1. Lobbying and Other Advocacy Knowing the Rules and Using Them to Maximum Advantage Lobbying and Other Advocacy Knowing the Rules and Using Them to Maximum Advantage By Ben Tesdahl, Esq. December 3, 2008

2. GOOD NEWS!!! Both Presidential candidates promised “CHANGE” GOOD NEWS!!! Both Presidential candidates promised “CHANGE”

3. BAD NEWS!!! The President has no power to unilaterally pass legislation or change anything.

4. GOOD NEWS!!! Through effective lobbying, you can make your organization’s concerns known to elected leaders. GOOD NEWS!!! Through effective lobbying, you can make your organization’s concerns known to elected leaders.

5. BAD NEWS!!! Both Presidential candidates promised to curb the influence of “lobbyists” and other “special interests” BAD NEWS!!! Both Presidential candidates promised to curb the influence of “lobbyists” and other “special interests”

6. GOOD NEWS!!! In 2007, Congress passed the “Honest Leadership and Open Government Act” GOOD NEWS!!! In 2007, Congress passed the “Honest Leadership and Open Government Act”

7. BAD NEWS!!! Both Presidential candidates are going to “clean up Washington” and create a more honest leadership and a more open government. BAD NEWS!!! Both Presidential candidates are going to “clean up Washington” and create a more honest leadership and a more open government.

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9. 9 HLOGA OVERVIEW HLOGA OVERVIEW Amends the Lobbying Disclosure Act to strengthen public disclosure of federal lobbying Amends the Lobbying Disclosure Act to strengthen public disclosure of federal lobbying Places more restrictions on gifts to Congress and other payments between registered lobbyists and Congress Places more restrictions on gifts to Congress and other payments between registered lobbyists and Congress

10. 10 Enforcement of HLOGA The Comptroller General will conduct random audits to determine compliance with the LDA and issue an annual report to Congress. The Comptroller General will conduct random audits to determine compliance with the LDA and issue an annual report to Congress.

11. 11 Enforcement of HLOGA Noncompliance with the Lobbying Disclosure Act could result in civil penalties up to $200,000 and criminal penalties of up to five years in jail! Noncompliance with the Lobbying Disclosure Act could result in civil penalties up to $200,000 and criminal penalties of up to five years in jail!

12. 12 WILL A NONPROFIT CEO WHO VIOLATES HLOGA REALLY GO TO JAIL?

13. 13 When Do You Need to Worry About the LDA? You must have at least one In-House “Lobbyist” You must have at least one In-House “Lobbyist” An in-house employee is considered a “lobbyist” if in any calendar quarter: An in-house employee is considered a “lobbyist” if in any calendar quarter: He/she spends at least twenty percent of his or her time on federal “lobbying activities.” He/she spends at least twenty percent of his or her time on federal “lobbying activities.”AND He/she makes more than one “lobbying contact.” He/she makes more than one “lobbying contact.”

14. 14 How Often Must LDA Reports be Filed? Initial Registration: Initial Registration: within 45 days of the date that you have an in-house “lobbyist” and expect to spend more than $10,000 on federal lobbying activities in a calendar quarter within 45 days of the date that you have an in-house “lobbyist” and expect to spend more than $10,000 on federal lobbying activities in a calendar quarter Quarterly Reporting (previously semi-annually). Quarterly Reporting (previously semi-annually). Made on Form LD-2 if the organization: has at least one employee during the calendar quarter who is a “lobbyist” and has at least one employee during the calendar quarter who is a “lobbyist” and spends at least $10,000 in that quarter in connection with all federal lobbying activities. spends at least $10,000 in that quarter in connection with all federal lobbying activities.

15. 15 What Gets Reported? A list of the specific issues upon which lobbying occurred, including a list of bill numbers. A list of the specific issues upon which lobbying occurred, including a list of bill numbers. A list of the Houses of Congress and the Federal agencies contacted by lobbyists for the registrant. A list of the Houses of Congress and the Federal agencies contacted by lobbyists for the registrant. A list of the employees of the registrant who acted as lobbyists A list of the employees of the registrant who acted as lobbyists A good faith estimate of the total expenses that the registrant and its employees incurred in connection with lobbying, rounded to the nearest $10,000. A good faith estimate of the total expenses that the registrant and its employees incurred in connection with lobbying, rounded to the nearest $10,000.

16. 16 IMPORTANT NOTE: IMPORTANT NOTE: The LDA will allow section 501(c)(3) organizations to report the lobbying numbers they have gathered under the IRS lobbying rules if they do not desire to keep two sets of records.

