501(c)(3) or 501(c)(6)???

Some state athletic training associations may be organized under the IRS Code 501(c)(3), which is intended for charitable non-profit organizations. There may be a concern about lobbying expenditures in this type of organization, and the following is excerpted from a whitepaper published on the American Society of Association Executives’ website entitled “Top Ten Myths about 501(c)(3) Lobbying and Political Activity” by Jeffrey S. Tenenbaum Esq.

(Note: In reading the following, please understand the distinction between “lobbying” and “political action.” Lobbying is best defined as petitioning the government, whereas political action refers to elections.)

Myth #1 501(c)(3)s cannot lobby and will lose their tax exemption if they engage in lobbying.

“Absolutely not” says Mr. Tenenbaum. Federal tax law has always permitted some lobbying by nonprofits. The 1976 law and the ensuing IRS regulations make it very clear that these organizations have wide latitude to lobby for the causes, communities and constituencies they serve.

A 501(c)(3) organization may spent up to $1M on lobbying depending on the size of the organization – if the 501(h) election is made. Moreover, lobbying occurs only when there is an expenditure of money. For example, if members or volunteers lobby and the organization spends nothing on that effort, there is no lobbying by the organization.

Generally, organizations that make the 501(h) election may spend 20% of the first $500,000 of their annual expenditures on lobbying ($100,000), 15% of the next $500,000 ($75,000), and so on up to $1 million.

Myth #3 501(c)(3)s cannot support or oppose a specific bill, or tell their members to do the same.

Under the 1976 definition, you are lobbying when you state your position on specific legislation to legislators or other government employees, or urge your members to do so (direct lobbying) – or when you state your position to the general public and ask them to contact legislators (grassroots lobbying).

Myth #9 501(c)(3)s cannot set up affiliated organizations for use in engaging in unlimited lobbying (and certain political) activities.

Not true. A 501(c)(3) may establish a 501(c)(4), 501(c)(6) or other tax exempt affiliate (but not a Political Action Committee or PAC) as long as no resources or assets of the 501(c)(3) are used to fund or support the affiliate.

If your association is organized as a 501(c)(3), you will wish to read more of Mr. Tenenbaum’s information. Please contact Judy Pulice at ext. 103 or email for a copy.

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