A Voice for Nonprofits: “The Rules are Never Neutral”

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.

It’s about being silenced in efforts to promote the common good. Just because someone else holds the purse strings and gets to say so.

The rules are never neutral.

20 responses to “A Voice for Nonprofits: “The Rules are Never Neutral”

  1. I am not very knowledgeable about taxes and other political issues but I do know and understand the purpose of the limitations imposed for lobbying. Many of these non-profit organizations are trying to add or change the same government policies so it would make sense to pull their resources. Many for-profit companies have the same interests and I don’t believe they have the same limitations. It seems to me that we could use the concept of getting two for the price of one if everyone is willing to work together. In some ways the 501(h) might pose limitations but it can also open up new opportunities. I know that when I contribute to a nonprofit organization, I hope they use the funds in the most efficient way to help others. If I thought that the money was only for lobbying puposes, I might rethink about my contribution because it isn’t what I was contributing to even though it might help others more in the future. If the government is funding some of these programs, then I do feel they have the right to make stipulations on how some of it is spent.
    When I volunteered for the Salvation Army, they were more focused on their programs rather than the income. Maybe in the administrative offices there was some focus on government policies and funding but if they tried to educate us, it fell on feaf ears until maybe there was a shortage in funding. Then we would ask tough questions such as “what do we do to keep this program going?” It isn’t much of a responses but it does represent how I feel about this issue at this point in time. I love that you are so in to these issues and feel confident with your knowledge so if you were to tell me that something needs to be done, I would probably back you as much as possible but don’t make me get too political because it isn’t a strength that I possess!

    • I appreciate your honesty, Mary, in thinking this through. I do want to respond to your comment about not wanting your donation dollars to go to lobbying, because I really feel sort of the opposite. If I am giving money to an organization, I want to know that they are absolutely doing everything they can to address the root causes that drive demand for their services, and that must include policy change. So I would be hesitant to give much to organizations that have absolutely no advocacy presence. I do think that your recognition that policy change is a new–and, so, somewhat intimidating–arena for you is totally valid. We don’t have to take on every aspect of social work practice to be effective; we just have to be intentional about how we leverage relationships with others and act in an ethical way, in pursuit of fundamental justice for those we serve. I think it’s difficult to do that without at least some lobbying engagement, but it’s certainly also true that just lobbying won’t get us there!

      On Sat, Mar 8, 2014 at 2:56 PM, Classroom to Capitol wrote:


  2. Emily Bell-Sepulveda

    ” If I am giving money to an organization, I want to know that they are absolutely doing everything they can to address the root causes that drive demand for their services, and that must include policy change.”
    This is really the heart of the matter, as far as I am concerned. Why do for profit companies get to lobby, when non-profits don’t? Take the probably too often put-upon example of “big pharma.” They lobby for billions of dollars, but the taxpayer money they get isn’t spent with any transparency. It isn’t always spent with the goal of finding cures, and in some cases, that would even be a conflict of interest. While I am not completely distrustful of this industry, and I do believe in the majority of what the medical establishment has to offer, it is analogous to the discussion of non-profits using our donations to “cure” the causes of the social “illnesses” that we donate our money to treat. Energy companies buy and trade politicians as a matter of course, and they can invest their money in entirely dangerous or useless policies and energy technologies. However, if a non-profit that helps disabled children in little town, USA, finds that many of the children they see are suffering from vitamin deficiencies that cause certain disabilities, why is it so burdensome for them to lobby for changes to policies that could allow for better pre-natal care access in that town, or better nutrition education with the delivery of the SNAP or WIC programs? I guess my point is, I agree with you, Melinda. The rules are not neutral, and they are heavily on the side of large profit-making entities. Personally, I believe that is because those large profits can find their way back to the politicians. The incentive to make fair rules for non-profits is not there.

    • What does your analysis suggest, Emily, about the need for nonprofit advocacy on the rules, then, in addition to the work we do directly on the causes we care about? I grapple with this a lot–how to get organizations and advocates to attend to things like campaign finance and IRS regulations, which determine a lot of the context in which our advocacy occurs, even if they seem to have little immediate impact on our clients’ well-being. What might this look like, in a sort of meta-advocacy agenda for the nonprofit sector?

