Legal Issues- Lobbying

Catholic health care leaders can and should be involved in advocacy activities, including lobbying, especially on critical issues relative to access, affordability, and quality of health care. It is important to know, however, what is legally permissible and what is not permitted.

Not-for-profit charitable organizations, including Catholic health care facilities, are exempt from federal taxes under Section 501(c)(3) of the Internal Revenue Code. A condition of tax exemption is that a substantial part of the organization's activities may not include influencing legislation. Tax-exempt organizations may either follow this general prohibition against engaging in more than a substantial amount of legislative activity or they may "elect" to meet a more specific test of how much lobbying activity is permitted.

The election test permits expenditures on lobbying activity up to the following:

  • 20 percent of the organization's first $500,000 of tax-exempt expenditures (generally speaking, the facility's budget)
  • 15 percent of the next $500,000
  • 10 percent of the next $500,000
  • 5 percent of the remaining expenditures

Two other restrictions also apply to those "electing" the specific test:

  • The total amount spent on lobbying activities in any year may not exceed $1 million
  • Expenditures for grassroots lobbying (aimed at the general public as opposed to a legislative body) may not exceed 25 percent of the organization's total lobbying limit

Given these parameters, it is unlikely that a health care organization would exceed the limitation of the law. However, organizations should be sure to check with their legal/tax advisors before engaging in specific lobbying activities.