Nonprofit Startup Jumpstart Program

Every so often someone comes up with something that leaves you scratching your head and saying "Hmmm...why didn't I think of that?"  Sandy Rees has done just that.  She has put together the Nonprofit Startup Jumpstart Program and every part of it is fabulous!  I think the name is misleading because even if your nonprofit has been around a while, there's a lot you can take away from this program.  I looked over her curriculum and I just had to post it, there's so much good information there.  BTW, Sandy did not pay me anything to provide these compliments, I just know good material and expertise when I see it.  Bunnie

Dear Nonprofit Founder,

You’ve taken a brave step! You’ve identified a need and decided to do something about it. My hat’s off to you!  I know it’s likely been something very personal for you.

You’ve poured your heart and soul into starting a new nonprofit. You’re so excited about helping people in need, and now you realize there’s a business side of the organization to run and money to raise. Ugh. This is not what you had in mind when you launched your new organization! You’ve probably got more questions than answers. And not sure who to turn to for information and guidance.

Are any of these questions rolling around in your mind?

■Where do I start? There’s so much to do!

■How do I find good Board members. I just need people. Now!

■Do I need to find an attorney to be on our Board? And maybe an accountant?

■How do I spread the word about my good cause?

■How can I get something on TV or in the newspaper about my new nonprofit?

■How do I raise money without begging or annoying people?

■How can I possibly compete with the big nonprofits in town?

Let me help you with my Nonprofit Startup Jumpstart program

I will take you by the hand and personally walk you through the process of getting everything started and running so you can raise awareness of your organization and begin fundraising.

I’ll save you time. No reinventing the wheel. No wondering what will work. I’ll give you tips and shortcuts for proven techniques. No more losing sleep over which fundraiser will work best for you. No more stressful decisions about which Board members will be a good fit.

I’ll share resources with you. I’ll tell you which books to read, which websites to spend time on, and which newsletters you should be reading.

I’ll answer every question you can come up with. If there’s something I don’t know the answer to, I’ll ask one of my colleagues in my vast nonprofit network.

I know this is not just a job. This is your passion! This is your calling! And I want to help you get it off and running as quickly and as efficiently as possible.

Why me?

I’ve been helping small nonprofits get up and running in their fundraising, marketing, and Board Development for years. I’ve worked with so many small nonprofits that I know what works and what doesn’t. I can help you avoid the common pitfalls that slow down the growth of many worthwhile organizations. I get so excited helping groups like yours and I genuinely want to see you succeed. I know you have big work to do and if I can help you get off the ground faster, then you can be about changing peoples’ lives.

Here’s what you get in the Nonprofit Startup Jumpstart:

There are 4 main pieces to this unique program: education, coaching, accountability, support.

Education.

Each month for 5 months, you’ll have access to a recorded webinar that you can watch at your leisure. I’ve included my outline for the educational content here so you can see what you’ll learn.

1.Boards (September)

A.Roles & Responsibilities

B.Recruiting (Skills matrix)

C.Governance

D.Fundraising

2.Marketing & Communications/Getting the Word Out/Telling your story (October)

A.Key messages

B.Target audiences

C.Website

D.Newsletters

E.Speaking engagements

F.Working with the Media

3.Get ready to fundraise (November)

A.Mindset

B.Case for Support

C.Mission statement

D.Vision statement

E.Understanding Fundraising

i.Donor Pyramid

ii.Diversified revenue streams

F.Infrastructure

i.Donor tracking software

ii.Systems

G.Budget

H.Permits for fundraising, 501c3

I.Volunteers

4.Grantwriting (December)

A.Research

B.What to ask for

C.How much to ask for

D.Writing tips

E.Follow up

5.Individual donor development (January)

A.Where to find donors (target audience)

B.Build your list

C.How to ask

i.House parties

ii.Champion letters

iii.Ask/Friendraising events

iv.Online fundraising

As you can see, there’s a LOT of content!! I’m going to give you exactly what you need to move forward in each area.

