Nonprofits have a lot of social capital to cash in on.
Even though we are an ‘interest group’, the public, and even many policymakers, don’t see us in the same way that they view another trade or industry group.
People love nonprofits, as A Voice for Nonprofits emphasizes, because they ’embody the caring, charitable side of us’ (p. 1). We tend to think fondly of institutions that make us feel like better people. Nonprofits respond when government programs and market structures fail, and do heroic work, often at a cut rate, every day, in communities all around the globe.
And nonprofits need to make that work for us, by using our good will to galvanize people to action on public policy the same way that we bring them together to respond to disasters, feed people who are hungry, clean up highways, and tutor struggling students.
But the rules that govern nonprofit advocacy–lobbying, in particular–constrain us, in ways that deserve further analysis, both around their intent and their outcome. As the authors put it, “Governments may love nonprofits, but, when it comes to political activity, it is a case of tough love” (p. 4).
Governments and nonprofits interact all the time, of course; A Voice for Nonprofits gives one example of a single nonprofit organization operating with funds from 32 government programs. Nonprofit CEOs can seldom survive without fairly regular communication with government officials, but we conceive of this as neutral ‘informing’, or as contact with just another funding source, instead of seeing it as the foundation for relationships that can spark policy changes, even though it is.
The one point from the book that did strike me as a new insight, even though this is my world, was this: the entire U.S. political system is predicated on the idea–indeed, the expectation–that interest groups will exert themselves in the process. Policymakers could not work without advocates to inform them, and there are multiple access points (official hearings, town halls, staffers who take correspondence, interface with the media) for these groups to shape the process.
There’s essentially an all-access pass to governmental decision-making, at least on many of the budget and programmatic decisions that matter most to our work.
And, yet, 501(c)3 organizations are excepted from this, carved out, in a way that, really, is indefensible.
When you think about the rationale being that their tax-preferred status means they have to limit political influence, even though many industries receive FAR MORE in tax and even direct government support than nonprofit organizations, without having to compromise any of their political activity, it’s pretty clear:
These rules, governing nonprofit advocacy, are not neutral.
I spend a fair amount of my consulting time helping organizations navigate the rules around lobbying, distinguishing between lobbying and general information and advocacy, and even helping agencies craft communications to fall on one side of that line. And that’s important work, because losing a 501(c)3 status would, for most organizations, be devastating.
But A Voice for Nonprofits makes the compelling case that the perception matters, in this instance, maybe even more than the substance of the rules, and that those who wrote them probably knew that. This means that, in practice, saying “this is how much lobbying a 501(c)3 can do” is heard as “this is how much you can’t do”. And that that might be intentional.
I mean, it took fourteen years for the Internal Revenue Service to issue the rules implementing the 501(h) election option. Fourteen years that added to the confusion about the provision and, I believe, increased the reluctance of many nonprofit organizations to go that route. The authors point out that it’s still a pretty stealth policy, not mentioned on the required 990 reporting form for nonprofits, and only adopted by around 3% of all 501(c)3 organizations, despite its considerable advantages in allowing a nonprofit to lobbying with confidence. What we have ended up with is the rather dubious fact that our tax code helps to determine, in a fairly direct way, who has access to address the government for grievances, who has a seat at the proverbial ‘table’. And these exclusions are not, of course, random; in general, nonprofit non-sectarian 501(c)3s tend to have some broad priorities in common, including a preference for collective responsibility and an expanded government infrastructure, so these are the values that receive comparatively less attention in policy debates.
When you put it that way, it sounds pretty odd, no?
The rationale for the exclusion falls apart even more in light of research like that conducted for A Voice for Nonprofits, which finds that, especially in sectors like civil rights and environmental protection, the advocacy records of 501(c)3s make clear that direct financial gain, through contracts from the government, for example, figure in very little to their advocacy motivations (see p. 88, for more details). This isn’t about nonprofits using ‘taxpayer dollars’ to advocate for policy changes, even though, of course, that’s exactly what many industries–defense, public works, energy–do.
The rules are never neutral.