de-mystifying the lobbying and political campaign intervention rules jacqueline c. leifer, esq....

De-Mystifying the Lobbying and Political Campaign Intervention Rules

Jacqueline C. Leifer, Esq.

Michael B. Glomb, Esq.

November 4, 2015

© 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved.

Disclaimer

• Presentation is intended as general information only, not as specific legal advice

• Consult qualified legal counsel for specific questions

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Overview

• Focus on organizations exempt under Section 501(c)(3) and that expend federal grant funds

–Legislative Advocacy vs. Political Advocacy

–Types of Legislative Advocacy

–Limits on Legislative Advocacy

–Political Campaign Activities

–Individual vs. Health Center Activities

–Intersection of Advocacy and Political Campaign Activity

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Advocacy Defined

• What is advocacy?

–“the act or process of supporting a cause or proposal” Merriam-Webster Dictionary

• Advocacy (for health centers, on issues, etc.) can and does occur outside of the legislative or political arena

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Legislative Advocacy

• Legislative Advocacy (Lobbying)

– Advocating the enactment or defeat of pending or proposed

federal, state, or local legislation (incudes referenda and ballot

measures)• Direct lobbying – contact with legislators or legislative staff• Indirect (“grassroots”) – contact with third parties urging them to contact

legislators

– Common exceptions• Does not include actions by executive, judicial, or administrative bodies

(but note FY 2015 HHS appropriations rider)• Providing objective, educational, nonpartisan information is not lobbying

so long as the communication does not support or oppose legislation

• State and/or private funds may have restrictions on lobbying activities

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Political Advocacy

• Intervening in a political campaign– for or against a candidate– in an election for public office

• Participation can = intervention

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Legislative Advocacy vs. Political Advocacy

• Legislative advocacy is permissible (within certain limits)

– Federal grant funds cannot be used for legislative advocacy

• Political campaign activity is entirely prohibited for 501(c)(3) organizations

– Federal grant funds cannot be used for political activity

• Violations may result in:

– Revocation of the organization’s tax-exempt status

– Imposition of an excise tax on the amount of money spent on the

activity

– Cost disallowance

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Limitations Under Federal Awards

• DHHS Appropriations (Pub. L. 113-235, Division G, Title V, Section 503(b))

– No funds may be used for:• Publicity or propaganda . . .designed to support or defeat the enactment of

legislation before the Congress or any State or local legislature or legislative body, except in presentation to the Congress or any State or local legislative body itself, designed to support or defeat any proposed or pending regulation, administrative action, or order issued by the executive branch of any State or local government• To pay the salary or expenses of any grant or contract recipient or agent

acting for such recipient, related to any action designed to influence the enactment of legislation, appropriations, regulations, administrative action, or Executive order proposed or pending before the Congress or any State government, State legislature, or local legislature or legislative body

– Except for “normal and recognized executive-legislative relationships”

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• DHHS Grants Administration Regulations (45 C.F.R 75.450 Lobbying)

– Costs associated with any attempt to influence the following are unallowable:• The introduction of Federal or State legislation• The enactment or modification of any pending Federal or State legislation through

communication with any member or employee of the Congress or a State legislature (including efforts to influence state or local officials to engage in similar lobbying activity)

• The enactment of or modification of any pending Federal or State legislation by preparing, distributing, or using publicity or propaganda, or by urging members of the general public, or any segment thereof, to contribute to or participate in any mass demonstration, march, rally, fundraising drive, lobbying campaign or letter writing or telephone campaign

• Any government official or employee in connection with a decision to sign or veto enrolled legislation

• Legislative liaison activities, including attendance at legislative sessions or committee hearings, gathering information regarding legislation, and analyzing the effect of legislations, when such activities are carried on in support of or in knowing preparation for an effort to engage in unallowable lobbying

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• DHHS Grants Administration Regulations (45 C.F.R 75.450 Lobbying)

–Exceptions:• Technical or factual presentations to Congress or State legislature on topics

directly related to the performance of an award, in response to a documented request, provided information is readily obtainable• Lobbying (otherwise unallowable) to influence State legislation in order to

reduce cost or avoid material impairment of grantee’s authority to perform the grant• Any activity specifically authorized by statute to be undertaken with funds

from the Federal award• Any activity that is not “lobbying” or “influencing legislation” under Section

