Lobbying--Chapter 17 of The Nonprofit Handbook
Lobbying is the time-honored tradition of communicating with elected or appointed officials for the purpose of influencing legislation and other public policy. The word itself derives from the outer room of the legislative chambers where paid professionals congregated, seeking to button-hole legislators before they cast their votes. In recent years, the term has developed a pejorative character as the public, justified or not, perceives special interest lobbyists as using their influence to work against the public interest. This general mistrust of lobbyists has been exacerbated by a corruption scandal that rocked the nation’s Capital in 2006 involving the lobbying efforts of Jack Abramoff, an independent lobbyist, with close ties to Congressional leaders and the White House.
Organized lobbying is an effective way to communicate an organization’s views on a pending issue, to promote a favorable climate for those served, and to directly influence the outcome of decision-making. Lobbyists are employed by organizations who view themselves as working in the public interest―speaking for the poor and disenfranchised, improving the environment, establishing programs to serve the disabled, or expanding government support for vital human service and community needs.
Whether referred to as “advocacy,” “government relations,” or “lobbying,” it is a right afforded by the First Amendment to the U.S. Constitution relating to freedom of speech, as well as the right to petition to redress grievances. Many of the public policy decisions made in Washington, state capitals, and cities and towns have a direct effect on nonprofit organizations and the client interests they serve.
Many nonprofits are expressly created to advance one cause or another whose fate is considered by a government body.
Lobbying is regulated at both the state and federal levels. Although there may be similarities between state and federal requirements, lobbyists must register separately with federal and state regulatory offices.
Federal Requirements
The Lobbying Disclosure Act, PL 104-65, was enacted on December 19, 1995, and provides major changes in registration and reporting requirements for lobbying the Congress and the Executive Branch. The bill also includes a provision (Section 18) that places restrictions on the lobbying by nonprofit civic leagues and social welfare organizations, among others, which receive federal funds. The effective date of the act was January 1, 1996. Minor changes were made by the Lobbying Disclosure Technical Amendments Act of 1998. On September 14, 2007, President George Bush signed into law the Honest Leadership and Open Government Act, which made substantive reforms affecting lobbying, a response to a major scandal. This law made major changes in lobbying reporting requirements, gift disclosure, and travel financed by lobbyists. Of particular importance are the following:
• Lobbying disclosure forms are required to be filed quarterly rather than semi-annually.
• Thresholds for reporting lobbying expenses were reduced.
• Information requirements for reporting and disclosure were expanded.
• New reports are required relating to political contributions made by, or transferred to politicians by, lobbyists.
• With some exceptions, gifts to members of Congress and their staff from lobbyists are prohibited.
• With some exceptions, lobbyists, or organizations that employ them, may not pay for the private travel of members of Congress or their staff.
• Lobbyists may not participate in privately funded Congressional travel.
The Lobbying Disclosure Act defines “lobbying contact” as―
any oral or written communication (including an electronic communication) to a covered executive branch official or a covered legislative branch official that is made on behalf of a client with regard to―
(i) the formulation, modification, or adoption of Federal legislation (including legislative proposals);
(ii) the formulation, modification, or adoption of a Federal rule, regulation, Executive order, or any other program, policy, or position of the United States Government;
(iii) the administration or execution of a Federal program or policy (including the negotiation, award, or administration of a Federal contract, grant, loan, permit, or license); or
(iv) the nomination or confirmation of a person for a position subject to confirmation by the Senate.
It defines “lobbyist” as―
any individual who is employed or retained by a client for financial or other compensation for services that include more than one lobbying contact, other than an individual whose lobbying activities constitute less than 20 percent of the time engaged in the services provided by such individual to that client over a six month period.