  3. Emily Bell-Sepulveda

    I think this meta-advocacy for advocacy needs to be ingrained into the culture of a non-profit. Or somehow pressed by outsiders and insiders that the success of the agency’s mission(s) depend on being able to advocate in both a political and financial arena and the overlapping arena. To me, you cannot have one without the other, because an individual agencies cannot work effectively without the input and support of other individuals, agencies, or the political structures in which an agency exists.
    This kind of is a systems theory view to organization, with the input-output-feedback of systems that both co-existing and residing in larger systems. The support component is absolutely dependent on the capacity of an organization to affect the environmental system in which it resides. This needs to be recognized by both the outer system (the governing bodies that create/ maintain the rules) and the inner system (the organization), so that they can accommodate this necessity. However, given what I said about the money creating the rules, I think ultimately, organizations need to have greater influence over individuals with more money (sounds too simple, right?).
    It is a tricky area to work ethically, but there are ways to influence policy through the influence of outsiders: finding a celebrity spokesperson to advocate, or a CEO or politician with a relative benefiting from a particular service, etc. If possible, capitalize on the only thing that divides and unites us more than money–our shared humanity. If there are ways to do so without compromising the everyday mission and ethics of an organization, then they should be explored. Finally, this is something ALL non-profits grapple with, so power in numbers could be a powerful catalyst for change if non-profits united in the goal of changing the rules.

  4. So far I’m just trying to get my feet wet in understanding how non-profits operate when it comes to lobbying and policy making and making changes that really matter. It seems to me that the non-profits have far more restrictions placed upon them than their for-profit counterparts. The non-profit can be perceived as the little engine that could and the for-profit is the mega-ton locomotive with 100 railcars – 30 of which are hauling the highly combustible oil from North Dakota. In a situation like that it is very hard to be neutral!
    Non-profit organizations should have a little more leeway in the lobbying and policy making process. Many of their causes are humanitarian, and even more of their causes come as a byproduct or result of the for-profit organizations. Non-profit agencies should not be penalized for lobbying or for trying to advocate for policy change. The big for-profit industries have millions of dollars that they can slap away in lobbying and advocacy; non-profit agencies have to target their funds on issues and policies that directly affect their operation – right down to their bottom line.

    • We’re going to talk about this in class tomorrow, actually, Chris! I’m really looking forward to it. There are two issues here–nonprofits’ unequal rights in the lobbying and, in particular, electioneering, contexts, and, also, some nonprofits’ reluctance to use even those rights they have, whether out of lack of understanding, fear, or inadequate resources. This becomes a destructive cycle, where organizations that fail to fully grasp the importance of policy engagement then fail to push for the latitude to engage there that they should…which perpetuates the problems. I’m anxious to see what you think of our conversation tomorrow!

  5. Tammy McCandless

    Wow! First of all, I think that non-profits are held to higher standard that for profit companies. And I think is because of their caring charitable side because it’s easy to give some money to a non profit and feel good about yourself – especially when you don’t want to do the work. I would venture to say that the non profits that take the risk of pushing the lines regarding lobbying and advocacy will have great rewards. Because everything is political. Look at how much we see regarding breast cancer awareness and how much the government has given to research as opposed to Alzheimer’s. The lobbying efforts and the campaign strategies in the media helped their cause. If we look at that what other groups have done get funds how do they measure up? How loud should we shout to get their attention?. It seems like a fine line that often gets pushed on how much a non profit can push the limits. Does the water get muddy? Or does everyone know their boundaries and play by the rules?

