CABE Board Meeting November 15 2014 Federal Tax Laws California Political Reform Act Relevant Laws A 501c3 nonprofit will lose its taxexempt status and its ability to receive deductible charitable contributions if a ID: 668976
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Slide1
Lobbying Rules
for Nonprofits
CABE Board Meeting
November
15,
2014Slide2
Federal Tax Laws
California Political Reform Act
Relevant Laws Slide3
A 501(c)(3) nonprofit will
lose its tax-exempt status and its ability to receive deductible charitable contributions if a
substantial
part of its activities are carried on to influence legislation.
Federal Tax LawSlide4
Advocacy on State ballot measures is considered grassroots lobbying.
“Insubstantial Part” Test
501(h) Expenditure Test
Federal Tax LawSlide5
Complete Form 5768
Calculate your “lobbying limit
”
Spend up to 25% of the lobbying limit on grassroots
lobbying
501(h) Expenditure TestSlide6
501(h) Expenditure Test
If the amount of exempt purpose expenditures is:
Lobbying nontaxable amount is:
≤ $500,000 20% of the exempt purpose expenditures
>$500,00 but ≤ $1,000,000
$100,000 plus 15% of the excess of exempt purpose expenditures over $500,000
> $1,000,000 but ≤ $1,500,000
$175,000 plus 10% of the excess of exempt purpose expenditures over $1,000,000
>$1,500,000
$225,000 plus 5% of the exempt purpose expenditures over $1,500,000
- See more at: http://www.councilofnonprofits.org/nonprofit-advocacy/501h-election#sthash.s1kcjcyC.dpuf
Slide7
If an organization has
$3 million in expenditures5% times $1,500,000
=
$75,000$75,000 plus $225,000 = $300,000 (lobbying limit)$300,000 times 25% = $75,000 (grassroots lobbying limit)
501(h) Expenditure TestSlide8
EXAMPLE:
Nonprofit Budget = $100,000
Lobbying Limit
= $20,000Grassroots Limit = $5,000
501(h) Expenditure TestSlide9
Only covers
expenditures and the following expenditures are exempt:
Making available the results of nonpartisan analysis, study or research
Communications with bona fide membersFederal LawSlide10
Supporting or opposing ballot measures in California is
not considered lobbying under California lobbying law
Existing nonprofits that solicit/receive contributions of $1000 or more in a calendar year earmarked for the passage or defeat of a ballot measure (or spend more than $50,000 on ballot measures) must register as a committee and
file campaign reportsCalifornia Disclosure LawsSlide11
Employees spending less than 10% of their time
Fee for services at fair market valueBona fide member communicationsNewsletters
Public Education Campaigns
CA Disclosure Law ExemptionsSlide12
Garcia
, Hernández, Sawhney & Bermudez, LLP
www.ghsblaw.com