Citizens are often unclear about what tax exempt 501(c)(3) organizations like Keep Sedona Beautiful can do regarding legislative or political activities. Many believe, erroneously, that 501(c)(3) organizations cannot do anything. In fact, 501(c)(3) organizations across the country can and do engage in legislative activities, such as educational forums, calls to action, and public persuasion. Where confusion often occurs is that 501(c)(3) organizations are prohibited from participating in political campaigns for anyone seeking public office.
From its inception, Keep Sedona Beautiful, Inc. has been involved in public persuasion on matters associated with its mission and will continue to do so within the IRS limitations. KSB has not participated in any political campaigns, nor have we supported or opposed candidates running for public office.
The IRS requires 501(c)(3) organizations who engage in legislative activities to limit those activities, as demonstrated by either the substantial part test or the expenditure test. KSB has opted to measure its legislative activity based on the expenditure test. Since nearly all of KSB expenses fall outside the definition of legislative activities, we easily pass this test.
Below are excerpts taken from the IRS web site regarding lobbying by 501(c)(3) organizations:
Legislative activities (commonly referred to as lobbying) and political activities are two different things and are subject to two different sets of rules and have different consequences of exceeding the limitations.
Political Activities: Under the Internal Revenue Code, all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office.
Legislative Activities: Legislation includes action by Congress, any state legislature, any local council, or similar governing body, with respect to acts, bills, resolutions, or similar items (such as legislative confirmation of appointive office), or by the public in referendum, ballot initiative, constitutional amendment, or similar procedure. It does not include actions by executive, judicial, or administrative bodies. As noted above KSB is permitted to engage in Legislative Activity.
Organizations may also involve themselves in issues of public policy without the activity being considered as lobbying. For example, organizations may conduct educational meetings, prepare and distribute educational materials, or otherwise consider public policy issues in an educational manner without jeopardizing their tax-exempt status.