  6. They absolutely are held to higher standards, Tammy, with the (I think legitimate) justification that their tax advantages mean that they owe a public debt, of sorts. The question is whether those are the right standards, and the fair ones, or whether they compromise nonprofits’ ability to achieve the very missions that we’re all investing in–with our donations and with the foregone tax revenue. Your point about the payoff for organizations that are forward-thinking in their advocacy is an important one. Too often, we only look at the risks associated with engaging, but there are huge risks in staying on the sidelines, too. The opportunity costs are tremendous. As for the last questions, I think that there are definitely nonprofit leaders who don’t know the rules, but they tend to err on the side of caution, then; most of those who are out front do so carefully..which isn’t to say always legally; sometimes a really pressing cause or an overabundance of passion (is there such a thing??) can push advocates into a danger zone.

  7. As stated in the beginning of this blog, non-profits are considered to be organizations that make life better, whether it be socially or environmental. To put restrictions, such as lobbying, on these organizations is ludicrous. I say this because, who better than those within the organization know what they need most and each organization should be allowed to address their government regarding its needs without fear of dissolution. With the implementation of 501(h), I am sure most of that fear has been greatly reduced. What if Susan G. Komen organization approached the government without a 501(h) or before the IRS incorporated 501(h) into the tax code? It is scary to this empowering organization for women would be – if at all. It is my humble opinion that if anyone should be allowed to lobby without restriction before anyone else, it would be the non-profit. Mr. Lincoln did say, “a government of the people, for the people and by the people” and I do not believe he meant for anyone to NOT be heard!

  8. That’s a good point, Dorothy, about how just the existence–reputation, expertise, legitimacy–of some nonprofit organizations can (and do!) influence policy, even without overt efforts to do so, which makes it all the more important that there be clarity about the rules under which nonprofit 501(c)3s are allowed to engage in lobbying. The rationale for the restriction, of course, is the tax-preferenced status of the nonprofit, but making the case that lobbying advances the public good, just as surely as direct services do, helps to reduce the perceived tension there. Thanks for your comment!

  9. Chandra Smalley

    We derive a tax preferred status which comprises restrictions on lobbying and political activity due to the potential, persuasive political power. It seems fair enough in the context of the old adage you can’t have your cake and eat it too. Problem, it consequentially further confines the agencies from advocating for the needed policy changes that directly affect many non-profit clients. Problem, hypothetically some non-profits want funding from the Government and to receive a preferred tax status yet want the authority to basically say we disagree with your policies and manner of governance but agree just enough to be subsidized and supported by the Government. I am not saying I agree that non-profits should be limited in their lobbying efforts and political activity but you can’t ask to be tax exempt and then gain from Government funding. Mission driven work is interest groups exerting themselves which is lobbying which is not consistent with neutrality. It seems to me to be the same story line with changing interpretation of our theories of logic. Throughout history divisions in power are created and then we seek to find balance and neutrality. Clearly there is no right or wrong, there has to be homeostasis for any system to be stable. Restricting non-profits is restricting a balanced political system. Problem, our political system has never been stable, well-adjusted and constant. It is the evolution that is needed to maintain our system. Just as we have created a division between macro-level social work and micro-level social work when essentially both are needed and there isn’t a definitive line between the two. We as social workers must not sit back and argue over who is right or who is wrong but find ways to cause a pattern of movement that will create a more collectively balanced system.

  10. This is a really strong analysis, Chandra–YES, absolutely it isn’t fair to expect to benefit from the tax-preferred status and then to be able to use those resources to push for policies that benefit us…but it also means that nonprofit organizations will continue to inefficiently have to expend resources in order to combat the problems that policy change might address more effectively. That doesn’t seem wise, either! Ideally, organizations would be able to do unlimited ‘mission’ advocacy and be limited in their ability to lobby for funding or direct ‘benefits’ for their organizations…but how would we ever draw those lines? Thank you for this nuanced post!

  11. From the article and the responses that I read I understand how important it is to lobby for non-profits. Hopefully, somehow there will be away. Non-profits are for the people that they serve. Last year I did my practicum at Salvation Army where I met with one of the directors. Part of the discussion was the shortfall of the amount of funding that occurred from the Christmas fund and how one of the positions was going to be eliminated.
    It seems like as students that we need to become more informed on a number of things such as how non-profits work, especially, those of who such as myself that want to work for a non-profit agency. Government regulation is involved in everything. Is it possible that some of the officials need to be educated, as well?
    Non-profits take up the slack where profit lets off. Yet, when the government makes changes it seems that non-profits get hurt. I noticed, especially, since the recession that there have been many changes, especially, when people are expected to give money to fund a program. Unfortunately, because of the changes that government has had to make some non-profits agencies have had to make drastic changes or go under. And, some non-profits agencies have.
    Maybe those who work for non-profits or are interested and those who donate should speak out for these agencies.

