Self-Defense Lobbying Rules for Public Charities
Community Foundations and other public charities may engage in an insubstantial amount of lobbying as part of normal operations. But what are the rules around engaging in self-defense?
Internal Revenue Code Section 4911(d)(2)(C) provides public charities with an exception to the definition of lobbying for appearances before or communication to any legislative body about decisions which might affect the organization’s operations. The accompanying Treasury Regulations clarify that self-defense communication that falls within this exception is not considered direct lobbying and does not need to be tracked as a lobbying expenditure under the 501(h) expenditure test. This exception is generally the same as the exception that applies to private foundations under 4945(e). The definition of self-defense communications can be broken down as:
- Appearance before or
- Communication to
- Any legislative body
- About a decision which might affect:
- The existence of the foundation;
- The foundation’s powers or duties;
- Its tax-exempt status; or
- The deduction of contributions to the foundation
For a foundation’s activities to fall within the bounds of self-defense, all four parts must be present. Namely (1) communication or appearance (2) to any legislative body (3) about a decision which might affect (4) the foundation’s existence; powers or duties; tax-exempt status; or the deduction of contributions to the foundation.2 As with the private foundation rule, the self-defense communications exception only covers direct communications with legislators and does not apply to communications that encourage the general public to take action (grassroots lobbying).
Note that the self-defense exception applies specifically to public charities that have taken the 501(h) election. Non-electing public charities may therefore need to include communications with legislators that might otherwise fall under this exception in their total reported lobbying activity. However, assuming a non-electing public charity does not engage in any other significant additional lobbying activity, it’s unlikely that occasional communications in favor or against specific legislation that affects the charity’s existence, powers or duties, tax-exempt status, or the deductibility of contributions made to it would cause the charity to fail the “insubstantial part” test.
