Page 112 - Washington Nonprofit Handbook 2018 Edition

publishing voter education materials that may create an appearance of bias
regarding issues that are significant to the organization, e.g., a “voter’s guide” that
compiles incumbents’ voting records only on issues that are important to the
organization.

CHAPTER 32. Legislative Activity (“Lobbying”)

a. “No Substantial Part” Limitation

The tax law distinguishes political activity (i.e., participating in campaigns for
political office) from attempts to influence legislation (commonly referred to as
lobbying). An organization engages in attempts to influence legislation if it contacts
legislators or their staff – or urges the public to do so – for the purpose of
proposing, supporting or opposing legislation.

A 501(c)(3) organization that is a public charity may engage in lobbying, but
only if such activities do not constitute a “substantial part” of the organization’s
activities. If the IRS determines that a public charity has attempted to influence
legislation as a substantial part of its activities, the organization’s exemption may be
revoked. It is unclear when lobbying activity will be deemed to constitute a
substantial part of an organization’s activities since there is no precise standard.

Certain other types of tax-exempt organizations, e.g., social welfare
organizations qualifying under section 501(c)(4), are not subject to limitations on
legislative activities. If an organization wishes to engage primarily in lobbying, it
should seek exemption under a category other than section 501(c)(3).

TIP:

Washington State has additional registration requirements for lobbying activities that are
separate and distinct from Federal IRS rules. See RCW 42.17A.600-655 for more on State
law requirements. For more information on Washington State requirements for lobbying
go to https://www.pdc.wa.gov.

b. Section 501(h) Election

(i) Generally

Most section 501(c)(3) organizations that are public charities, other than
churches, may elect to become subject to a more objective standard for lobbying
activities than the vague “substantial part” test. This is called a section 501(h)

WASHINGTON NONPROFIT HANDBOOK -101- 2018