What are the IRS rules regarding community foundations and lobbying?
As stated above, community foundations may lobby as long as lobbying is an insubstantial part of the foundation’s activities. The IRS has established two different tests to determine whether lobbying is insubstantial. Your community foundation may choose which test will govern its activities. The first test is called the insubstantial part test. This test is the default test that the IRS will apply when looking at the organization’s lobbying activities. While the term insubstantial has never been clearly defined by the IRS, most practitioners will tell you that about 5 percent of the organization’s overall activities is a safe level of lobbying. Some factors the IRS will look at to determine the amount of lobbying include volunteer activities, money spent on lobbying, and the amount of publicity the foundation attributes to its lobbying activities. The second—and, in many cases, the more advantageous—test is referred to as the 501(h) expenditure test. Under this test, the amount the co
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