Nonprofits have strict compliance rules for what they can – or, more correctly, cannot – do related to lobbying and political expenditures. Although these terms seem to complement one another, they are in fact distinct from each other, and the layman’s understanding of the terms is not the same as the IRS’s definitions in most cases.
Worse yet, having a wrong understanding of these terms can cause a nonprofit to be subject to more income tax than they should be, or to subject themselves to an IRS audit. Therefore, it is imperative to understand the differences in these activities, and how they impact various tax-exempt designations, to eliminate confusion and ensure your organization complies with the intentions of the IRS.
Read Yeo & Yeo’s eBook, Lobbying and Political Expenditures for Nonprofits to learn more:
- What is lobbying?
- Considerations in making a 501(h) election
- Political expenditures: 501(c)(3) vs. Non-501(c)(3)