Nonprofits and Ballot Measures

Yes on 2 Support Local Food croppedBallot measures ask the electorate to vote on proposed or existing laws, bonding issues, or constitutional amendments. About half the states and many counties and municipalities allow ballot questions to be put before the voters either by voter petition or legislative action.


Three Things to Know about Ballot Measures

1. The IRS considers activity on ballot measures a lobbying activity – not electioneering. A 501(c)(3) may work for or against ballot questions up to normal lobbying limits. The IRS makes this distinction because advocacy on ballot measures is an attempt to influence a proposed law or policy – not the election or defeat of a candidate.

2. Ballot measure advocacy is more a first amendment right to advocate on issues than a matter of tax law. Any organization or individual is free to express their opinion for or against a proposed law or constitutional amendment.

3. 501(c)(3) nonprofits may choose to provide neutral public education on ballot questions on what a “yes” or “no” vote means and who supports each side. There are no limits to neutral and nonpartisan voter education.

Q: What are the 501(c)(3) lobbying limits in regards to ballot measures?
Your lobbying limit depends on which of two alternative tests your nonprofit chooses to measure its lobbying:

  • If your nonprofit has chosen to measure its lobbying under the 501(h) expenditure test, it has clearer guidance and can do more lobbying. Under this expenditure test, you can spend a certain percentage of your annual budget (as much as 20% for small organizations, less for larger groups) on efforts by you or your members to directly influence the outcome of a ballot question or legislative vote.
  • If your 501(c)(3) has not chosen to use the above expenditure test, it may spend an “insubstantial” amount of money and time on lobbying. “Insubstantial” lobby expenditures has been interpreted to mean a relatively small percentage of time and money, for example less than 5%.

Q: How does my nonprofit opt for the 501(h) lobbying expenditure test?
File a one-page, one-time form with the IRS-Form 5768. Once submitted and approved your nonprofit has higher and defined lobbying limits. It includes annual reporting of expenditures on your Form 990. For more information and the application form, read Bolder Advocacy’s “Maximize Your Lobbying Limits.”

Q: Are there campaign disclosure requirements for funds raised or spent to advocate on ballot measures?

Your state may have reporting requirements for funds you raise or spend more than a nominal amount related to ballot measure advocacy. Check with your state’s campaign finance office or an attorney to see what your state’s requirements are if your nonprofit decides to invest significant resources in advocating a “yes” or “no” vote.

Q: How should a 501(c)(3) track its lobbying on ballot questions?

If you do a substantial amount of work for or against a ballot measure, whichever of the two lobbying expenditure tests you use, you will need some type of system to keep track of how much lobbying you do.

  • Track the money you spend on direct expenses such as flyers, signs, advertising, and snacks for your volunteers.
  • Keep track (via time sheets or some other mechanism) of the time that any paid staff spend supporting your lobbying effort.
  • You’ll need to report this lobbying information to the IRS on your organization’s annual tax return (your Form 990 for nonprofits).

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