Year of Publication



Martin School of Public Policy and Administration

Executive Summary

The nonprofit sector holds an interesting role in democracy, as this segment balances the powers of government and business by providing a way to cultivate social justice and afford people a means of acting and promoting interests outside of the government and private sectors. Nonprofit organizations therefore allow people to join together in providing services and programs that strengthen the communities in which they act. Advocacy involves identifying, embracing, and promoting a cause, especially by educating the public about their organization, whether this is through public engagement, coalition building, or lobbying.

Lobbying is a specific but critical component of general advocacy that enriches a nonprofit’s ability to fulfill its mission and helps to build informed public policies. For some organizations, issue advocacy is the purpose of their existence, others use it as a way to meet organizational goals, but some may avoid issue advocacy as a whole. Since the Internal Revenue Service gives federal tax-exemption status to organizations categorized as 501(c)(3), there are lobbying expenditure limitations on this category as put into law; most organizations do not get close to this threshold, but some change their advocacy techniques to avoid approaching the limit and endangering their tax-exempt status. Some literature shows that there is a positive relationship between the size of an organization and the amount of lobbying expenditures reported, but a negative relationship between certain types of funding sources and the willingness of a nonprofit to report lobbying expenditures. Therefore, there is not only the question of what factors influence whether a 501(c)(3) organization is willing to engage in lobbying efforts, but what factors may influence the extent of lobbying expenditures should be considered as well. These factors for each question may be the same, but they must be tested separately.

Literature from the field is used to gain an understanding of nonprofit advocacy and lobbying efforts and the tendencies of 501(c)(3) organizations to lobby, as well as to define the expectations of what should be reported on the Form 990 to the Internal Revenue Service (IRS). Using data from IRS Form 990, this study analyzes the relationship between lobbying expenditures, the size of the organization, and various funding sources. Funding sources assessed include direct public support, indirect public support, government grants, program service revenue, and membership fees and assessments. Two regression models were utilized, one to look at the factors associated with the organization’s willingness to engage in lobbying efforts, and a second to assess the factors associated with the extent of lobbying expenditures, if the organization did indeed engage in lobbying efforts. The study finds a statistically significant positive relationship between several sources of funding (direct public support, indirect public support, and program service revenue) and the reporting of lobbying expenditures, as well as a statistically significant positive relationship between several sources of funding (direct public support and indirect public support) and the amount of lobbying expenditures reported by the organizations that do engage in lobbying efforts. The funding factors associated for each of these questions did not provide the same results. The variable of the size of the organization provided straightforward results; the larger the organization, the more likely the organization was to lobby because it had more access to funding, but eventually the size was not a factor and the organization either reported lobbying or did not. Therefore, instead of the results showing that all large nonprofits lobby, it shows that if a large nonprofit does lobby, then they do a lot of it. Across the board, any increased amounts of funding correlated with increased reports of lobbying expenditures. Further conclusions are problematic, however, due to limitations in the research design. Although the dataset provided a large sample, more control over the sample selection would be ideal, as this study had to work within the constraints of limited data access. To truly assess the impacts of funding and size factors on lobbying expenditures, great care would need to be taken in ensuring the data from the IRS Form 990 was correctly filed by each organization, and proper measures would need to be taken to collect the data from organizations of a specific sector to ensure a more homogenous and specific data set. An interpretation of the results and a recommendation for further studies is made in the conclusion of this paper.