Ronnie Pawelko

Sorry, but the self-defense lobbying exception is not a budget advocacy exception

With the specter of budget cuts looming, many advocates in the 501(c)(3) world are looking for ways to save their programs and the jobs of the people who carry out the functions and mission of their organization.

The Bolder Advocacy hotline has been fielding calls from sexual assault coalitions, education advocates, and other social service providers who are concerned about news stories that discuss Congress’s potential plans to repeal funding for Violence Against Women programs, arts, educational and environmental programs, and a range of other social service and safety net programs. While it is far from clear whether these ideas could pass through a deeply divided Congress, advocates want to take steps now to ensure vital services are not lost in their communities. Being bold and advocating for your programs can help to show the depth of support for state or federally funded programs.

Many public charities, who are limited in the amount of lobbying in which they can engage by grant terms (government funds cannot be spent on lobbying, some foundations unnecessarily prohibit their grant funds from being spent on lobbying) and tax code rules, have asked whether the “self-defense” exception to lobbying allows their organization to engage in unlimited lobbying to protect their funding line and the services they offer. After all, the exception (§ 4911(d)(2)(C)) excludes from the definition of lobbying “appearances before, or communications to, any legislative body with respect to a possible decision of such body which might affect the existence of the organization, its powers and duties….” pointing out that defunding will result in the demise of their organizations along with the services they provide. Unfortunately, this exception does not apply to funding cuts—or even funding slashes.

While the loss of funding can cause organizations to close, the IRS has made clear that the self-defense lobbying exception does not apply when an organization is lobbying to preserve its funding in a budget, be it state or federal. In Treasury regulations, the IRS offers two examples of activities that meet the exception and two that do not. Activities that do fall into the self-defense exception include lobbying around a proposal that could result in a foundation’s loss of tax exemption or ability to receive tax deductible contributions. Advocacy around legislative proposals to eliminate or change funding for social service programs or other state grants are explicitly excluded from the exemption in the examples. See Examples 1-4, Treas. Reg. section 53.4945-2(d)(3)(ii).

Advocates do not need to remain silent in the face of devastating budget cuts. First, public charities can lobby. Second, while all lobbying is advocacy, not all advocacy is lobbying. Even without the self-defense exception, organizations that are restricted from lobbying have several advocacy avenues available. An organization may educate policy makers and community members about their programs without including a call to action or encouraging their elected representative to vote for or against a budgetary proposal. An organization could also invite policy makers to visit their program, write letters to the editor or an op ed about the number of people served, provide examples of impacts in other communities that have lost a program, highlight the dollars saved by the program, hold rallies to support those who could be affected.

For more information, see our fact sheet on Budget Advocacy here. You may also reach out to us on our technical assistance hotline with any additional questions.  We can be reached at 866-675-6229 or by clicking here.