501(c)(3) of the IRC• Nonpartisan analysis, study or research reports• Examination and discussion of broad social economic and similar problems

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• The “Byrd Amendment” (31 U.S.C. 1352) (45 C.F.R. Part 93)

– Prohibits using Federal funds to influence Federal officials in

connection with the award renewal, extension of a Federal grant,

contract, loan, or cooperative agreement

– Requires (for awards greater than $100k) certification that no

Federal funds have or will be paid to any person to influence the

award and discourse of any non-Federal funds paid to any person to

influence an award

– Does not apply to reasonable compensation paid for professional or

technical services rendered regarding preparation, submission, or

negotiation of an award

– Does not apply to general administrative or legislative “lobbying”

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Section 330 Requirements

• Section 330 of the Public Health Service Act provides, in part:

“Nongrant funds . . . Including any such funds in excess of those

originally expected, shall be used as permitted under this section, and

may be used for such other purposes as are not specifically prohibited

under this section if such use furthers the objectives of the project”

(emphasis added)• According to HRSA, the “furthering the objectives of the project”

standard is met by “ensuring that the uses of non-grant funds benefit the individual health center's patient/target population.” HRSA PIN 2013-01, at 6

• Whether the expenditure of non-grant funds for lobbying purposes meets the standard is a question of fact, determined on a case by case basis

• Rationale for expenditure should be documented

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Lobbying Activities Under IRC 501(c)(3)

• Allowable lobbying limits

–Substantial part test• No precise definition• Measures lobbying activities

–Expenditure test (IRC Section 501(h))

• Clearer standard• Allows 501(c)(3) organizations to elect to have their allowable

lobbying measured by amounts expended for lobbying– Funds may be spent within certain limits, up to $1 million a year

• (e.g. 20% of first $500 thousand of “exempt purpose expenditures”)

– No more than 25% of organization’s allowable lobbying expenses may be used for grassroots lobbying

• Applies only if organization elects 501(h) treatment

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Lobbying Activities: Direct vs. Grassroots

• Distinguish “Direct” and “Grassroots” lobbying (Grassroots limited to 25% of total allowable lobbying expenses)

– Direct lobbying - attempt to influence specific legislation through a communication with Member or employee of legislative body, or

– Any government official who may participate in formulation of legislation, if purpose is to influence legislation

– Specific legislation• Legislation that has been introduced• Specific proposal that has not been introduced

– Communication reflects a view on such legislation/proposal

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Lobbying Activities: Direct vs. Grassroots

– Grassroots Lobbying – attempt to influence specific legislation through communication to general public (or segment) if communication:• Refers to specific legislation• Reflects a view on such legislation; and• Contains a “call to action”

– e.g. “write your Congressman”– Provides address or tel. number of member/staff– Contains petition or postcard– Specifically identifies a legislator who will vote on the matter

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Lobbying Activities Under IRC 501(c)(3) - Exceptions

• Examination and discussion of broad social, economic, and similar problems• Requests for technical advice

–Written request

–By committee, etc., not individual member

–Readily available to all members• “Self-defense” communications

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Political Campaign Activities

• A 501(c)(3) organization (and its affiliates, directors, employees and agents acting on behalf of the organization) cannot engage in or conduct any political campaign activities• Political campaign activities:

– Making contributions to candidate or party

– Endorsing/promoting candidates

– Activities that favor/disadvantage candidates – appearances

are important

– Publishing candidate statements

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Political Campaign Activities

• Candidate for Public Office

–Elective for public office at any level of government

–Does not matter if election is not partisan or if the

candidate is unopposed

• Political Campaign

–Deemed to begin when someone announces his/her

candidacy or is proposed by others for an elective

public office

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Personal Activity vs.Health Center Activity

• Activities/statements by directors, staff, or volunteers acting on their own behalf (own time, own resources) are not restricted, so long as no organizational resources are used and the organization is not associated or identified with the activities• Written policies for staff (including volunteers) are critical

–Workplace activity

–Use of center resources

–Social media

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Political Campaign Activities: Individual Activity

• Leaders should not make partisan comments in official organization publications or at official functions of the organization

– Does individual say he/she is speaking on behalf of the organization?

