Can a Nonprofit Lobby? The Limits, and How Many Charities Do

Yes, a nonprofit can lobby. A 501(c)(3) charity may try to influence legislation as long as lobbying is not a substantial part of what it does, and it can swap that vague test for a fixed spending limit by filing one form. What a charity can never do is support or oppose a candidate for public office. Those are two different rules, and most of the confusion comes from treating them as one.

Very few charities come near either line. Across 256,539 charities filing a full Form 990, 12,571 (4.9%) report any lobbying at all, and only 183 (0.07%) report campaign activity. The figures below are from the IRS annual extract of those returns, and the analysis script is published with the method.

Lobbying and campaigning are different rules

The distinction matters because the practical advice runs in opposite directions. Charities are routinely told to be careful about lobbying, and many conclude they should do none. The law intends the reverse: lobbying within the limits is a legitimate way to pursue a charitable mission. The campaign ban is where caution belongs, and it catches things that do not feel political, such as a director endorsing a candidate from the organization’s social media account.

How much lobbying is allowed

There are two tests, and a charity chooses which applies to it.

The substantial part test is the default. Lobbying must not be a substantial part of the organization’s activities, and there is no fixed percentage. The IRS weighs time, money, volunteer effort and prominence together, which is why lawyers find it uncomfortable: an organization can spend little money and still fail it through volunteer campaigns or media attention. A figure of 5% is often quoted, and it comes from a 1955 case that later courts declined to follow as a rule.

The expenditure test applies to a charity that files Form 5768 to make a 501(h) election. Lobbying is then measured only in money, with a ceiling set by the size of the budget:

A charity that goes over pays a 25% excise tax on the excess. It loses exemption only if its lobbying averages more than 150% of the limit over four years. Volunteer time costs nothing under this test, and neither does most advocacy that is not about specific legislation, which is why nonprofit lawyers commonly recommend the election for any organization that lobbies regularly. Churches and private foundations cannot make it.

Under the substantial part test the penalty for failing is loss of exemption, with a 5% tax on the lobbying spending and a matching tax on managers who agreed to it knowing the risk. The difference in consequence is the main argument for electing.

What counts as lobbying

Under the 501(h) rules there are two kinds. Direct lobbying is communicating with a legislator, their staff, or any official who takes part in forming legislation, about a specific piece of legislation, with a view on it. Grassroots lobbying is communicating with the public about specific legislation, stating a view, and encouraging people to contact legislators. A communication to the public about a ballot measure counts as direct lobbying, because on a ballot the voters are the legislature.

Most advocacy is none of these. The following are not lobbying:

• Nonpartisan analysis, study or research that presents the facts fairly, even if it reaches a conclusion
• Technical advice given in response to a written request from a legislative body or committee
• Communicating about legislation that affects the organization’s own existence, powers, exemption or deductibility of gifts to it
• Discussing broad social problems without reference to a specific bill
• Advocacy on regulations, executive orders and enforcement, because those are not legislation
• Educating the public about an issue without a call to contact legislators about a bill

The last two are the ones most often missed. A charity commenting on a proposed federal rule, or meeting an agency about how a programme is run, is not lobbying under the expenditure test, however hard it pushes. That is one reason a charity can report no lobbying while paying a firm that works in Washington, and 547 do.

How many charities lobby, by size

Lobbying is a large organization activity. Only 0.6% of charities under $250,000 report any, against 38.3% of those over $25m. Most of it is done by staff and volunteers rather than hired firms: 6,196 charities (2.42%) paid anything to outside lobbyists, and of the charities reporting lobbying, 44.9% paid an outside firm.

The obvious objection is that small charities lobby less because the rules frighten them. The 501(c)(4) column is the test. Social welfare organizations may lobby without limit, and at the top of the size range they pay outside lobbyists at the same rate as charities: 23.4% against 23.5%. Below $5m the gap opens, to 2.9% against 0.3% under $250,000. The data cannot separate the two explanations. A 501(c)(4) is often an advocacy organization by design, and a small charity may simply have no legislation it needs to change. But the pattern is consistent with the rules weighing most on the organizations least able to get advice about them, and it is the argument for knowing the limits rather than guessing at them.

Among the largest charities, those that depend least on donations lobby most. 45.3% of charities over $25m with contributions under 10% of revenue report lobbying, against 29.0% of those with 90% or more. Hospitals, universities and health systems earn most of their revenue from fees and reimbursement set by legislation, and they lobby about it.

What charities pay outside lobbyists

Among charities that pay anything, the median is $30,000 a year, 0.16% of spending. A small charity that retains a firm spends a noticeable share of its budget on it, 4.47% at the median under $250,000, while for large organizations it is a rounding error. The total across the sector is $511,062,053, and the top 10% of payers account for 59.5% of it.