I’ll also be providing you with handouts, including checklists, worksheets, templates, and sample documents.

The Nonprofit Startup Jumpstart program will start in September and continue on through January 2011.

Coaching. Each month, you’ll get to join me live on a Q&A call with your fellow program participants. We’ll talk about where you are and what you’re doing. You can ask any question you like and you’ll get to hear what others are doing. I find that there’s tremendous benefit in this group dynamic! You’ll likely learn more from each other than you will from me! If for some reason you can’t make the Q&A call, don’t worry. I’ll record them and share the recording with you so you can listen in.

Accountability. Each month, you can participate in an Accountability Day. This is a fantastic activity if you’re feeling a bit stuck on any topic. The Accountability Day works like this: I’ll tell you the date of the Accountability Days in advance. Early that day, you’ll check in with me via email or Facebook chat and tell me what you want to get accomplished that day. You’ll go do the work, then come back later and tell me what you got done. It sounds so simple, but it’s very powerful! If you’re having trouble getting something done, I can talk with you about what’s getting in the way and help you get moving again.

Support. You’ll have 24/7 access to me through email and a private Facebook group. I’ll be available to answer questions or give you a word of encouragement during the program. I’ll be your biggest cheerleader and supporter, urging you forward. If you get frustrated or need a listening ear, I’ll be here to listen to you and help you.

Obviously, I’m offering a LOT of time to you in this program! To make sure I can give you the attention you want and need, I’m limiting the number of nonprofit participants in this group to 20. If you are a co-founder, you may both participant and still count as only one nonprofit participant.

Learn more about Sandy and this seminar at http://getfullyfunded.com/nonprofit-startup-jumpstart

Attack of the Tax-Exemption Killers

Say it again, the economy is bad for state and local government, and legislators, council members and municipal managers are scrambling to figure out how to make up shortfalls and prevent layoffs.  This is going to be another two-part article because of the original length.  Rick Cohen, nonprofit advocate in DC brings a prespective to nonprofit issues that nobody else can quite match.  Nonprofits cannot afford to be nickeled and dimed to death.  Every penny that goes out the door in taxation and fees results in lost services.  Pass this one around.  Bunnie


Attack of the Tax-Exemption Killers
by Rick Cohen

This article is reprinted with permission from Blue Avocado, a practical fast-read magazine for community nonprofits. Subscribe free by sending an email to editor@blueavocado.org or at http://www.blueavocado.org/.

If Congress tried to take away the tax exemption from nonprofit 501(c)(3) organizations, our sector would be united and up in arms. But instead we are besieged with hundreds of local attacks on the tax exemption from cities, counties, and states. In this article we'll briefly look at some of the attacks being mounted by financially starved local and state governments trying to get extra nickels and dimes from financially starved 501(c)(3) charities. And we'll conclude with some thoughts on how we inadvertently give ammunition to these attackers.

How many ways can you balance a governmental budget on the backs -- or finances -- of nonprofits? Nearly every week, all across the country, different levels of government devise strategies -- sometimes ingenious, occasionally pernicious -- to get tax revenue from already-strapped nonprofits. These include taking away property tax exemptions, adding employee headcount taxes, charging nonprofits "streetlight fees," and more.

Creating or hiking fees: Because governments have much greater flexibility in applying "fees" as opposed to "taxes," localities are finding ways to charge nonprofits for streetlights and anything else they can think of. In Yakima, Washington, the Yakima Health District ended the exemption of nonprofit-sponsored food booths at community fairs and church bazaars; this will yield the Health District all of $10,000 per year. And in two Minnesota cities -- Minneapolis and Rochester -- government is increasing the fees it charges nonprofits for streetlight use. In Minneapolis, this will raise an additional $104,000 for the city . . . hardly enough to balance the budget.