17. 17 Other Key Changes Electronic reporting is required. Electronic reporting is required. Registered lobbyists (both individuals and organizations) will be required to file a new semi-annual report (called Form LD-203) identifying political contributions and compliance with Congressional gifts rules. Registered lobbyists (both individuals and organizations) will be required to file a new semi-annual report (called Form LD-203) identifying political contributions and compliance with Congressional gifts rules.

18. 18 Senate/House Ethics Rules HLOGA Reforms to Senate/House Gift Rules HLOGA Reforms to Senate/House Gift Rules New rules preclude any gifts from registered lobbyists or any employees of firms that employ or retain lobbyists. (No longer a $50 gift exception) New rules preclude any gifts from registered lobbyists or any employees of firms that employ or retain lobbyists. (No longer a $50 gift exception)

19. 19 Senate/House Ethics Rules HLOGA Reforms to Senate/House Gift Rules HLOGA Reforms to Senate/House Gift Rules Exceptions for: Exceptions for: Receptions – “stand-up food” is OK Receptions – “stand-up food” is OK Charity events Charity events Widely-attended events Widely-attended events Events consistent with official duties Events consistent with official duties Nominal value—trinkets, t-shirts, caps Nominal value—trinkets, t-shirts, caps

20. 20 IRS LOBBYING RULES The good news! The good news! 501(c)(3) entities can lobby, but with limits 501(c)(3) entities can lobby, but with limits 501(c)(4) and (c)(6) can have unlimited lobbying 501(c)(4) and (c)(6) can have unlimited lobbying Two ways of reporting lobbying for 501(c)(3)s Two ways of reporting lobbying for 501(c)(3)s “No substantial part” test “No substantial part” test The 501(h) election – reporting money only The 501(h) election – reporting money only

21. 21 IRS LOBBYING RULES The IRS Legal Test for Lobbying The IRS Legal Test for Lobbying Section 501(c)(3) of the Internal Revenue Code states that "no substantial part" of a charity's activities may consist of influencing legislation.

22. 22 What Are the Lobbying Limitations Under the Optional “Expenditure Test”? Expenditure Test Limits Expenditure Test Limits Roughly speaking, total lobbying can be no more than 20% of a charity’s annual budget (with a cap of $1 M). Roughly 15% can be for “direct lobbying” and 5% for “grass roots lobbying”

23. 23 How to Make the 501(h) Election The expenditure test election is made by filing IRS Form 5768 any time during the year The expenditure test election is made by filing IRS Form 5768 any time during the year Once filed, the form is effective for the entire tax year and only expenditures of money are counted (but not the time of unpaid lobbyists). Once filed, the form is effective for the entire tax year and only expenditures of money are counted (but not the time of unpaid lobbyists).

24. 24 What is Lobbying Under the IRS Definition? Direct Lobbying Direct Lobbying It refers to "specific legislation" It refers to "specific legislation" It "reflects a view" on that legislation It "reflects a view" on that legislation It is addressed to a legislator, an employee of a legislative body, or any other government official participating in formulating legislation It is addressed to a legislator, an employee of a legislative body, or any other government official participating in formulating legislation

25. 25 Grass Roots Lobbying In general, a "grass roots lobbying communication" is one which”: In general, a "grass roots lobbying communication" is one which”: Refers to specific legislation Refers to specific legislation Reflects a view on that legislation Reflects a view on that legislation Contains a "call to action." Contains a "call to action."

26. 26 What is a “call to action” A call to action includes: A call to action includes: (a) urging readers to contact their legislators; (a) urging readers to contact their legislators; (b) stating a legislator's address or telephone number; (b) stating a legislator's address or telephone number; (c) providing the reader with a petition or tear-off post card; (c) providing the reader with a petition or tear-off post card; (d) identifying a legislator as being opposed to a charity's view, undecided about the legislation, the recipient's representative, or a member of the legislative committee that will consider the legislation. [NOTE: It is permissible to identify the sponsors of legislation.] (d) identifying a legislator as being opposed to a charity's view, undecided about the legislation, the recipient's representative, or a member of the legislative committee that will consider the legislation. [NOTE: It is permissible to identify the sponsors of legislation.]

27. 27 Nonlobbying Communications to the executive or judicial branches or to administrative agencies Communications to the executive or judicial branches or to administrative agencies Communications in response to a written request for technical advice from a legislature Communications in response to a written request for technical advice from a legislature Any grass roots message that omits a “call to action” Any grass roots message that omits a “call to action”

28. 28 EXAMPLE: H.R. 1234 is an ill-conceived and devastating piece of legislation. The ADAP Advocacy Association strongly opposes this legislation. IT MUST BE STOPPED NOW! EXAMPLE: H.R. 1234 is an ill-conceived and devastating piece of legislation. The ADAP Advocacy Association strongly opposes this legislation. IT MUST BE STOPPED NOW!

