White flag aloft: I’m not buying DNA’s 501(c)(3) dodge.


As reported earlier today, after months of dragging its feet, Develop New Albany finally opted out from the single most important issue facing its supposed constituency (bridge tolls) and provided as a tremulous excuse this tired sidestep:

The organization is a tax exempt charitable organization and IRS rules state Section 501(c)(3) organizations are restricted in how much political and legislative (lobbying) activities they may conduct.

Take a look at the IRS guidelines linked below.

Can you find any part of it that would (a) preclude a one-time vote supporting toll-free bridges (substantial part test), or (b) would prevent a self-described economic development organization from conducting educational activities pertaining to the economic impact of bridge tolls on the same small businesses the organization claims to represent? Of course, the organization would have to desire performance of its stated function, which is another topic.

What say the lawyers?

Political and Lobbying Activities

Political activities and legislative activities (commonly referred to as lobbying) are two different things and are subject to two different sets of rules. The rules depend on several issues:

  • The type of tax-exempt organization (different rules apply to private foundations than to other section 501(c)(3) organizations),
  • The type of activity (political or lobbying) at issue,
  • The scope or amount of the activity conducted, and
  • The consequences of exceeding the given set of limitations.