Taking positions on public policy and nonprofit-charity status

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Workspace: Public policy

The Public Policy Committee has a role to report to the Wikimedia DC board annually to confirm that the chapter is staying within the proper bounds of a tax-exempt 501(c)3 organization, by allocating small enough fractions of its time, resources, and effort. On this page we discuss the various dimensions of this and our procedure for verifying that we are in-bounds.

Tax rules

See the rules of Internal Revenue Code 4911 here: Internal_talk:Public_Policy_Committee_resolution

  • 501(c)3s may lobby as long as lobbying is not "substantial": IRS doc see p.7 on legislative activities.
  • this source says "501(c)3 Public Charities, including Community Foundations, have every right to advocate on behalf of policies they believe in. But, when nonprofits advocate for specific legislation (i.e. lobby), it may trigger specific rules and limits."
  • This guidance says that "501(c)(3) organizations can, and often should, lobby at all levels of government. Federal tax law has always permitted some lobbying by nonprofits."
  • Perhaps the potential committee should provide an analysis or specific proposal on this topic if and when becomes relevant. An IRS tax attorney may be on the committee. We do not in the near run have a specific proposal to do it, or to budget a penny for it.
  • Wikipedia has a clear helpful paragraph on this point. The IRS guidance is very clear here. We have to file a trivial form, Form 5768, if we take positions. The "expenditure test" seems to say that if the org spends approximately zero on lobbying, it is not at any risk. If its lobbying is not "substantial" timewise, it is not at risk. We'll be fine. A possible step is to assign an analysis of the Corporation's limits here to the Public Policy Committee, once it exists. And perhaps a policy proposal on keeping the risk to a negligible level. -- Econterms (talk) 21:53, 26 January 2014 (EST)
  • Wikimedia DC made the 501(h) election a few years ago, so we should be in the clear as you say. Thank you for the research! James Hare (talk) 22:45, 26 January 2014 (EST)

The things we have to verify for the Board

Wikimedia DC's Advisory committee policy, Article IV, sections 6(d) and 6(e) say:

6. Public Policy Committee
. . .
(d) Lobbying. The Committee shall not advocate for the election or defeat of a political candidate, and no substantial part of the Committee's activities may be dedicated to advocating for or against legislation.
(e) Insubstantial Part Analysis. The Committee shall conduct an annual analysis of the Corporation's activities to ensure that no substantial part of the Corporation's activity is dedicated to advocating for or against legislation, pursuant to Section 501(h) of the Internal Revenue Code.

So, annually, this committee should send to the board a statement that in the most recent year it did not advocate for the election or defeat of a political candidate, and that no substantial part of Wikimedia DC's activity was dedicated to advocating for or against legislation. This is certainly true. Let's develop a simple easy recipe to make a strong, convincing statement with evidence each year on this point so we can get to our main line of business.

Expenditures on public policy matters in 2012-2013

Our "program expenses" in 2012-13 were over $12,000. (Source: 2012-13 Annual financial report). These expenses are "exempt purpose expenditures." We satisfy the requirement that weif we spent less than 20% of that on lobbying, or on attempts to influence legislation. The upper limit then is at least $2500. Actually, we spent far less than that -- perhaps zero, or perhaps a little on photocopies and stationery for our meetings with congressional staff. Therefore we are in the clear on this point. I claim also that we spent nothing on advocacy in any election. --the chair

Tax rules, more exactly

  • Below IRC=Internal Revenue Code
  • Under IRC 4911, Tax on excess expenditures to influence legislation, the definition of influencing legislation can be found. There is a 25% tax on "excess lobbying expenditures of any organization".
  • The lobbying nontaxable amount for any organization for any taxable year is the lesser of (A) $ 1,000,000 or (B) the amount determined by the following:
  • If the exempt purpose expenditures are-- Not over $ 500,000 .......
  • The lobbying nontaxable amount is-- 20 percent of the exempt purpose expenditures.
  • (d) Influencing legislation.
  • (1) General rule. Except as otherwise provided in paragraph (2), for purposes of this section, the term "influencing legislation" means--
  • (A) any attempt to influence any legislation through an attempt to affect the opinions of the general public or any segment thereof, and
  • (B) any attempt to influence any legislation through communication with any member or employee of a legislative body, or with any government official or employee who may participate in the formulation of the legislation.
  • (2) Exceptions. For purposes of this section, the term "influencing legislation", with respect to an organization, does not include--
  • (A) making available the results of nonpartisan analysis, study, or research;
  • (B) providing of technical advice or assistance (where such advice would otherwise constitute the influencing of legislation) to a governmental body or to a committee or other subdivision thereof in response to a written request by such body or subdivision, as the case may be;
  • (C) 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, tax-exempt status, or the deduction of contributions to the organization;
  • (D) communications between the organization and its bona fide members with respect to legislation or proposed legislation of direct interest to the organization and such members, other than communications described in paragraph (3); and
  • (E) any communication with a government official or employee, other than--
  • (i) a communication with a member or employee of a legislative body (where such communication would otherwise constitute the influencing of legislation), or
  • (ii) a communication the principal purpose of which is to influence legislation.
  • (3) Communications with members.
  • (A) A communication between an organization and any bona fide member of such organization to directly encourage such member to communicate as provided in paragraph (1)(B) shall be treated as a communication described in paragraph (1)(B).
  • (B) A communication between an organization and any bona fide member of such organization to directly encourage such member to urge persons other than members to communicate as provided in either subparagraph (A) or subparagraph (B) of paragraph (1) shall be treated as a communication described in paragraph (1)(A).

Update May 20222

  • By any definition ("test") we have not done excess lobbying. But there is a little difficulty with exactness and proof. I (Peter) believe we did NOT take the 501(h) exemption; but if we did that means we filed a Form 5768 at some point, probably before 2014 (per James above). I'm inclined to bet that we didn't do that. I haven't found it in the corporate records when I last checked. So I'm inclined to say "no we didn't" on our new Form 990 filings.

Background:

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