Taking off from charging nonprofits for streetlights, other localities are starting to charge nonprofits for police and fire services and even fire hydrants. Localities in Indiana have enacted nonprofit fees for consumption of public services such as police and fire. In Pennsylvania, State Senator Wayne Fontana has introduced legislation that would allow municipalities to charge nonprofits an "essential services" fee. In the village of Pewaukee, Wisconsin, the local government turned the local hydrant tax into a fee which then allowed them to levy the fee against otherwise tax exempt nonprofits and churches.

And think of the effort of the speaker of the New Jersey state Assembly to hit nonprofits in Camden -- only nonprofits and only in Camden -- with a $100 tax on each employee. In a devastated urban center where the nonprofit sector provides most essential services, this reads like no more than a slap at nonprofits and their hard working employees.

Attacks on the property tax exemption

Nonprofit property owners are in theory exempt from paying property taxes, at least on the properties they own and use for tax-exempt purposes. But many local governments are trying to charge nonprofits "payments in lieu of taxes" or PILOTs. Sometimes localities have a formula in mind; in other cases, they negotiate PILOTs on a case-by-case basis.

In a recent example of such attacks, a consortium of 102 nonprofit property owners in Pittsburg is negotiating with the city, to which it has already paid a $14 million lump sum payment in lieu of taxes (PILOT) for 2005 through 2007. The consortium's offer of $5.5 million for the period 2008 - 2010 has been rejected by the mayor as insufficient.

Typically, the target of PILOTS are large institutional nonprofit property owners such as hospitals and nonprofit universities. But not every nonprofit property owner is a Harvard University or Mass General Hospital. For example, a Billings, Montana nonprofit purchased a hotel to be used as a pre-release residential and treatment facility for female ex-offenders. Partly to mollify neighbors who objected to the placement of the facility and likely as a way to raise money, the mayor promised that the nonprofit would pay a $40,000 PILOT on the property.

Even more troubling for nonprofits than across-the-board PILOTS is the make-it-up-as-you-go calculation of PILOTs from community to community. Is Harvard's $2.2 million PILOT payment plus $5.2 million payment for water and sewer to Cambridge fair and proportional compared to Yale's $7.5 million to New Haven or Vanderbilt's $2.5-$3 million payment to Nashville? Shouldn't the PILOT paid by nonprofit hospitals in Pittsburgh, say, be commensurate with the PILOT charged in Lancaster, both localities in the same state, governed by the same nonprofit legislation?

Rick Cohen writes this Washington Nonprofit Insight column for every other issue of Blue Avocado.

Brainshark Awards Technology Grants to Six Outstanding Non-Profits as Part of the Company’s Non-Profit Program

It's always great when business teams up with nonprofit and I especially love it when business steps up to the plate and provides grants, especially technology grants.  Additionally, while the nonprofit community is often slower to adopt newer technology than the business community, so much can be gained by nonprofits modeling their business counterparts.  See how six nonprofits will be using technology to enhance their worthy missions.  Maybe some good ideas for you and your organization?  Bunnie

Brainshark Awards Technology Grants to Six Outstanding Non-Profits as Part of the Company’s Non-Profit Program

The Leukemia & Lymphoma Society, DAMMAD, FSG Social Impact Advisors, Hope Foundation, Road Runners Club of America and Summer Advantage USA Use Brainshark to Strengthen Training Programs and Promote Their Missions

Brainshark, Inc., the leader in on-demand multimedia for business, recently announced the six latest grant recipients in its Non-Profit Program. The Leukemia & Lymphoma Society (LLS); Dads and Mad Moms Against Drug Dealers (DAMMAD), Inc.; FSG Social Impact Advisors (FSG); the Hope Foundation’s eLearn initiative; Road Runners Club of America (RRCA) and Summer Advantage USA have received a free one-year Brainshark software license – letting them harness the benefits of on-demand multimedia to cost-effectively increase their reach and impact.

