[EL] IRS discussion of nonpartisan analysis, study or research

[Mark Schmitt]

Thank you for that correction. That is absolutely right about private 
foundations. I should not have described the prohibition on lobbying by 
private foundations as comparable to the "substantial part test." The 
substantial part test applies to a private foundation's basic 
eligibility for tax-exemption; the excise tax adds a second level of 
lobbying prohibition.

I'm sorry for the late-night misstatement of the law. I do know the 
difference.

Nonetheless, ALEC should have elected and there wouldn't even be a case 
to be made if they had.

On 4/24/2012 9:20 AM, BZall at aol.com wrote:
> Well, I was going to let this lie fallow. After all, Ellen criticized 
> me for incompletely describing Rev. Rul. 70-79, but I simply 
> summarized the ruling and QUOTED the IRS Exempt Org Division's own 
> internal training materials:  "Rev. Rul. 70-79 holds that the 
> organization qualifies for IRC 501(c)(3) status because of the 
> educational nature of its activities and because it abstained from 
> advocating the adoption of any legislation or legislative action to 
> implement its findings." Kindell & Reilly, 
> http://www.irs.gov/pub/irs-tege/eotopicp97.pdf, see pp. 275; see also 
> pp. 302, 274-76. As to the complaint that I was mixing the rules 
> for electing and non-electing charities: that 1997 IRS CPE text 
> contains our most substantive explanation of the rules governing BOTH 
> electing and non-electing charities. Since we have no definition of 
> lobbying for non-electing charities, it's useful to include the IRS's 
> own thinking on what it means; Ellen offered the 1970 Rev.Rul. and I 
> added the 1997 IRS interpretation from the two IRS EO specialists 
> expected to know, who quoted several other useful Rulings. I was 
> negligent in not mentioning and explaining the distinction for those 
> who think they understand it but don't really (see below). We had a 
> whole thread on this some time back.
> As to Ellen's question of whether having legislators as members should 
> affect whether given actions are considered lobbying (and leaving 
> aside Judy and Jack's CPE analysis), Ellen, you mentioned only 
> analogizing to testimony (e.g., Treas. Regs. 53.4945-2(d)(2)); I would 
> suggest you consider another element of non-partisan analysis: public 
> (or at least non-targeted) distribution (under -2(d)(1)). One 
> explanation is that it is not so much whether legislators are members 
> so much as it is the use of the materials for public education 
> or advocacy communications. One key to the "making available" regs is 
> whether the communication is directed only to "persons who are 
> interested solely in one side of a particular issue." E.g., Treas. 
> Regs. 53.4945-2(d)(1)(iv); see also Example 10 (organization that did 
> not make substantial distribution of a nonpartisan report prior to or 
> contemporaneous with a lobbying communication).  Even legislators can 
> educate. On the spectrum of research and education, issue advocacy, 
> lobbying, and electioneering, it would appear that it is as much the 
> principal use of the materials as the happenstance of who receives it. 
> So, for example, the incidental receipt of a newsletter by a 
> legislator who also happens to be a member of the organization should 
> not (and does not) convert the genuinely educational or issue advocacy 
> nature of the publication into a lobbying message. And see also 
> subsequent use (as I mentioned yesterday), -2(d)(1)(v); it would seem 
> the subsequent use rules would affect your analysis. (Oh, and given 
> your insistence on the Sect. 115 character of NCSL being critical, I 
> wonder about your analysis of their c3 foundation in this specific 
> context?)
> And finally, there are enough non-exempt organization lawyers on this 
> list that I can't let Mark Schmitt's comment stand without a warning. 
> *Please do not use Mark Schmitt's comment as a guide to lobbying 
> analysis, especially of private foundation activities*. Private 
> foundations' legislative activities are governed, in part, by IRC 
> section 4945, and Treas. Regs. 53.4945-2, "Propaganda influencing 
> legislation", which is, in its modern version, expressly tied to IRC 
> Section 4911 (for electing charities). See, e.g., Treas. Regs. 
> 53.4945-2(a)(1). And, of course, the original topic of discussion 
> ("Nonpartisan analysis, study, or research") is treated explicitly in 
> Treas. Regs. 53.4945-2(d)(1), which also includes the "directly 
> encouraging" definition. -2(d)(1)(vi). And see especially Examples 8, 
> 9, 10 and 11.  Go to the IRS (or very well-done Alliance for Justice, 
> http://www.afj.org/for-nonprofits-foundations/about-advocacy/lobbying.html) 
> materials for more. (His point about whether ALEC should elect to be 
> governed by the mechanical test, on the other hand, is perfectly valid 
> opinion.)
> I won't cover all the rest lest this limited topic grow new wings.
> Barnaby Zall
> Of Counsel
> Weinberg, Jacobs & Tolani, LLP
> Please note our new address:
> 10411 Motor City Dr., Suite 500
> Bethesda, MD 20817
> 301-231-6943 (direct dial)
> www.wjlaw.com <http://www.wj/>
> bzall at aol.com
>
>
>
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-- 
Mark Schmitt
Senior Fellow, The Roosevelt Institute
202/246-2350
gchat or Skype: schmitt.mark
twitter: @mschmitt9
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