29. 29 Tracking Lobbying Expenditures Generally, all costs incurred in: Generally, all costs incurred in: researching researching drafting drafting editing editing disseminating disseminating the lobbying communication must be captured.

30. 30 PRACTICAL TIPS When lobbying, use the cheapest means possible. When lobbying, use the cheapest means possible. Use unpaid volunteers to draft and/or deliver your lobbying message, since their time is not counted at all. Use unpaid volunteers to draft and/or deliver your lobbying message, since their time is not counted at all. Use the Internet to conduct grass roots lobbying whenever possible, since it can reach millions of people at a very tiny cost as compared to using regular mail or other means. Use the Internet to conduct grass roots lobbying whenever possible, since it can reach millions of people at a very tiny cost as compared to using regular mail or other means. For grass roots messages, omit a call to action whenever you possibly can. For grass roots messages, omit a call to action whenever you possibly can.

31. 31 IRS Rules—Political Activity 501(c)(3)s can’t directly or indirectly “intervene in a campaign” for or against a candidate for public office 501(c)(3)s can’t directly or indirectly “intervene in a campaign” for or against a candidate for public office Doing so can result in loss of tax exemption and/or payment of a penalty tax Doing so can result in loss of tax exemption and/or payment of a penalty tax

32. 32 Political Activity (continued) But, it is OK to conduct neutral voter education or voter registration activities: But, it is OK to conduct neutral voter education or voter registration activities: Hosting candidate forums and debates Hosting candidate forums and debates Preparing candidate questionnaires Preparing candidate questionnaires Preparing voter guides on the issues Preparing voter guides on the issues

33. 33 Political Activity (continued) Hosting candidate forums and debates Hosting candidate forums and debates

34. 34 Political Activity (continued) Preparing candidate questionnaires Preparing candidate questionnaires

35. 35 Political Activity (continued) Preparing voter guides on the issues Preparing voter guides on the issues

36. 36 Political Activity (continued) You can engage in issue advocacy, including issues that surround a political campaign, as long as it is not slanted for/against particular candidates You can engage in issue advocacy, including issues that surround a political campaign, as long as it is not slanted for/against particular candidates

37. 37 Political Activity (continued) Nonprofit leaders can participate in campaigns and endorse candidates if they do so in their “personal capacity” Nonprofit leaders can participate in campaigns and endorse candidates if they do so in their “personal capacity”

38. 38 Political Activity (continued) “Incumbents” can be invited to speak before a nonprofit, even if the person may also be a “candidate”. But introduce the person by his/her current job title and make sure the speech does not turn into a campaign speech. “Incumbents” can be invited to speak before a nonprofit, even if the person may also be a “candidate”. But introduce the person by his/her current job title and make sure the speech does not turn into a campaign speech.

39. 39 Political Activity (continued) BE SURE TO CONTINUE YOUR RELATIONSHIPS WITH POLITICIANS IN BOTH ELECTION YEARS AND ALSO IN NON-ELECTION YEARS. BE SURE TO CONTINUE YOUR RELATIONSHIPS WITH POLITICIANS IN BOTH ELECTION YEARS AND ALSO IN NON-ELECTION YEARS.

40. 40 The IRS will look at the purpose of the political link and the number of “clicks” it take to get to partisan campaign information. [See Revenue Ruling 2007-41 and IRS Memo dated July 28, 2008] INTERNET LINKS TO POLITICAL MATERIAL:

41. 41 Any website content involving voter guides and other “voter education” activities should follow the same guidelines that exist for printed materials. Such content must be educational and nonpartisan. Any website content involving voter guides and other “voter education” activities should follow the same guidelines that exist for printed materials. Such content must be educational and nonpartisan. Political Website Links (continued)

42. 42 When in doubt regarding candidate-related activity, seek legal guidance first and take action second. General Rules of Thumb (continued)

43. 43 Your competitors are likely to be the first ones to complain about you publicly or turn you in to the IRS for any alleged misstep regarding the foregoing political rules.

44. 44 TESDAHL’S RULE OF THUMB FOR POLITICAL CAMPAIGN ACTIVITY BY 501(C)(3) ENTITIES -- TESDAHL’S RULE OF THUMB FOR POLITICAL CAMPAIGN ACTIVITY BY 501(C)(3) ENTITIES --

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49. 49 Follow-Up Questions Contact: Contact: Ben Tesdahl Powers, Pyles, Sutter & Verville, PC 1501 M Street, NW Washington, DC 20005 Ben.tesdahl@ppsv.com @ppsv.com 202-872-6743