With Brainshark’s Web-based platform, organizations can communicate faster and more effectively than ever before, cutting training time in half and reducing the costs associated with previous communications methods – including face-to-face meetings and Web conferencing – by up to 90%. Through its Non-Profit Program, Brainshark awards one-year technology licenses on a quarterly basis. This enables non-profit organizations to use Brainshark’s enterprise-class solutions to create, edit and distribute high-impact, multimedia content – incorporating voice narration, video, survey questions and more – that can be viewed online, on demand. Using Brainshark’s tracking capabilities, these organizations also get deep visibility into the impact and effectiveness of their communications.

The latest grant recipients plan to use Brainshark as follows:

• The Leukemia & Lymphoma Society: LLS is the world’s largest voluntary health organization dedicated to funding blood cancer research and providing education and patient services. Its mission is to cure leukemia, lymphoma, Hodgkin’s disease and myeloma, and to improve the quality of life of patients and their families. The organization plans to use Brainshark’s audio and visual capabilities to deliver high-impact communications that galvanize potential partners and donors, help fund cancer research, and spread awareness of blood cancer and LLS’ mission. Brainshark will also be used to promote LLS’ “Light the Night” fundraising walk and its “Team in Training” charity sports training program.

• Dads and Mad Moms Against Drug Dealers: DAMMAD is an anti-drug organization committed to addressing drug trafficking, prescription drug abuse and illicit drug use in the state of New Hampshire. The organization plans to use Brainshark to educate students, parents and local communities on the dangers and consequences of drug abuse. DAMMAD has created the following Brainshark presentation to educate the community on the dangers of methamphetamine: http://www.brainshark.com/dammad/vu?pi=zHEzEHbboz1PaUz0 . Overall, this education and community awareness campaign will reach approximately 130,000 students and 891,000 residents across New Hampshire.

• FSG Social Impact Advisors: Through its work with leading foundations, corporations, governments and non-profits, FSG helps to accelerate social progress by advancing the practice of philanthropy and corporate social responsibility. The organization will use Brainshark to engage, educate, inform and motivate key influencers, funders, clients and other stakeholders. FSG also plans to use Brainshark to enhance and expedite the creation of professional development and training presentations. In addition, FSG will leverage on-demand presentations for marketing and training activities associated with its subsidiary division, Community Foundation Insights.

• Hope Foundation: The Hope Foundation’s eLearn initiative is working to alleviate poverty in rural and semi-urban districts in India by providing education and training to the local communities. The foundation plans to use Brainshark to provide on-the-job training to working adults across India so they can improve their employment prospects and obtain higher wage jobs. Brainshark will also be used to train the foundation’s 5,000 accredited partners – who are responsible for training approximately 100,000 adults enrolled in the program. To learn more about the program, view the following Brainshark presentation: http://www.brainshark.com/hopefoundation/vu?pi=zGuzbYUDFz1sBdz0 .

• Road Runners Club of America: The RRCA is the national association of running clubs, running events and runners whose mission is to represent and promote the sport of running through education, leadership, programs and other services. The RRCA has more than 1,100 running clubs and events annually, and represents more than 175,000 members. The organization plans to use Brainshark to develop and administer a comprehensive race director certification course, complete with testing. As part of these efforts, the RRCA will develop narrated Brainshark training modules, based on the book Organizing Running Events by Phil Stewart. The RRCA will also use Brainshark in its development of an online training course for adults interested in leading/coaching youth running programs and in the development of free orientation modules for volunteers. RCCA has created the following Brainshark presentation to educate certified coaches about the organization’s general and professional liability insurance program: http://www.brainshark.com/rrca/vu?pi=zGvzWM7NSz1sTqz0 .

