1. Lobbying Rules for Nonprofits CABE Board Meeting November 15, 2014

2. Federal Tax Laws California Political Reform Act Relevant Laws

3. A 501(c)(3) nonprofit will lose its tax-exempt status and its ability to receive deductible charitable contributions if a substantial part of its activities are carried on to influence legislation. Federal Tax Law

4. Advocacy on State ballot measures is considered grassroots lobbying. “Insubstantial Part” Test 501(h) Expenditure Test Federal Tax Law

5. Complete Form 5768 Calculate your “lobbying limit” Spend up to 25% of the lobbying limit on grassroots lobbying 501(h) Expenditure Test

6. 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 - See more at: http://www.councilofnonprofits.org/nonprofit-advocacy/501h-election#sthash.s1kcjcyC.dpuf

7. If an organization has $3 million in expenditures 5% times $1,500,000 = $75,000 $75,000 plus $225,000 = $300,000 (lobbying limit) $300,000 times 25% = $75,000 (grassroots lobbying limit) 501(h) Expenditure Test

8. EXAMPLE: Nonprofit Budget = $100,000 Lobbying Limit = $20,000 Grassroots Limit = $5,000 501(h) Expenditure Test

9. Only covers expenditures and the following expenditures are exempt: Making available the results of nonpartisan analysis, study or research Communications with bona fide members Federal Law

10. Supporting or opposing ballot measures in California is not considered lobbying under California lobbying law Existing nonprofits that solicit/receive contributions of $1000 or more in a calendar year earmarked for the passage or defeat of a ballot measure (or spend more than $50,000 on ballot measures) must register as a committee and file campaign reports California Disclosure Laws

11. Employees spending less than 10% of their time Fee for services at fair market value Bona fide member communications Newsletters Public Education Campaigns CA Disclosure Law Exemptions

12. Garcia, Hernández, Sawhney & Bermudez, LLP www.ghsblaw.com