As Chicago’s Mayoral transition shifts into high gear, 501(c)(3) organizations should structure their involvement to comply with the special rules that apply to them. (As a reminder, all 501(c)(3) organizations are strictly prohibited from engaging in political campaign activity; 501(c)(3) organizations that also are classified as public charities are permitted to engage in limited lobbying activity; and 501(c)(3) organizations that are classified as private foundation are prohibited from engaging in or funding any lobbying activity.)
Many public charity and foundation organizations in the Chicago area have been invited to support the incoming Mayor and his team as they prepare the new administration’s agendas, plans, and strategies. Input from Chicago’s philanthropic sector is vital to making these efforts a success, but compliance with the 501(c)(3) rules can present some unique considerations. While no general guide is a substitute for careful legal advice, the following principles may be helpful in planning efforts:
- Education that excludes lobbying activity is always permissible under the 501(c)(3) rules. (See our prior blog post for a refresher on the 501(c)(3) lobbying definitions and rules.) Accordingly, public charities and foundations can meet with the transition team and committees to educate them about key issues, past successes and failures, and opportunities for success. These efforts should not include discussions of specific ordinances or other legislation or even specific legislative proposals, but general conclusions that “this issue needs legislative attention” is permissible.
- Nominating candidates who will be confirmed by City Council is considered lobbying under the 501(c)(3) rules. Accordingly, public charities and their representatives can do this only within limits. Private foundations and their representatives cannot do this at all.
- Nominating candidates who will be appointed by the new Mayor generally is not considered lobbying under the 501(c)(3) rules.
- Recommending regulatory or administrative reforms that do not include new or amended ordinances or other legislation is not considered lobbying under the 501(c)(3) rules. Accordingly, public charities and private foundations can engage in this type of advocacy.
- Serving on a transition team or subcommittee is permissible for charities and foundations so long as the team’s work excludes developing legislative priorities, legislative proposals, or lists of nominees for positions that are confirmed by the City Council.
- If the team’s work involves developing legislative priorities or nominees that are confirmed by the City Council, those activities are considered “lobbying” under the 501(c)(3) rules. That means that public charities and their representatives can participate in them only to a limited degree, and that private foundations and their representatives cannot participate in them at all.
- Private foundation representatives wishing to participate in transition advocacy that includes lobbying must do so only in their personal capacities and not on foundation time.
- Public charity representatives wishing to participate in transition advocacy that includes lobbying should do so only with approval of their leaders so that the organization can properly track, report, and monitor the activity.
Careful structuring will permit public charities and foundations to participate in the Mayoral transition in a meaningful and robust manner.
* * * *
The C3 Legal team would be pleased to assist your organization as it considers how to best navigate these issues.
[Caution! Be aware that other federal, state, and local laws requiring lobbyist registration and reporting often have different definitions and rules from those discussed in this summary. Compliance with the 501(c)(3) rules does not guarantee compliance with those other rules. Your organization should consult with qualified lobbying counsel for guidance on compliance with those rules.]