• Summer Advantage USA: Summer Advantage USA provides rigorous academic programming and enrichment activities to children in grades K-8 during the summer months to prepare them for success in high school, college and beyond. Launched only a year ago, Summer Advantage USA is already serving more than 3,000 children in Indiana and is expanding its efforts across other states. The organization plans to use Brainshark to train thousands of educators – helping to reach its goal of serving more than 100,000 students during the next five years. Summer Advantage USA will also use Brainshark’s software to educate parents, school leaders, government officials and policymakers about its mission, results and partnership opportunities. For more information about the organization and its mission, view the following Brainshark presentation: http://www.brainshark.com/summeradvantageusa/vu?pi=36716846 .

“We’re excited to announce the next round of non-profit grant recipients and applaud their plans to implement far-reaching and well-thought-out communication campaigns,” said Brainshark CEO Joe Gustafson. “In providing access to an easy-to-use, compelling and trackable communication solution, we look forward to helping these organizations spread awareness of their missions among key constituencies and achieve their communications goals.”

In addition to awarding grants, the Brainshark Non-Profit Program also provides the Standard Edition of the Brainshark platform at a 40% discount for eligible non-profits. These include registered 501(c)(3) organizations (or their equivalent outside the U.S.). Other eligibility requirements apply. For more information, please view the following two-minute Brainshark presentation, which provides a program overview and a link to the grant application: http://www.brainshark.com/brainsharkinc/NPOGrant .

Interested non-profits can also take advantage of Brainshark’s free website, myBrainshark.com, which allows anyone to create multimedia presentations that are search-engine optimized and can be shared via e-mail or embedded within a website or blog.

About Brainshark, Inc.


Brainshark is the leader in on-demand multimedia for business, transforming static business content into high-impact communications. Delivered via Software-as-a-Service (SaaS), Brainshark enables audiences to access and engage with business content when and how they want. More than 1,200 companies – including a third of the Fortune 100 – rely on Brainshark software and services to help sales, marketing, training and HR experts cost-effectively deliver measurable results. In addition, organizations and individuals use the myBrainshark site to create, share and track multimedia presentations for free. For more information on these offerings, visit www.brainshark.com.

Assessing Associations' Identity Theft Red Flags and Risks

Here's the second half of the article I posted a couple of weeks ago by Thomas A. Cohn and Jeffrey S. Tennenbaum at Venable, LLP.  Assessing Associations Identity Theft Red Flags and Risks This would be a sample worksheet to help you assess your risk.  It's probably be helpful to you to re-read the above article before beginning this one.  We hear so much about identity theft these days and certainly no database is safe, but it is incumbent on nonprofits to do everything they can to keep people's most sensitive information safe.  Bunnie

ASSESSMENT OF ASSOCIATION’S ACCOUNTS/SERVICES, METHODS FOR OPENING ACCOUNTS, METHODS FOR ACCESSING ACCOUNTS

[Association] allows customers to open and access accounts and conduct transactions in-person, by mail, by telephone, and online [modify and change accordingly, both here and on following charts, to eliminate any irrelevant charts or portions thereof]. The risk of identity theft relating to the type of account, and the means of opening and accessing accounts and conducting transactions, are assessed below:

IN-PERSON


Accounts Offered Interaction IDT Experience Risk

Large corporate accounts

Small corporate accounts

[insert any other distinct types of account]

Sole proprietorship/ individual accounts

The overall risk rating for account opening, accessing accounts, and conducting transactions in person is [low/medium/high].

BY MAIL

Accounts Offered Interaction IDT Experience Risk

Large corporate accounts

Small corporate accounts

[insert any other distinct types of account]

Sole proprietorship/ individual accounts

The overall risk rating for account opening, accessing accounts, and conducting transactions in person is [low/medium/high].

BY TELEPHONE

Accounts Offered Interaction IDT Experience Risk

Large corporate accounts

Small corporate accounts

[insert any other distinct types of account]

Sole proprietorship/ individual accounts

The overall risk rating for account opening, accessing accounts, and conducting transactions in person is [low/medium/high].

