MANP Nonprofit Resource Library

Taking the 501(h) Election 

11-01-2022 08:11 PM

Federal tax laws already allow every charitable nonprofit to engage in some legislative lobbying activities, providing that, “no substantial part of the activities” may be for “carrying on propaganda, or otherwise attempting, to influence legislation.”  

The definition of “insubstantial” has not been provided by Congress or the IRS, and the line between an “insubstantial” and a “substantial” amount of legislative lobbying activities is hazy at best, especially because it depends on how the IRS retroactively weighs the “facts and circumstances” of each situation.

Therefore, to avoid the uncertainty of a nonprofit's lobbying activity being measured with this subjective test, charitable nonprofits should consider filing a short form with a long name: IRS Form 5768 (Election/Revocation of Election by an Eligible Section 501(c)(3) Organization to Make Expenditures to Influence Legislation). Filing the form (also known as "taking the 501(h) election") allows nonprofits to elect to be measured by the objective “expenditure test” instead. 

#advocacy #lobbying #reporting​​​

0 Favorited
0 Files