobbying activities, while those that have not made this choice must provide more information about these activities. However, any tax exempt organization that engages in lobbying activities should maintain records that can be used to support such disclosures and statements such as employee time records, expense receipts and other relevant documentation. The Federal Lobbying Disclosure Act (LDA) requires disclosure of federal level lobbying activity. There are related registration and reporting requirements. Registration and quarterly reports must be filed electronically using specified software available through a website associated with the House of Representatives. However, lobbying at the state and municipal level does not need to be reported under the LDA. Additionally, only organizations that meet both of these two criteria must register and report under the LDA in a given quarter: 1. The person or persons who lobby on behalf of the organization have made at least two or more legislative contacts and have spent 20% or more of their time on lobbying activity, and 2. The organization has spent at least $11,500 on lobbying during that quarter. If both of these criteria are not met, the organization does not need to register and report under the LDA, even if it does some lobbying at the federal level. If an organization must register and report under the LDA, lobbying must only be reported if aimed at any of the following: In the Executive Branch: President or Vice President, Officers and employees of the Executive Office, any official serving in an executive level I through V position, any member of the uniformed services serving at grade 0-7 or above, and Schedule C employees. In the Legislative Branch: A member of Congress, an elected officer of the House or Senate, or an employee of a legislator, committee or the legislature as a body. Reporting under the LDA must include any contact with such individuals and any efforts in support of such contact such as preparation, planning and coordination of such contact or related research or other background work. It should be noted that the LDA allows 5 P a g e M a r c h 2 0 1 6
501(c)(3) organizations to report their lobbying activity as defined by the IRS, so such organizations do not have to keep separate records according to two definitions of what constitutes lobbying under the IRC and LDA. However, this does mean that organizations would be essentially reporting under the LDA more than they have to under that law. VII. What NY State Rules May Apply When Non-Profit Organizations Choose to Engage in Lobbying? Lobbying activities in NY State are regulated under the NY State Lobbying Act NY Legislative Law Sub-Sections 1-a through 1-v. NY State does not limit how much lobbying an organization may engage in, but does require disclosure of lobbying activity involving legislation within NY State after spending on such lobbying activities reach a monetary threshold. Additionally, NY State includes attempts to influence administrative rule-making as lobbying, while the IRS does not unless such rule-making is subject to federal or state legislative approval. So NYS may require organizations to report some lobbying activities that they are not required to report to the IRS. In August 2011, the NY State Legislature passed the Public Integrity Reform Act (PIRA), which reformed the oversight and regulation of ethics and lobbying in NY State, and established the Joint Commission on Public Ethics (JCOPE) as a new independent agency. Each lobbyist, or organization that engages in lobbying, is required to register with the JCOPE, and to submit bi-monthly reports of all lobbying activity to JCOPE. Failure to do so can have very serious consequences. These registration and reporting requirements are triggered if a lobbyist s activities, or their organization s spending on non-federal lobbying activities, exceeds $ 5,000 in a calendar year. This $ 5,000 threshold must include the portion of employee s salaries that compensate time spent in lobbying activities, but other costs for lobbying activities must be included as well. NOTE: This threshold went into effect through new regulations adopted in January 2013. See NY Legislative Law Sub-Sections 1-h and i-j and the NYCRR Section 938.2. Under the NY State Lobbying Act & JCOPE requirements, if a non-profit organization must register as a lobbyist, each staff person who engages in lobbying activities on behalf of the organization must be listed as a lobbyist. Similarly, required reports on the organization s lobbying activities must list the lobbying activities of each such lobbyist. Lobbying reports sent to JCOPE must include: 1. Name, address and phone number of each lobbyist 2. Name of the public official, organization, or legislative body before which the lobbyist has engaged in lobbying 3. A description of the general subject or subjects in the lobbying activity & the legislative numbers of any proposed legislation 4. The compensation of each lobbyist 5. All lobbying expenses incurred by the lobbyist or organization, or reimbursed to a lobbyist 6 P a g e M a r c h 2 0 1 6