ONLINE

Accounts Offered Interaction IDT Experience Risk

Large corporate accounts

Small corporate accounts

[insert any other distinct types of account]

Sole proprietorship/ individual accounts


[Note: In determining the association's risk regarding accounts/services and methods for opening and accessing accounts/services, you should review all types of accounts/services offered to customers, and note any restrictions on accounts/service availability that might mitigate risk. Also, review all methods for opening and accessing accounts/services and any restrictions that might mitigate risk.]

ASSESSMENT OF ASSOCIATION'S PRIOR EXPERIENCES WITH INFORMATION SECURITY BREACHES AND/OR IDENTITY THEFT CONCERNING CUSTOMER ACCOUNTS

[Association] had [number] data security breach[es] in XXXX, 200X [if true, and modify number and response accordingly]. No customer account information was accessed, and no customer accounts were accessed. In response to this breach, [Association] ______________________ [e.g., monitored accounts for a period of X months and instituted additional identification checks for accessing customer accounts to conduct transactions].

To date, [Association] is aware of [number] occurrence[s] of identity theft, concerning unauthorized access to our customer accounts, either in account opening, account access, or transactions conducted. In response to these occurrences, [Association] ______________ [issued a full credit to each affected customer, and instituted additional identification checks for accessing customer accounts to conduct transactions]. [if true, and modify number and response accordingly].

[Association] maintains all regulatory alerts and business guidance on the Identity Theft Red Flags Rule (16 C.F.R. Part 681) (the “Rule”) issued by the Federal Trade Commission (“FTC”). Based on the above risk assessment and all applicable FTC alerts and business guidance, [Association] assesses the risk to its customer accounts from identity theft to be low. Because these are accounts for which there is not a foreseeable risk of identity theft, these accounts are not “covered accounts” within the meaning of the Rule.

[Note: In determining the association's risk regarding prior experiences with information security breaches and/or identity theft, you should include a description of any past experiences, including the steps taken by the association to prevent any further experiences. Also include other factors such as regulatory actions/findings; legal actions; insurance coverage; and/or independent analysis of any third-party vendors.]

CONCLUSION

While [Association] is a “creditor” within the meaning of the Rule, its customer accounts are not “covered accounts” under the Rule. Based on the above risk assessment, [Association] determines its overall risk regarding identity theft to be low. [but see Note below, if overall risk is medium or high] Because [Association] does not offer accounts for personal or household purposes, and because its customer accounts have experienced few occurrences of identity theft, when viewed in relation to either the total number of accounts or the total number of annual transactions, these accounts do not face a foreseeable risk of identity theft. Therefore, they are not “covered accounts” within the meaning of the Rule.

Because [Association]'s customer accounts do not fall within the scope of the Rule, [Association] is not required to establish any specific Policies or Procedures in order to comply with the Rule. [Association] will conduct a similar Risk Assessment annually, in order to determine whether any changes in identity theft threats have caused its accounts to be considered “covered accounts” under the Rule, and thus to require enactment of such Policies or Procedures.

[Note: The risk assessment should reach an overall conclusion as to the association's risk regarding identity theft. The above conclusion is drafted with a low overall risk assessment, and hence no Rule coverage. However, if the overall risk assessment is medium or high, then the association may conclude that such risk is in fact "reasonably foreseeable" and therefore proceed to develop and enact the Policies/Procedures required by the Rule.]

SIGNED:

NAME/TITLE:

DATED:

* * * * * *

For more information, please contact Thomas A. Cohn at 212.370.6256 or tacohn@Venable.com or Jeffrey S. Tenenbaum at 202.344.8138 or jstenenbaum@Venable.com.


This article is not intended to provide legal advice or opinion and should not be relied on as such. Legal advice can only be provided in response to a specific fact situation.

Nonprofits, Lobbying and You

Nonprofits, Lobbying and You
by Bunnie Riedel, Host of Nonprofit Conversation


I cannot tell you how often I speak with people who believe that nonprofit 501 (c)3 organizations are prohibited from direct lobbying at the local, state or federal levels. They fear that if they lobby they will lose their tax-exempt status. While there are limits on the amount of direct lobbying a nonprofit can do, they certainly can and should lobby.

