1. Grassroots Lobbying & Coalitions: Legal Issues American League of Lobbyists Lobbying Certificate Program Ronald M. Jacobs May 10, 2010 Ronald M. Jacobs May 10, 2010 rmjacobs@venable.com

2. Agenda for Today Efficacy & Ethics Disclosure Tax Campaign Finance Advertising Efficacy & Ethics Disclosure Tax Campaign Finance Advertising

3. Efficacy & Ethics Are the contacts real? Legitimate contact versus “Astroturf” Are the contacts real? Legitimate contact versus “Astroturf”

4. Real Contacts? Protect against fraud –Policies and procedures for employees or vendors –Have letters sent directly to legislature –Require reporting –Spot check Protect against fraud –Policies and procedures for employees or vendors –Have letters sent directly to legislature –Require reporting –Spot check

5. Astroturf versus Grassroots Truthful and not misleading information –Careful use of statistics –Source information Caution on use of scare tactics Demographic contacted Length of relationship Truthful and not misleading information –Careful use of statistics –Source information Caution on use of scare tactics Demographic contacted Length of relationship

6. Disclosure Issues Federal Lobbying Disclosure Act –Grassroots not disclosed on LDA reports –Unless reporting using Method B or C State Disclosure –Grassroots or “indirect” lobbying may be lobbying –Separate registration and reporting for grassroots Federal Lobbying Disclosure Act –Grassroots not disclosed on LDA reports –Unless reporting using Method B or C State Disclosure –Grassroots or “indirect” lobbying may be lobbying –Separate registration and reporting for grassroots

7. Tax Issues Different Rules –Trade Associations Must tell members what percentage of dues are nondeductible –501(c)(3) Organizations Limits on lobbying –Businesses May not deduct lobbying expenses Different Rules –Trade Associations Must tell members what percentage of dues are nondeductible –501(c)(3) Organizations Limits on lobbying –Businesses May not deduct lobbying expenses

8. Tax Issues Section 162(e) –Applies to associations and corporations –Lobbying broadly defined: “Any attempt to influence the general public, or segments thereof, with respect to elections, legislative matters, or referenda.” –May allocate purpose Section 162(e) –Applies to associations and corporations –Lobbying broadly defined: “Any attempt to influence the general public, or segments thereof, with respect to elections, legislative matters, or referenda.” –May allocate purpose

9. Tax Issues 501(c)(3) Organizations –Substantial part of activities may not be lobbying –Two methods Facts and circumstances test – virtually no definition 501(h) election – specific definition, hard-dollar caps 501(c)(3) Organizations –Substantial part of activities may not be lobbying –Two methods Facts and circumstances test – virtually no definition 501(h) election – specific definition, hard-dollar caps

10. Tax Issues 501(h) Election Definition –A communication to the public that (1)refers to specific legislation, (2)reflects a point of view on the legislation, and (3)encourages the recipients to take action with respect to the specific legislation by contacting their legislators. 501(h) Election Definition –A communication to the public that (1)refers to specific legislation, (2)reflects a point of view on the legislation, and (3)encourages the recipients to take action with respect to the specific legislation by contacting their legislators.

11. Tax Issues 501(h) Election Exclusions –Existence, powers, or tax-exempt status –Money only –Does not include volunteer time –Communications with members with no call to action 501(h) Election Exclusions –Existence, powers, or tax-exempt status –Money only –Does not include volunteer time –Communications with members with no call to action

12. Tax & Disclosure Issues Methods B or C on LDA: include grassroots expenses Includes state grassroots expenses Some use Method A to avoid “artificially” high numbers Disclosed on Form 990 Methods B or C on LDA: include grassroots expenses Includes state grassroots expenses Some use Method A to avoid “artificially” high numbers Disclosed on Form 990

13. Campaign Finance Issues Under Citizens United may use candidate names and advocate election or defeat Will be disclosure issues Must avoid coordination May raise new tax issues Under Citizens United may use candidate names and advocate election or defeat Will be disclosure issues Must avoid coordination May raise new tax issues

14. Advertising Issues Media –Must identify sponsor Email –Should not be a CAN-SPAM issue Phone –Calls to cell phones prohibited –Text messages may be permitted Media –Must identify sponsor Email –Should not be a CAN-SPAM issue Phone –Calls to cell phones prohibited –Text messages may be permitted

15. Coalition Issues Tax implications Governance Legal Structure Disclosure Tax implications Governance Legal Structure Disclosure

16. Grassroots Lobbying & Coalitions: Legal Issues Ronald M. Jacobs May 10, 2010 Ronald M. Jacobs May 10, 2010 rmjacobs@venable.com