How the sliding scale builds your limit
| Bracket of exempt-purpose expenditures | Rate | Lobbying allowed in bracket |
|---|
The overall lobbying limit is capped at $1,000,000. Spending over the limit triggers a 25% excise tax on the excess; exceeding 150% of the limits on a four-year average can cost your exempt status. Grassroots lobbying (urging the public to act) is limited to 25% of the total. This estimates the 501(h) limits only — confirm with counsel and see Schedule C (Form 990).
Unrestricted dollars are advocacy dollars
Most grants prohibit using their funds for lobbying — so advocacy has to come from unrestricted money. Good Circles builds exactly that: a recurring, unrestricted base from a share of supporters’ everyday local spending (about 10% of each merchant’s net profit, conservatively ~$72 per active supporter per year — an estimate), free for your nonprofit. Spend it on advocacy, overhead, or whatever your mission needs.
Claim a Founding Nonprofit spot →Sources & tools
Free first
- IRC §4911 (Cornell LII) — the statute defining the lobbying nontaxable amount and the sliding scale.
- IRS — measuring lobbying (501(h) election) — the official explanation of the expenditure test and Form 5768.
- Bolder Advocacy (Alliance for Justice) — free, in-depth guidance and fact sheets on nonprofit lobbying rules.
Paid — optional labor-savers
- A nonprofit/tax-exempt attorney — confirms what counts as lobbying and keeps you inside the limits. Worth it when you run active advocacy campaigns or approach the limits.
Last verified 2026-06-17. Figures and rules change — verify at the source before you act.
FAQ
What is the 501(h) election?
It is an option a 501(c)(3) public charity can elect by filing IRS Form 5768 to measure its lobbying under a clear expenditure test with dollar limits, instead of the vague no-substantial-part standard. The election is generally favorable and can be made or revoked at any time.
How is the lobbying limit calculated?
Under IRC section 4911 the lobbying nontaxable amount is a sliding scale of exempt-purpose expenditures: 20% of the first $500,000, 15% of the next $500,000, 10% of the next $500,000, and 5% of the remainder, with an overall cap of $1,000,000.
What is grassroots lobbying?
Grassroots lobbying tries to influence legislation by shaping the opinion of the general public, as opposed to direct lobbying of legislators. A 501(h)-electing charity may spend no more than 25% of its total lobbying limit on grassroots lobbying.
What happens if we go over the limit?
Exceeding the limit in a year triggers a 25% excise tax on the excess lobbying expenditures. A charity that normally exceeds 150% of its limits, measured on a four-year average, risks losing its tax-exempt status.