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

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

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

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

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 5

Disclosure Issues Federal Lobbying Disclosure Act State Disclosure 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 6

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

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

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

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

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

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

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

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

Coalition Issues Tax implications Governance Legal Structure Disclosure 15

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