The largest payers are the organizations you would expect to have a stake in legislation: health systems such as Stanford Health Care, the AIDS Healthcare Foundation, disease charities such as the American Heart Association, the Association of American Medical Colleges, the Nature Conservancy and the Southern Poverty Law Center, each paying between $2,303,668 and $8,939,436 in fees against budgets of $122,131,443 or more.

This figure is a floor on lobbying, not a measure of it. Form 990 Part IX line 11d holds only fees paid to outside firms. Staff time, publications and grassroots campaigns are elsewhere in the expenses and are reported only on Schedule C, which the extract does not include. The overhead benchmarks break down the rest of the back office.

How close charities come to the limit

Measured against the 501(h) ceiling for their size, outside lobbyist fees are a small fraction. For the median charity that pays a firm, the fees come to 6.1% of the nontaxable amount the expenditure test would allow. At the 90th percentile it is 35.2%.

A small group is closer. 343 payers (5.5%) have fees alone at half the ceiling or more, and 64 (1.0%) have fees alone above it. Those organizations are not necessarily in breach: many will not have made the election, and are judged instead by the substantial part test, where a very large organization can spend a great deal in absolute terms. But for any charity where outside fees are approaching the ceiling, staff time on top will take it over, and the election and the tracking deserve a lawyer’s attention.

The yardstick has one simplification. The ceiling is set on exempt purpose expenditures, which exclude some fundraising and investment costs; total expenses stand in for them here, which overstates the ceiling slightly and makes the shares above, if anything, low.

The campaign ban, and the 183 charities that report breaking it

A 501(c)(3) may not participate in any political campaign on behalf of or in opposition to any candidate for public office. That covers endorsements, contributions to campaigns, statements for or against a candidate, and the use of the organization’s money, mailing list, premises or website to help one. There is no de minimis amount. The penalty is a 10% excise tax on the spending, a 2.5% tax on managers who agreed to it knowingly, further taxes if it is not corrected, and possible revocation.

183 charities answered Yes to the campaign activity question, 0.07% of filers, spread evenly across sizes. A Yes from a 501(c)(3) is either a misunderstanding of the question or a reported violation, and the extract cannot say which; Schedule C Part I, which would show the amount and any tax paid, is not in the file. For comparison, 4.18% of 501(c)(4) organizations report campaign activity, rising to 16.36% of those over $25m, because the law allows it for them as long as it is not their primary activity. The charity figure is close to zero at every size, which suggests the ban is well understood.

What a charity can do in an election year is still substantial:

• Run nonpartisan voter registration and get out the vote drives, not targeted by party
• Hold candidate forums that invite every qualified candidate and give each the same opportunity
• Publish voter guides that cover a broad range of issues without indicating preferred positions
• Keep advocating on its issues, as long as it does not tie them to a candidate
• Rent its mailing list or premises to candidates at the usual rate, if it offers the same to all of them

Staff and directors keep their own political rights. A director may endorse a candidate in a personal capacity, and may be identified by title for identification only, as long as the organization’s resources, publications and official accounts are not used. The social media guide covers the account rules, which is where most accidental violations now happen.

Private foundations, and funding advocacy

Private foundations cannot lobby at all: any lobbying expenditure is a taxable expenditure. They can still fund charities that lobby. A general support grant to a public charity is not treated as a lobbying expenditure even if the charity lobbies, and a grant for a specific project is safe as long as it does not exceed the non-lobbying part of the project budget. This is a large part of why the public charity and private foundation distinction matters in practice.

For the charity receiving the money, the terms of each grant and gift determine how it can be spent and how it must be counted. Advocacy work is often carried by a handful of major donors and foundations, and what each one agreed to, whether general support, a project grant with a non-lobbying budget, or a gift restricted to research, has to be findable at filing time and when the relationship passes to a new fundraiser. For a development team managing many such funders, Gratefully assembles that history from the CRM, documents and email and produces handover notes when a relationship changes hands, at $4,800 a year for five seats. It is the wrong purchase for a small charity with two or three funders, where the grant letters in a shared folder and a line in the budget are enough, and it records what funders agreed rather than doing the lobbying accounting itself.

Donors to a 501(c)(3) keep their deduction whether or not the charity lobbies. Gifts to a 501(c)(4) are not deductible as charitable contributions, which is why organizations with a large advocacy programme often run both: a charity for research and education, and an affiliated 501(c)(4) for unlimited lobbying and limited campaign work, with separate books and no charitable money crossing over.

What the board should put in place

A charity that lobbies even occasionally should decide deliberately rather than drift. The board should agree whether to make the 501(h) election, who may speak for the organization on legislation, and how lobbying time and costs are recorded, because both tests require the numbers at year end. A short written policy that covers lobbying and the campaign ban belongs with the organization’s core policies, and approving it is the kind of decision covered in the board of directors guide.

