DEFINITION
While a substantial part of activities in a 501(c)(3) cannot be carrying on propaganda, or attempting to influence legislation, a public charity, other than a church, can conduct limited lobbying, with 10% of time and funding being dedicated to such an activity.
BEST PRACTICE
Organizations that plan to conduct limited lobbying as a continued activity of the organization, can, and probably should file a Form 5768 electing to follow the limitations and report expenditures for such on Form 990, Schedule C.
For an organization that only plans to support or oppose one bill, and not engage in lobbying ongoing, it may not be necessary to file Form 5768.
Filing of Form 5768 gives a 501(c)(3) public charity a 501(h) designation. It is important to know, that the organization remains a 501(c)(3) entity with this designation.
Attempting to influence legislation can take two forms: indirect and direct.
Indirect means, commonly described as grass roots lobbying, is an attempt to affect the opinions of the general public. A direct attempt is made through communications with any member or employee of any legislative body or with any government official or employee who may participate establishing polices and legislation.
Organizations will report on their Form 990 information about their limited lobbying activities regardless of having the 501(h) designation or not. It may be that organizations who do not have such a designation would increase their audit chances, especially depending on the amount of money allocated to such an activity.
An organization can revoke their designation should they find they are no longer conducting lobbying activities ongoing. This is also accomplished by filing of Form 5768.
RESOURCE
Publication 557
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