Advocacy and Nonprofits: How to Engage in Policy Without Jeopardizing Your Tax-Exempt Status

Nonprofits are mission-driven organizations, and advocacy is often a natural extension of that mission. Whether it’s raising awareness about critical issues, educating policymakers, or amplifying the voices of those you serve, advocacy can be a powerful way to create lasting change. 

But many nonprofit leaders hesitate to get involved in policy work because they fear losing their tax-exempt status. The good news? Advocacy is allowed—and encouraged—when done within the boundaries set by the IRS. With the right strategies, your nonprofit can engage in meaningful policy work without putting compliance at risk. 

Understanding the Rules 

Tax-exempt 501(c)(3) organizations must avoid substantial lobbying activity and are strictly prohibited from participating in political campaigns for or against candidates. However, nonprofits are allowed to: 

• Educate the public and policymakers on issues related to their mission. 

• Encourage civic participation, such as voter registration or issue awareness. 

• Lobby, within limits, to influence legislation that aligns with their mission. 

The key is knowing where the line is drawn and documenting activities to show compliance. 

Advocacy vs. Lobbying 

Not all advocacy counts as lobbying. Examples of advocacy that generally remain compliant include: 

• Publishing research or reports on issues relevant to your mission. 

• Hosting educational events or forums. 

• Providing nonpartisan analysis of policy options. 

• Encouraging constituents to contact legislators on a broad issue without referencing a specific bill. 

Lobbying, by contrast, typically involves efforts to influence specific legislation by urging action from legislators or the public. This is permitted in limited amounts but must be carefully tracked. 

Best Practices for Safe Engagement 

• Set Clear Policies – Establish internal guidelines that distinguish between acceptable advocacy, limited lobbying, and prohibited political activities. 

• Track Activities and Expenses – Maintain documentation of advocacy and lobbying activities to demonstrate compliance if questioned. 

• Train Staff and Volunteers – Ensure everyone understands the boundaries so activities remain mission-focused and compliant. 

• Use the 501(h) Election – Consider filing IRS Form 5768, which allows nonprofits to measure lobbying activity based on expenditures rather than the more subjective “substantial part” test. This can provide clarity and reduce risk. 

• Stay Nonpartisan – Avoid endorsing candidates, contributing to campaigns, or engaging in any activity that could be seen as partisan. 

Why Advocacy Matters 

When done responsibly, advocacy amplifies your nonprofit’s voice and advances your mission in ways that direct service alone cannot. Whether it’s securing funding for vital programs, shaping policies that affect your constituents, or raising public awareness, advocacy helps nonprofits expand their impact far beyond their own resources. 

Looking Ahead 

In 2025, nonprofits are navigating a fast-changing policy environment—making advocacy more important than ever. By understanding the rules, setting strong policies, and documenting activities, your organization can engage confidently in advocacy without jeopardizing its tax-exempt status. 

At Brady Martz, we work with nonprofits to ensure compliance while empowering them to use advocacy as a tool for impact. From reviewing governance practices to advising on IRS requirements, our professionals help you stay focused on your mission while engaging in the policy conversations that matter most.