Unsurprisingly, the IRS has not been immune to the recent churn within the federal government workforce. Over the past year, wait times for processing Form 1023 have been anywhere from 7.5 to 9 months. The IRS’s website states that applicants who submitted their applications after September 25, 2024, have not yet been assigned reviewers. This wait may increase in the coming months. Thus, you might wonder—are there faster options available?  

The IRS offers an option for organizations with a compelling reason to request faster, expedited processing. The IRS guidelines include the following examples of compelling reasons to approve expedited processing. 

• If the organization has a pending grant, not receiving it could adversely impact its ability to operate.
• If the organization is newly established and offers disaster relief to victims of emergencies. 
• If delays in issuing a determination letter are caused by errors made by the IRS. 

If your organization qualifies under one of those reasons, consider applying for expedited processing. To achieve this, we suggest closely following the IRS’s requirements.  Your organization must submit a letter to the IRS outlining the compelling reason(s) for the expedited processing request. As you prepare your request, we recommend considering and framing it with the following in mind.    What reasons justify your organization receiving its determination letter sooner than other organizations waiting in the processing queue for months? The IRS must understand why your organization must receive its determination letter quickly.    

Suppose your organization has a donor willing to give a vital grant. Still, the grant depends on the organization’s formal confirmation of its tax-exempt status by a specific deadline.  In that case, you can ask the donor if they are willing to send a letter to the IRS on behalf of the organization. If the donor agrees to write a letter, they should include the following information:  

• The committed donor’s name (the person or the organization)
• The amount of the donation (or value of the asset being donated)
• The date the donation will be forfeited or permanently redirected to another organization. 

In your organization’s letter to the IRS, it is important to explain the potential harm to the organization and/or its charitable class if there is a delay in receiving the IRS determination letter. For example, consider the following.   

Your organization is submitting an application to the IRS for tax exemption and plans to operate a drug and alcohol treatment center for teens. The previous center closed years ago, and no other similar center exists in the area. A donor has pledged a specific amount that will cover the center’s construction costs if your organization can provide proof of its tax-exempt status by a specific date. Your organization cannot open the treatment center without funding for the building.  

In this scenario, if your organization submitted an expedited request to the IRS, your letter should emphasize the impact of the donation on the organization. For example, without donations, your organization could not open a center. You might consider highlighting how long your organization would take to raise the same amount the donor is pledging and how many people your organization could assist if the center opened sooner with the donor’s contribution. Then, ask the donor to write a letter to the IRS on the organization’s behalf, providing the information listed above, which would accompany the expedited request.  

Even if your facts may not be as urgent or compelling as this example, conveying how a long delay will significantly hinder your ability to execute critical programming with real-world consequences might still make submitting an expedited review request worthwhile.

Given the staffing uncertainty at the IRS and throughout all federal agencies, predicting what will happen in the coming months is nearly impossible. If your situation fits the IRS’s stated criteria for expedited processing, it may be worth submitting an expedited review request, especially if you provide essential services to your community. And remember, if you have questions or need assistance, be sure to consult with legal counsel.  

The views expressed in this article reflect Perlman & Perlman’s experience with expedited processing.  While we have not heard of specific changes, it is uncertain if staffing reductions and changes in the administration’s priorities will impact on the IRS’s review of expedited processing requests. 

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Here are some key elements to include in the written agreement and other important considerations as you move forward.

Term and Termination

Any contract, including one for professional services, should define the term of the agreement.   The term includes an effective date and a termination date.  The duration of a contract can vary, but if you aren’t sure the relationship will be a good fit, consider a shorter initial period of three to six months. A renewal can be quickly negotiated if the partnership is successful. 

Termination provisions allow either party to cancel the contract under specific circumstances.  Typically, professional services contracts allow either party to terminate upon written notice of thirty or sixty days.  It is also common to include a provision for termination “for cause,” in the event one party materially breaches the contract and fails to fix (or cure) the problem within a specified time frame.  

The organization should consider a provision for immediate cancellation in the event its good reputation is threatened.  This protection is important if the influencer’s unforeseen behavior garners bad press and reflects negatively on the charity through its association with the influencer. 

Code of Conduct

Consider including a code of conduct provision requiring the influencer to agree to online conduct that won’t interfere with the charity’s ability to fulfill its charitable endeavors, harm the charity’s fundraising efforts, or jeopardize the charity’s tax-exempt status.  The contract can require that the influencer refrain from featuring explicit music or language in its posts for the charity and prohibit the influencer from promoting other organizations in the same content created pursuant to its agreement with the charity.  

Intellectual Property

The contract should spell out which party owns any intellectual property (“IP”) developed as part of the agreement.  In addition to the usual grant of a limited license to use the organization’s logo and other trademarks, if the organization wants to secure ownership of any IP developed as part of the partnership, the contract should stipulate in clear terms that any IP created under the agreement (e.g., trademarks or copyrights) belongs to the organization.  Content can include photographs, images, videos, as well as other media created within the scope of the work done for the organization.  In some cases, an influencer may want any content that they develop and post on their own social media account to be their owned IP (excluding only the IP elements incorporated in the content that the charity may own). Ultimately, it’s most important to set clear expectations around IP ownership developed within the scope of the partnership to avoid future conflicts due to a lack of a meeting of the minds. 

