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

[Ellen Aprill]

Barnaby and I have already continued our discussion off-line, but, on
reflection, I think it is worth quoting to the list the full paragraph in
the CPE text re Revenue Ruling 70-79 from which he quoted (emphasis added):

"In Rev. Rul. 70-79, 1970-1 C.B. 127, an organization was created to assist
local

governments of a metropolitan region by studying and recommending regional
policies directed

at the solution of mutual problems. Although *some *of the plans and
policies formulated by the

organization could only be carried out through legislative enactments, *the
organization did not*

*direct its efforts or expend funds in making any legislative
recommendations, preparing*

*prospective legislation, or contacting legislators for the purpose of
influencing legislation.* 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."


The CPE text also includes the following description of another revenue
ruling:


"The organization described in Rev. Rul. 70-79 can be distinguished from
the organization

discussed in Rev. Rul. 62-71, 1962-1 C.B. 85. The latter organization is a
corporation formed

for the purpose of supporting an educational program with regard to a
particular doctrine or

theory. It was the announced policy of the organization to promote its
philosophy by educational

methods as well as by the encouragement of political action. Most of the
publications

disseminated by the organization, together with a substantial part of its
other activities, dealt with

the theory advocated. This theory or doctrine can be put into effect only
by legislative action.

Rev. Rul. 62-71 concludes that while the portion of the organization’s
activities that

consisted of engaging in nonpartisan analysis, study and research and
making the results thereof

available to the public, when considered alone, may be classified as
educational within the

meaning of IRC 501(c)(3), the organization was primarily engaged in not
only teaching but

advocating the adoption of a particular doctrine or theory that can become
effective only by the

enactment of legislation. Since the primary objective of the organization
can be attained only

by legislative action, a step that the organization encouraged or advocated
as a part of its

announced policy, as opposed to merely engaging in nonpartisan analysis,
study and research and making the results thereof available to the public,
it is an action” organization as that term is

defined in Reg. 1.501(c)(3)-1(c)(3) of the regulations. Accordingly, the
organization does not

qualify for IRC 501(c)(3) exempt status."


I do not think I know enough about how ALEC or the NCSL Foundation operate
to make a conclusion regarding them under these authorities.


  Ellen





On Tue, Apr 24, 2012 at 6:20 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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-- 
Ellen P. Aprill
John E. Anderson Professor of Tax Law
Loyola Law School
919 Albany Street
Los Angeles, CA 90015
213-736-1157
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