– Does an individual’s endorsement/opposition occur at the organization, or during an official meeting (e.g., Board meeting)?

– Does an individual’s endorsement/opposition use the organization’s resources (e.g., telephones, stationary)?

“The political campaign intervention prohibition is not intended to restrict free expression on political matters by leaders of organizations speaking for themselves, as individuals. Nor are leaders prohibited from speaking about important issues of public policy.” IRS Revenue Ruling 2007-41

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Political Campaign Activities: Issue Advocacy

• Tax-exempt organizations are permitted to take positions on public policy issues, including issues that divide candidates in an election for public office, as long as the message does not favor or oppose a candidate

• Avoid issue advocacy that functions as political campaign intervention• Communication is considered in context

– Does statement identify candidates?

– Does statement express approval or disapproval for candidates’ positions and/or actions?

– Does statement refer to the election or voting?

– Is the timing of the statement related to a non-electoral event such as a scheduled vote on specific legislation?

“Section 501(c)(3) organizations may take positions on public policy issues, including issues that divide candidates in an election for public office. However, section 501(c)(3) organizations must avoid any issue advocacy that functions as political campaign intervention.” IRS Revenue Ruling 2007-41

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Political Campaign Activities: Organization Events

• If a candidate is invited to speak at an organization event in his/her capacity as a political candidate, take steps to ensure:

– Equal opportunity to participate extended to all political candidates seeking the same office;

– Does not support/oppose any candidate; and

– No political fundraising/electioneering activity occurs• If a candidate is invited to speak at an organization event for reasons

other than his/her candidacy, take steps to ensure:– Individual speaks only in a non-candidate capacity and does not mention the

candidacy or the election;

– Organization clearly indicates the capacity in which the candidate is appearing and does not mention the candidacy or the upcoming election in the communications announcing the candidate’s attendance; and

– Organization maintains a nonpartisan atmosphere on the premises

– No electioneering

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Political Campaign Activities: Candidate Forums

• Must be conducted in a nonpartisan manner

–Invite all candidates for the particular office

–Ensure the questions cover a variety of topics, not just

those of interest to the organization

–Avoid candidate electioneering activities

–Non-biased questioning

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Political Campaign Activities: Candidate Questionnaires

• Should cover a variety of topics, not just those of interest to the organization, i.e. be done in the public interest• Invite responses from all candidates for the

particular office• Do not edit responses, or present some in more

favorable light than others

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Advocacy and Social Media

• Social media, e.g. Facebook, twitter, blogs, websites, are “communications,” but rules/limits are unclear and evolving• “Personal” use of center resources will be attributed to

the center • Social Media and Lobbying

–Generally subject to rules/limits on lobbying communications

–Distinguish direct and grassroots

–Consider “political” content

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• Social Media and Campaign Intervention–Websites• Generally treated like any other communication• Neutral links to outside websites likely OK, but consider content as a

whole• Organization is responsible for content of linked website

– Proximity is important – “facts and circumstances” control–Monitoring is essential

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Voter Registration/ Get Out the Vote Activities

• Permissible so long as conducted in an entirely nonpartisan fashion

–Do not target areas/populations expected to favor one

candidate/party

–No candidate electioneering activity

–Do not use Federal grant funds

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Tips For Advocates in a Political Campaign Environment

• “Facts and Circumstances” of the particular situation control

–When in doubt get expert advice

• Consider timing of your activities• Multiple activities can be troublesome• Consider your environment• Candidates are focused on the election, not on

tax/federal grant law • Complaints get more attention than the resolution

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Resources

See Tax Exempt Organizations and Political Campaign Interventionwww.irs.gov/charities

IRS Rev. Rul. 2007-41 (June 18, 2007)

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Contact Information

de-mystifying the lobbying and political campaign intervention rules jacqueline c. leifer, esq....

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