Compensation

The contract should clearly state the compensation terms, including when payments are due and which expenses (if any) will be reimbursed.  It should make clear what is owed if the contract is terminated early.  If the influencer posts content encouraging people to donate to the organization, this could imply their status as a professional fundraiser, triggering charitable solicitation registration and reporting requirements in several states.  While there are certainly resources available to meet such requirements, the regulatory obligations it places on the influencer may discourage them from doing so, so be sure to have a clear discussion upfront if you are considering paying an influencer in connection with any fundraising efforts. 

Review and Approval of Content

While organizations may want to review and pre-approve any social media posts, many influencers will resist having their content, which are often primarily disseminated from their own social media accounts, managed in this way, particularly if they are doing so on a voluntary and uncompensated basis.  Your organization will need to strike a balance by being clear with its expectations upfront and thoroughly vetting the influencer’s content. One option is to pre-approve the general types of content, and provide accurate, vetted information that the influencer can use, while giving the influencer a choice of the ultimate details to be communicated.   This type of provision may require negotiation to reach mutually agreeable terms.

If a strict pre-approval process is not implemented, one other way to mitigate risk is to require that the influencer take down any posts that don’t meet the approval of the organization or contradict the vetted information provided to the influencer. 

FTC Rules 

The Federal Trade Commission (FTC) has published regulations on principles of advertising, also called the FTC Guides, which include disclosures influencers must provide to make it clear they have received compensation (in the form of money, products, and so on) for the content they are publishing.  The contract with an influencer should include the requirement to abide by the most recent FTC Guides.  

Representations and Warranties

The contract should include a representation and warranty from the influencer that the content they create will not infringe upon the rights of any third parties, particularly third-party intellectual property rights. This language is essential because it provides grounds for termination for cause as a material breach of the agreement.  

Templates for Efficiency

If the organization is contemplating several contracts, either with the one influencer or many, consider creating a template that can be adapted for different purposes.  For the same influencer, the organization can have an umbrella contract and attach different statements of work, depending on the social media campaign the influencer is working on. 

The rise of social media influencers already plays an important role for charities looking to expand their brands (charities are brands too!) and reach a wider audience to support their cause.  If your organization chooses to work with influencers, formalizing the relationship through a written agreement will help reduce ambiguity, ensure alignment, and minimize risk for your organization.

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Under the Internal Revenue Code, all 501(c)(3) organizations are prohibited from participating in any political campaign on behalf of or in opposition to any candidate for elective public office.  This includes contributions to political campaigns or public statements of position made on behalf of the organization in favor of or in opposition to any candidate for public office.  The IRS explains on its website that non-partisan voter registration and get-out-the-vote drives may be permissible as long as they do not bias, favor or oppose one candidate over another, or have the effect of favoring a candidate or group of candidates.   For private foundations, there are more specific rules restricting their grantmaking for voter registration activities.  

Although public charities are prohibited from engaging in political campaign activities on behalf of or in opposition to candidates, the IRS states that “The political campaign intervention prohibition is not intended to restrict free expression on political matters by leaders of organizations speaking for themselves, as individuals. Nor are leaders prohibited from speaking about important issues of public policy. However, for their organizations to remain tax exempt under section 501(c)(3), leaders cannot make partisan comments in official organization publications or at official functions of the organization.” (IRS Rev. Rul. 2007-41).

If you lead or work for a public charity and plan to get involved in political activities in a personal capacity, you should keep the following guidelines and best practices in mind.    

• Employees who endorse or support candidates, make public comments in person, express themselves in writing or online, or engage in other electioneering activities, should refrain from using organizational titles or the organization’s name while making such endorsements or expressing such support.  
• If an employee is identified by name or title in public communications, the employee should include this statement: Titles and affiliations of each individual are provided for identification purposes only and do not reflect the views of the organization or imply an endorsement by the organization. 
• Organization leadership and employees who use personal email communications, personal social media platforms, and any online platforms not affiliated with the organization to communicate about or engage in political campaign activities should include the following disclaimer in the ‘About/Bio’ section and where possible, at the end of such communications:  All personal views and opinions expressed are my own and do not represent or reflect the views of any organization.  Although this disclaimer will not provide absolute cover, its inclusion helps to draw a clearer line between the individual’s affiliation with an organization and their rights as a private citizen.
• Organization representatives cannot support or oppose candidates at organization-sponsored events.  For example, an employee should not, while attending a charity-sponsored event, wear any political t-shirts, buttons, hats, etc. 
• Employees should not use organizational resources, including phones, copiers, computers, office space, email addresses, office addresses, organization name, organization online and social media platforms, donor or mailing lists, for supporting or opposing candidates.  

