Many states have ballot questions – initiatives, referenda, or constitutional amendments. How are these different from candidate elections?
In general, there are three things to know about working on ballot measures:
- The most important thing a 501(c)(3) nonprofit should know is that 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.
- 501(c)(3)s may also engage in unlimited activities that neither support nor oppose the ballot measure, such as voter registration, voter education, and get-out-the-vote activities.
- Your state may have reporting requirements for ballot measure expenditures. 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 resources in advocating a “yes” or “no” vote.
Q: What are the 501(c)(3) lobbying limits in regards to ballot measures?
A: Your lobbying limits depend on which of two alternative tests your nonprofit chooses to measure its lobbying:
- If your nonprofit has chosen to measure its lobbying under the so-called 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?
A: 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: How should a 501(c)(3) track its lobbying on ballot questions?
A: 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 timesheets 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).
Also, as mentioned above, any organization spending funds to influence the outcome of a ballot question may have to register and file disclosure reports with a state or local campaign finance office – which you can find by contacting your Secretary of State’s office.
For more information, visit:
- “Nonprofits and Ballot Measures” Factsheet – English | Spanish
- “Laws on the Ballot” Presentation
- Ballot Measures and Public Charities, Bolder Advocacy
- Foundations and Ballot Measures, Bolder Advocacy
- The Powerful, Free, and Easy 501(h) Election: Benefits Galore! National Council of Nonprofits
- 2014 Ballot Measures, Ballotpedia
- State Portal, Ballotpedia