The IRS has two tests for measuring direct lobbying: one is the “substantial part” test and the other is the “expenditure test.” Let me dissect these two.

The “substantial part” test is a highly vague measurement of how much time you and/or your volunteers spend on lobbying. It also takes into account expenditures, but offers no real guidance on what “substantial” really means and can be wide open for interpretation depending on which IRS agent has audited your tax return, seriously, I am not kidding on that. In the past the IRS has said that substantial is 5% to 15%, time and money, and they can come down at the low end or high end or somewhere in between.

This uncertainty has vexed nonprofits for years, and frankly scared the living daylights out of them because nobody wants to lose their hard sought tax exempt status. However, if you are ever in the Washington D.C. area and you take notice of the name plates on many buildings or office spaces, you will notice that D.C. is filled to the gills with nonprofits and associations who have headquarters in D.C. for the very purpose of lobbying. And most of those organizations have a 501 (c)3 designation, not a 501 (c)4.

However, the IRS does provide certainty in the “expenditure” test. I call it the “H” designation and basically what you have to do is fill out a very simple form, form Form 5768 and file it with the IRS. It’s like the IRS is saying to nonprofits “If you will just tell us that you are going to lobby, we will give you the guidelines and take the guess work out of your reporting.”

The following is from the IRS’s website:

Measuring Lobbying Activity: Expenditure Test

Organizations other than churches and private foundations may elect the expenditure test under section 501(h) as an alternative method for measuring lobbying activity. Under the expenditure test, the extent of an organization’s lobbying activity will not jeopardize its tax-exempt status, provided its expenditures, related to such activity, do not normally exceed an amount specified in section 4911. This limit is generally based upon the size of the organization and may not exceed $1,000,000, as indicated in the table below.

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

Organizations electing to use the expenditure test must file Form 5768, Election/Revocation of Election by an Eligible IRC Section 501(c)(3) Organization to Make Expenditures to Influence Legislation, at any time during the tax year for which it is to be effective. The election remains in effect for succeeding years unless it is revoked by the organization. Revocation of the election is effective beginning with the year following the year in which the revocation is filed.


Under the expenditure test, an organization that engages in excessive lobbying activity over a four-year period may lose its tax-exempt status, making all of its income for that period subject to tax. Should the organization exceed its lobbying expenditure dollar limit in a particular year, it must pay an excise tax equal to 25 percent of the excess.

In other words, if you have an organization whose exempt purpose expenditures are less than or equal to $500,000 you can spend 20% of that on direct lobbying. And the amounts go up depending on expenditures and are capped at $1,000,000 for direct lobbying.

This designation gives nonprofits a lot of leeway to do what it is they should be doing and that is advocating for their cause.

Now, having said that, you must note that federal lobbying rules have changed in the past few years. Expenditures used to be counted mainly as the time and money you spent for actual meetings to directly lobby. Under the new lobbying rules, everything gets counted including, but not limited to: the time and money you spent preparing to lobby; the time and money spent by staff preparing your lobbying efforts; overhead incurred by your organization (what percentage of operational and capital expenses could be counted against the lobbying activity?).

This is where the accountant comes in.

Additionally, there are ceilings for lobbying expenditures that require the organization be registered as a lobbying organization, see Lobby Disclosure Guidelines and there are reports that now must be filed once an organization has hit that ceiling.

However, while at first blush it might seem daunting, once your organization is in the system, it is easy to file the necessary reports.

I encourage you to do what it is you need to do and that is educate and advocate for your cause. To a great extent, that is what many nonprofits are for, to provide a voice for their cause.

This article is not meant to be a substitute for getting legal or accounting advice from your lawyer or your accountant.  If you have any questions, you can always call the IRS, I have found them to be quite responsive and helpful.