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501(h) Election & Substantial Part Test

Public charities may engage in a limited amount of legislative lobbying under either the “substantial part” test or by electing to operate such activities under the Section 501(h) of the tax code. The IRS evaluates the “substantial part” test on the basis of the facts and circumstances, such as the time (by both paid and volunteer workers) and the expenditures devoted to lobbying by the organization.

Under the 501(h) expenditure test, public charities may spend:

on Direct Lobbying: 20% of the first $500,000 of its exempt purpose expenditures; 15% of the next $500,000, and so on, up to one million dollars a year.

on Grassroots Lobbying: 5% of the first $500,000 of its exempt purpose expenditures; 3.75% of the next $500,000, and so on, up to $250,000 a year.

Direct lobbying is defined as an attempt to influence legislation by stating a position on specific legislation to legislators or other government employees who participate in the formulation of legislation, or urging your members to do so.

Grassroots lobbying is defined as an attempt to influence legislation by stating a position on specific legislation to the general public and asking the general public to contact legislators or other government employees who participate in the formulation of legislation.

The term "lobbying" does not include the following activities:

  • providing technical assistance or advice to legislative body or committee in response to a written request;
  • making available nonpartisan analysis, study or research;
  • providing examinations and discussions of broad, social, economic and similar problems;
  • communicating with a legislative body regarding matters which might affect the existence of the organization, its powers and duties, its tax-exempt status, or the deduction of contributions to the organization (the "self-defense" exception); and,
  • updating the members of your own organization on the status of legislation, without a call to action.

Nebraska Revised Statute §49-1483.03

(1) Any lobbyist or principal who receives or expends more than five thousand dollars for lobbying purposes during any calendar month in which the Legislature is in session shall, within fifteen days after the end of such calendar month, file electronically a special report disclosing for that calendar month all information required by section 49-1483. All information disclosed in a special report shall also be disclosed in the next quarterly report required to be filed. The requirement to file a special report shall not apply to a receipt or expenditure for lobbyist fees for lobbying services which have otherwise been disclosed in the lobbyist's application for registration.

(2) Any lobbyist who fails to file a special report required by this section with the Clerk of the Legislature or the commission shall pay to the commission a late filing fee of one hundred dollars for each of the first ten days the report remains not filed in violation of this section. After the tenth day, such lobbyist shall pay, for each day the report remains not filed, an additional late filing fee of one percent of the amount of the receipts and expenditures which were required to be reported, not to exceed ten percent of the amount of the receipts and expenditures which were required to be reported.

Source:Laws 1994, LB 872, § 5; Laws 1994, LB 1243, § 6; Laws 1996, LB 1263, § 6; Laws 1999, LB 416, § 17; Laws 2007, LB434, § 4; Laws 2012, LB782, § 71. Operative Date: January 1, 2015

NebraskaLegislature.gov: §49-1483.03

Nebraska Accountability & Disclosure Commission: Lobbyist Instructions and Registration

Nebraska Legislature: Nebraska Lobbyist Electronic Reporting

Nebraska Legislature: View Lobbyist Records

Nebraska Legislature: For Lobbyist - Reports, Filing Instructions, Deadlines, Rules & Regulations

Law Server: Neb. Rev. Stat. 49-1480.1 Lobbyist Registration

Iowa Code §68B.37 | Government Ethics & Lobbying Act

The governmental ethics & lobbying laws in Chapter 68B govern the conduct of governmental officials, employees, and lobbyists. The Board administers the chapter as it applies to executive branch officials, employees, candidates for statewide office, and executive branch lobbyists. The Board gives advice to local governmental personnel, but enforcement is conducted by the county attorney. The Board may enter into an agreement with a political subdivision to enforce the subdivision's adopted code of ethics. The Senate and House Ethics Committees have jurisdiction over ethics and lobbying issues involving the legislative branch.


Iowa.gov: Iowa Ethics & Campaign Disclosure Board An independent executive branch agency of the State of Iowa - Electronic Filing, Paper Forms, Ethics Manual and Campaign Reports

Iowa.gov: Lobbyist FAQs

Iowa.gov: Iowa Legislature: Lobbyist Online Filing

Iowa.gov: Iowa Code 68B.37: Lobbyist Reporting

Record Keeping & Expense Tracking

There is no perfect recordkeeping system, nor does the Code or IRS mandate a particular system. Different organizations will have different recordkeeping systems based on their size, needs, capabilities, and activities. An organization should design a system that is: flexible enough to satisfy the IRS as well as other federal and state reporting requirements; not overly burdensome to administer; and valuable in facilitating programmatic planning.

Alliance for Justice: Keeping Track: A Guide to Recordkeeping for Advocacy Charities

Resource & Sample Documents

Nonprofit Lobbying General

IRS.gov: Nonprofits & Lobbying

Independent Sector: Lobbying Guidelines for Public Charities

House.gov: Lobbyist Registration and Disclosure

National Council of Nonprofits: Taking the 501(h) Election: The Powerful, Free, and Easy 501(h) Election: Benefits Galore!

Association of Corporate Counsel: Lobbying: What does it mean for nonprofits?

Record Keeping & Expense Tracking

Alliance for Justice: Sample Record Keeping & Expense Tracking Procedures

Lobbying Disclosure Act of 1995

House.gov: Lobbying Disclosure Act

House.gov: Office of the Clerk: Lobbying Disclosure Act

Ballotpedia: Lobbying Disclosure Act of 1995

Citizen.org: Lobbying Disclosure Act: A Brief Synopsis of Key Components

Citizen.org: Origins, Evolution and Structure of the Lobbying Disclosure Act