Tracking is simpler than it sounds: a timesheet code for lobbying, a budget line for fees and materials, and a note on any communication that mentions a specific bill. Under the expenditure test that is enough to complete Schedule C Part II-A. Under the substantial part test Schedule C Part II-B asks which methods were used, including volunteers, paid staff, media, mailings, rallies and grants to other organizations for lobbying.

Reporting it on Form 990

Part IV line 4 asks every 501(c)(3) whether it engaged in lobbying or had a 501(h) election in effect, and a Yes requires Schedule C Part II. Line 3 asks about campaign activity, and a Yes requires Schedule C Part I. Fees to outside lobbyists go on Part IX line 11d, and travel or entertainment for public officials on line 18, which 1,362 charities (0.53%) report.

The answers do not always line up. 547 charities paid outside lobbyists and answered No to the lobbying question. Some will be correct, because the firm worked on regulations rather than legislation, but it is a combination a reviewer will notice, and worth checking before filing. The full walk through the return is in the Form 990 guide, and the categories of exempt organization and their political freedoms are compared in what a nonprofit organization is.

Method and limits

The data is the IRS SOI annual extract for processing year 2024, restricted to 501(c)(3) organizations with at least $25,000 of total expenses, which gives 256,539 returns, and to 10,067 501(c)(4) organizations on the same terms for comparison. Lobbying and campaign activity are Part IV lines 4 and 3, and line 4 is also answered Yes by an organization with a 501(h) election in effect, so a few of the 12,571 may have elected without lobbying that year; outside lobbyist fees are Part IX line 11d, column A. The 501(h) ceiling is computed from total functional expenses.

Four limits. Organizations filing Form 990-EZ or 990-N are absent. Schedule C is not in the extract, so total lobbying spending, the 501(h) election itself and the split between direct and grassroots lobbying cannot be measured; line 11d is outside fees only. The Part IV lobbying question is asked only of 501(c)(3) organizations, so the 501(c)(4) comparison uses fees. And nothing here is legal advice; an organization planning a significant lobbying or ballot measure campaign should take it.

Questions people ask

Can a nonprofit lobby?

Yes. A 501(c)(3) charity may lobby as long as it is not a substantial part of its activities, or within a dollar ceiling if it makes a 501(h) election. 4.9% of charities filing a full Form 990 report lobbying, rising to 38.3% of those over $25m. What a charity cannot do is support or oppose a candidate for office.

How much can a nonprofit spend on lobbying?

Under a 501(h) election, 20% of the first $500,000 of exempt purpose spending, falling in steps to 5% above $1.5m, with a cap of $1,000,000, of which a quarter may be grassroots lobbying. Without the election there is no fixed figure: lobbying must not be a substantial part of activities, judged on time and effort as well as money.

What is the difference between advocacy and lobbying?

Lobbying is an attempt to influence specific legislation, either by contacting legislators or by urging the public to. Advocacy is wider and mostly unrestricted: public education, research, commenting on regulations, and working with agencies are all advocacy that is not lobbying under the 501(h) rules.

Can a nonprofit endorse a political candidate?

No. A 501(c)(3) may not support or oppose any candidate for public office in any amount, including endorsements, campaign contributions and statements on its website or social media. Staff and directors may endorse candidates personally, without using the organization's resources. 501(c)(4) organizations may do some campaign work.

Can a nonprofit donate to a political campaign?

A 501(c)(3) cannot. A contribution to a candidate's campaign is prohibited campaign intervention and triggers a 10% excise tax on the organization, a tax on managers who agreed to it, and possible loss of exemption.

What are examples of nonprofit lobbying?

Meeting a state legislator to argue for a bill, testifying on pending legislation when not formally invited, emailing supporters to call their representative about a named bill, and campaigning for or against a ballot measure. Research reports, responses to written requests from a committee, and comments on proposed regulations are not lobbying.

Should a nonprofit make the 501(h) election?

Usually, if it lobbies regularly. The election replaces a vague test with a dollar limit, ignores volunteer time, and replaces loss of exemption with a 25% tax on any excess unless the excess persists. It is made on Form 5768. Churches and private foundations are not eligible.

Where do these figures come from?

The IRS Statistics of Income annual extract of Form 990 returns, processing year 2024, covering 256,539 charities and 10,067 501(c)(4) organizations with at least $25,000 of spending. It is a free public download, and the analysis script is published alongside the method.

This is reference information, not legal or tax advice. Rules vary by state and change over time. For a decision that carries real consequences, check the current text at irs.gov or your state registry, and talk to a nonprofit attorney or CPA.