VIII. What Kind of Recordkeeping is Important When Non-Profits Choose to Engage in Lobbying at the Federal, State or Local Level? Every non-profit organization that engages in lobbying activities should keep records to document the lobbying activities of its employees, including:. Records detailing the time spent by each employee engaged in lobbying activities;. Expenses incurred in relation to lobbying and non-lobbying activities;. Compensation to anyone or any organization paid to engage in lobbying on behalf of the non-profit organization. Such documentation can be especially crucial if the IRS or JCOPE raises questions about the organizations lobbying activities. NOTE: If an organizational meeting is held in which lobbying activity occurs (including discussions about lobbying strategy, planning, or coordination) but other matters are also discussed, only the portion of the meeting related to lobbying must be documented for required reporting. The records must be kept carefully to distinguish between lobbying and non-lobbying activities. State Who Must Report Required Contents of Activity Reports New York Legislative Law 1A-1-h, 1A-1i 1A-j Lobbyists, Public Corporations, Clients who spend more than $5,000 a year on lobbying Lobbyists: Lobbyist's name, address, phone number. Lobbyist's client's name, address, phone. General description of subjects lobbied on, as well as the legislative bill numbers of any bills and the rule, regulation. The numbers or subject matter (if there are no numbers) of gubernatorial executive orders or executive orders issued by the chief executive officer of a municipality. The subject matter of and tribes involved in tribal-state compacts, memoranda of understanding, or any other state-tribal agreements and any state actions related to class III gaming as provided in 25 U.S.C. 2701, and ratemaking numbers on which the lobbyist has lobbied. The rule, regulation, and ratemaking or municipal ordinance or resolution numbers of any rules, regulations, or rates or ordinance or proposed rules, regulations, or rates or municipal ordinances or resolutions, and the titles and any identifying numbers of any procurement contracts and other documents disseminated by a state agency, either house of the state legislature, the unified court system, municipal agency or local legislative body in connection with a governmental procurement. Names of people, organizations, or legislative bodies before which the lobbyist has lobbied. Compensation paid or owed to the lobbyist, and any lobbying expenses, to be listed in the aggregate if $75 or less and individually if more than $75. For items listed individually, disclose the amount, recipient and purpose. Expenses not to include: personal sustenance; lodging and travel disbursements of such lobbyist, printing and mailing less than $500. Expenses paid or incurred for salaries other than that of the lobbyist shall be listed in the aggregate. Public Corporations: Public corporation's name, address, phone number. Names, addresses, phones of all lobbyists retained, employed or designated. Copies of all agreements relating to each such retainer, employment or designation, and if the agreement was oral, a statement of its substance. General description of subjects lobbied on, as well as the 7 P a g e M a r c h 2 0 1 6
State Who Must Report Required Contents of Activity Reports legislative bill numbers of any bills and the rule, regulation, and ratemaking numbers on which the lobbyist and the public corporation have lobbied. Names of people, organizations, or legislative bodies before which the public corporation or its lobbyists have lobbied. Compensation paid or owed to each lobbyist and any expenses whether directly for the benefit of public officials or through lobbyists. List expenses in the aggregate if $75 or less and individually if more than $75. For items listed individually, disclose the amount, recipient and purpose. Expenses not to include: personal sustenance; printing and mailing less than $500. Clients who spend more than $5,000 a year lobbying must file semi-annual reports with similar information as above. (Lobbyists and public corporations must file bimonthly.) Copyright 2016 by National Conference of State Legislatures IX. What Penalties May Apply if State Rules are Not Followed? Under the NY State Lobbying Act & JCOPE Requirements:. Willful failure to comply is a Class A misdemeanor. A second failure within 5 years is a Class E felony.. A conviction will result in a 1 year prohibition on lobbying.. Failure to report can result in civil penalties up to $ 25,000 or 3 times the amount of money contributed, used or received.. A false report could result in fines of up to $ 50,000 or 5 times the amount a person or organization failed to report.. Failure to retain records could result in a fine up to $2,000.. HOWEVER, mitigating factors will be taken into consideration. X. What Resources Are Available For Information and Questions about Lobbying? A. Sources Relied Upon in the Creation of this Factsheet: NYS JCOPE, Lawyers Alliance for NY, National Council on Aging, IRS: Exemption Requirements 501 (c)(3) Organizations, IRS section 501(h) Lobbying Expenditures was adapted from Lobbying Issues," written by Judith E. Kindell and John Francis Reilly, Public Citizen, Alliance for Justice, Association for Corporate Counsel, and National Conference of State Legislatures. B. Additional Resources. When in doubt about whether or not to report a lobbying activity under NY State Law, you can contact JCOPE for guidance at jcope@jcope.ny.gov.. JCOPE webpage page http://jcope.ny.gov/local/local_lobbying.html 8 P a g e M a r c h 2 0 1 6