A packet of materials, including a copy of the Lobbying Disclosure Act, registration and expense reporting forms, instruction booklets for filling out the forms, and answers to frequently asked questions, can be obtained by contacting―
Secretary of the Senate
Office of Public Records
232 Hart Senate Office Building
Washington, D.C. 20510
(202) 224-0758
Unless they are self-employed, individual lobbyists do not register with the House and Senate. The law requires registration by lobbying firms, defined as entities with one or more employees who act as lobbyists for outside clients. A separate registration is required for each client. A typical nonprofit that has one or more employees who engage in lobbying activities is required to register, provided that its expenses attributable to lobbying exceed $10,000 in a semi-annual period (either January 1-June 30 or July 1-December 31). Registration is required no later than 45 days after a lobbyist first makes a lobbying contact or is employed to do so, whichever comes earlier. To register, the organization must electronically file a Form LD-1 in duplicate with the Secretary of the Senate and the Clerk of the House:
Secretary of the Senate Clerk of the House
Office of Public Records Legislative Resource Center
232 Hart Senate Office Building B106 Cannon House Office Building
Washington, D.C. 20510 Washington, D.C. 20515
(202) 224-0758 (202) 226-5200
Registration discloses general information, a description of the registrant’s business or activities (e.g., social welfare organization), and a list of employees who act or are expected to act as lobbyists (an employee is not considered to be a lobbyist if he/she spends less than 20% of his or her time lobbying). Also disclosed are an indication of the issues to be lobbied (selected from a list of 74 general categories, such as “welfare”), and the specific issues to be addressed, including specific bill numbers or executive branch activities.
Online forms and instructions can be found at: http://lobbyingdisclosure.house.gov/
Registered organizations are required to file four quarterly reports each year. The reports are due 20 days after each quarter. One copy each must be filed with the Secretary of the Senate and the Clerk of the House. Organizations employing lobbyists must report whether their lobbying expenses were less than $5,000, or more. If lobbying expenses were more than $5,000, the organization must make a good-faith estimate, rounded to the nearest $10,000, of its lobbying expenses during the reporting period.
Organizations must also file a separate sheet on each general lobbying issue that was engaged, specific information about each bill or executive branch action, houses of Congress and federal agencies contacted, and the name and title of each employee who acted as a lobbyist.
Each state has its own registration and reporting requirements for lobbyists and organizations that employee them. Consult the state directory in the back of this book for the requirements in your state. But don’t rely on this book for these legal requirements, as they may have changed snce publication. Always contact the office that administers this state law for reliable nformation.
• Get to Know Legislators―Give them the information they need to help the nonprofit organization meet its objectives.
• Identify Key Contacts―Survey the organization’s network to discover who has a personal or professional relationship with key public policy decision-makers, and who contributes to political campaigns.
• Target Decision-Makers―Pay special attention to legislative leadership, the majority and minority chairpersons of relevant committees, and their staffs.
• Use Local Resources―Identify constituents connected to the organization, such as board members and organization members. Match them with their legislators, and assign them to meet with these particular legislators on issues of concern to the organization.
• Schedule Lobby Days―Many nonprofit organizations and other groups schedule a Capitol Lobby Day. Such events typically include a briefing on an important pending issue by the organization’s executive director, a rally and/or press conference in the Capitol, scheduled office visits to local legislators and legislative leadership, and a closing session conducted by the organization’s staff to exchange information gleaned from those visited.
• Schedule Press Conferences―Nongovernmental organizations can hold press conferences in the Capitol or on the steps of the Capitol.
• Circulate Petitions―While viewed as one of the least effective forms of lobbying, the presentation to a legislator or government official of a petition signed by thousands of persons is a worthy “photo opportunity” and may get some media coverage.
• Present Awards―Many nonprofit organizations present a “Legislator of the Year” or similar award to recognize key legislators for their interest in the issues of concern to that nonprofit. These awards further cement a positive relationship and ensure continued access to that legislator.
• Arrange Speaking Engagements―Most legislators are delighted to receive invitations to address groups of their constituents. Such gatherings provide opportunities to educate the legislator on issues of interest to the organization through questions and comments from the audience.
• Provide Contributions―Organizations exempt under Section 501(c)(3) may not establish political action committees. Other exempt organizations may do so and pay administrative and other indirect expenses of their affiliated Political Action Committees (PACs). However, money is still considered to be the mother’s milk of politics. Those who make contributions find their access to public policy makers is vastly improved. As a general rule, the more an organization’s activities are perceived to be in the public interest, the less need there is to rely on making political contributions to develop access and to deliver the organization’s message. A 2006 publication of the Alliance for Justice, The Connection: Strategies for Creating and Operating 501(c)(3)s, 501(c)(4)s, and PACs is available for $35, including shipping and handling (http://www.afj.org). It is an excellent guide for charities and social welfare organizations that want to influence the political process without violating federal laws and regulations.
• Request Public Hearings―Public hearings held by a legislative committee provide an opportunity for media coverage, a forum for an organization’s point of view, and a way to galvanize support for an issue. Having an organization’s clients fill a hearing room sends a clear message to the committee members and staff. While it is true that the suggestion by a committee chairperson to hold hearings on an issue may be a strategy to delay or kill a bill, public hearings can nevertheless be utilized by the organization to focus attention on an issue. A hearing can generate public and media support. It can provide a forum for improving the proposal, thereby minimizing opposition to the legislation.