  12. Hopefully, I enter this post right since I lost this the first time that I tried posting. But, what does this have to do with the article? I think that the comparison here is that non-profit agencies get lost in the shuffle of government bureaucracy when it concerns government regulations. The government it seems expects non-profits operate and be governed the same way that for profits are. Yet, non-profits should not be governed the same, especially, since they pick up the slack of where other areas leave off. It unfortunate that when changes are being made in the government or the country hits a financial crisis like it did during the recession one of the first things that people cut is donating to non-profits. I don’t think that non-profits should be governed the same way as profit organizations. If they have a voice so, too, should non-profits. Could it be possible that individuals who work for non-profits and want to work for a non-profit agency should be taught how to lobby for them? And, also, those in public offices?

    • Of course there should be restrictions, Chris. The question is whether it’s fair to expect nonprofit organizations to trade their voice in the political process (in terms of campaign contributions, in particular) for the tax treatment they receive. Or is this holding organizations hostage in order to permit their financial survival? What’s a fair price to pay, in other words, for tax-exempt status?

  13. I have always felt the ambiguity around lobbying and advocacy in nonprofit organizations, specifically social work organizations, to be counter-intuitive to our goals, not to mention the social work code of ethics. This hesitancy regarding lobbying feels a lot like fear, and I feel that fear comes from not only worry of losing resources, but also an apologetic nature regarding our very existence as non-profits. For me, this mirrors a power struggle between the government and non-profits forced to be subservient. Perhaps I am stretching this a little far, but in reflecting on the manner in which the U.S. government spends its dollars in comparison to many other developed nations, it is clear non-profits are not valued for their social capital. This lack of value may be due to constraints on the lobbying professionals are allowed to do, or perpetuated by the image non-profit entities themselves pursue. My understanding has been non-profits are expected to be grateful for their dollars, even if measly, as social capital has not yet been seen as equal to or more important than financial gain.

    • I struggle with this too, Leslie. I’m honestly not sure if there is actual ambiguity, or if some nonprofits hide behind the idea of uncertainty/lack of clarity, in order to avoid taking actions deemed risky. What do you think? I do think it’s a great point that there is a presumed ‘beggars can’t be advocates’-type of mentality, that the tax benefits conferred by 501(c)3 status somehow must be exchanged for silence or, even complicity. Starting from where you are right now, what do you think could help break through this belief at Catholic Charities? How do you see your practice attempting to counter these tendencies, as you move into your professional role?

  14. It’s been intriguing, to say the least, to learn about the restrictions that non-profit organizations face when it comes to how they can advocate within their agencies. As A Voice for Nonprofits states, the general consensus in regards to non-profits is overwhelmingly positive. The common perception of non-profits is that they are organizations with a passion towards helping those who need it the most. Commonly, these populations have been failed by other institutions within their communities, so they rely on the services provided by non-profits. That being said, it is confusing that the federal government seems to have little trust when it comes to the intentions of non-profit advocacy. When confusing restrictions are put into place in regards to lobbying within non-profit organizations, this negatively impacts the potential changes that non-profits could kickstart in order to benefit the populations they serve. It’s disheartening to know that regulations like these could be keeping underserved populations from obtaining the resources they need to endure in an environment that has never been supportive of their survival in the first place.

    • I don’t know that it’s that government leaders don’t trust nonprofit organizations’ intentions…more that they don’t want to be pushed or pressured too much, particularly when government tax benefits help to subsidize nonprofit operations, and so they tamp down on advocacy to keep such dissonance at a minimum. That obviously doesn’t solve the problem, but it is how at least I see its roots.

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