The U.S. Congress in 1976 enacted a law that expanded the rights of nonprofits to lobby. However, it was not until August 30, 1990, that the IRS and Treasury Department promulgated final regulations to implement this law. In the preceding 14 years, there had been a pitched battle between nonprofits and the Congress. Nonprofits fought diligently to preserve their rights to lobby under the Constitution and the 1976 law. Some in the executive branch also sought to deny those rights. The principal issue is the definition of the term “substantial,” since the law prohibits 501(c)(3) nonprofits from carrying on “substantial” lobbying activities.
The regulations permit electing organizations to spend on lobbying, on a sliding scale, up to 20% of their first $500,000 in expenditures, and up to 5% of expenditures over $1.5 million―with a $1 million ceiling in each year. Organizations can spend no more than a quarter of their lobbying expenses on grass-roots lobbying (communications to the general public that attempt to influence legislation through changing public opinion).
These regulations exclude certain expenditures from lobbying, including―
1. Communications to members of an organization that brief them on provisions of legislation, but do not urge that they take action to change those provisions.
2. Communications to legislators on issues that directly affect the organization’s own existence, such as changes to tax-exempt status law, or lobbying law.
Of major importance to nonprofits, the organization would no longer be subject to the “death penalty” (i.e., the total revoking of their tax-exempt status) for violations. There is a system of sanctions replacing that.
All 501(c)(3)s must report the amount they spend on lobbying on their Form 990 annual federal tax returns.
The August 1990 regulations of the Treasury Department with respect to lobbying are quite complicated. An excellent 57-page publication, Being a Player: A Guide to the IRS Lobbying Regulations for Advocacy Charities, is available from The Alliance for Justice, Eleven Dupont Circle, 2nd Floor, Washington, D.C. 20036 (http://www.afj.org; 202-822-6070). The guide explains in clear and precise terms what is permitted under these regulations, and includes many sample forms and worksheets. The cost is $15.
In January 2010, the U.S. Supreme Court handed down a 5-4 decision in the case of Citizens United v. Federal Elections Commission that raised an issue about whether statutory limits on the exercise of free speech by charities is constitutional. The primary focus of the decision was to overturn two previous precedents (Austin v. Michigan Chamber of Commerce,1990, and McConnell v. Federal Election Commission, 2003), that had upheld statutory restrictions on campaign spending by corporations and unions. This case could, but not necessarily, have an effect on current statutory limitations on lobbying by tax-exempt organizations, including those that are exempt under section 501(c)(3).
1. When visiting a Legislator―
• Make an appointment, if at all possible.
• Arrive promptly, be warm and courteous, smile, and speak for five minutes or less on a single issue.
• Don’t threaten or exaggerate your political influence. If you are really influential, the legislator will already know.
• Listen carefully to the legislator’s response and take notes; be polite, but keep the legislator on the subject.
• Leave the legislator with something in writing on the issue, if possible.
• Request that the legislator do something to respond to the organization’s position―vote in a specific way, take action on a problem, or send a letter to legislative leadership requesting action.
• Follow up the meeting with a thank-you note, taking advantage of this second opportunity to reinforce the organization’s views and remind the legislator of the action requested.
• Do not feel slighted if referred to a staff member―legislators often have last-minute important meetings or unscheduled votes. Staff members are valued advisors who, in some cases, have as much or more influence than the legislator in the process and may have more time to help.
2. When writing to a Legislator―
• Restrict letters to one issue; be brief and concise.
• Clearly indicate the issue of concern, the organization’s position on it, and the bill number, if known.
• Write the letter in a manner that will require a written response and include a return address.
• Use facts to support positions, and explain how the issue affects the organization, its members, and the community.
• Use professional letterhead, if appropriate. Type the letter, if possible, or write it neatly and legibly.
• Try not to indicate that the letter may be a form letter sent to scores of other legislators.
• Make the letter positive―don’t threaten the loss of votes or campaign contributions.
• Follow up after the vote on the issue to indicate to the legislator that the organization is following his or her actions with interest and that it appreciated or was disappointed by that vote.
3. When telephoning a Legislator―
• Speak clearly and slowly.
• Make sure that callers identify themselves in a way that will permit the legislator to reach them or the organization by letter or telephone.
• Follow the guidelines listed above for writing and visiting that are equally appropriate for telephoning.