If you lead or work for a public charity, consider the following tips to help keep your organization in compliance during election season.   

• Organization leaders should provide written notice to members of the Board, staff, and volunteers of its policy against using organizational resources for political campaign activity.  In addition to developing a policy on political activities, leaders should regularly update the policy and train the Board, staff, and volunteers.

• Charities should not report or comment on staff and volunteer personal campaign intervention activities in the charity’s newsletter, on its websites, or any social media accounts.  
• When dealing with the public on issues relating to an election, charity spokespersons should regularly include disclaimers that the charity cannot and does not endorse political candidates (The organization can post a disclaimer on the charity’s website to this effect). While such disclaimers will not excuse partisan activity, they can help explain that a charity’s public communications are not intended to support or oppose candidates, particularly where members of the public might construe certain communications to involve political campaign intervention. 

When it comes to political campaign activities, public charities have different restrictions than the individuals who lead and work for them have in their personal capacities.  That said, to help keep your organization out of trouble, the best thing you can do is to understand the rules and make sure there is a clear line between what you do in your personal capacity from that of the organization you work for.

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So how is advocacy different from lobbying, and exactly where is the line between the two? As I wrote in my previous article, advocacy is a broad term which  describes various facets of the work nonprofit organizations undertake.  Although it isn’t a statutorily defined term, advocacy refers to many types of activities, which include educating about and raising awareness of an issue; advancing the organization’s charitable mission; raising funds; communicating with members and the public; and influencing behaviors, attitudes, and policies related to the organization’s mission.

By contrast, lobbying is a statutorily defined term.  The Lobbying Disclosure Act regulates federal lobbying, and each state and many cities have their own  laws that define and regulate lobbying.  For public charities, the IRC defines lobbying as “any attempt to influence any legislation through an attempt to affect the opinions of the general public or any segment thereof, and any attempt to influence any legislation through communication with any member or employee of a legislative body, or with any government official or employee who may participate in the formulation of the legislation.” This federal tax code definition covers both grassroots and direct lobbying. 

The IRC defines certain activities as exceptions, and, therefore, does not count them towards the organization’s lobbying limits.  These include: making available the results of nonpartisan analysis, study, or research; providing technical advice or assistance to a governmental body; appearances before, or communications to, any legislative body about decisions that might affect the existence of the organization, its powers and duties, and tax-exempt status; communications between the organization and its members on legislation or proposed legislation of direct interest to the organization and its members; and any communications with a government official other than communications that would be considered lobbying. 

The term advocacy generally encompasses a broad range of exceptions to lobbying.  If your organization is conducting and publishing research and disseminating it in a nonpartisan manner, it is not considered to be lobbying.  What about activities that don’t easily fall into one of these exceptions?  For example, perhaps your organization has a meeting with legislators and their staff about important policy issues without discussing specific legislation.   What if, during the meeting, your organization identifies legislative priorities and its position on various topics, some of which are addressed in currently pending legislation?  Most often, the answer to the question “is this lobbying” is going to be “it depends.”  It depends on who is present, what is said, and other factors. 

With this clear-as-mud guidance, it can be both confusing and onerous for a public charity to assess and determine whether the multitude of advocacy activities it engages in count as lobbying.   When clarity is called for, there are two recommended steps: 1) confer with legal counsel, and 2) establish written guidelines for organizational lobbying. 

Consulting with legal counsel serves a few purposes.  First and foremost, your legal counsel can analyze how the unique facts apply to the law – something an online search can’t do.  Next, talking to your lawyers about your current and planned lobbying activities gives the organization an opportunity to educate and train staff and Board members on the rules and limitations. Once the organization’s leadership is trained, they should draft guidelines based on the types of activities the organization typically engages in.  By developing guidelines for the organization, leadership can craft a strategy with respect to advocacy and lobbying activities with a better understanding of what is, and what is not, lobbying. This will ensure compliance while fostering the confidence to effectively advocate in furtherance of its charitable objectives. 

Because the rules can be confusing, many organizations shy away from engaging in certain activities for fear they may breach the regulations on lobbying.  It’s good to remember, however, that public charities are allowed to lobby up to a certain limit if they track their expenditures and report them.  Once understood and exercised with confidence, lobbying can be a powerful tool in assisting a charity to fulfill its mission. 

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Navigating the types of activities that tax-exempt nonprofits are allowed to engage in (and how much) without jeopardizing their tax-exempt status can be tricky.  Many charities engage in types of activities that are important to the organization’s mission, donors, and people they serve.  Two activities that charities may use to influence public policy include “advocacy” and “lobbying.”  While advocacy and lobbying are terms that are sometimes used synonymously, the two are distinct in important ways, most notably because federal tax law limits the amount of lobbying that charities may engage in.

How Does Advocacy Differ from Lobbying?

Advocacy can take many forms that do not constitute lobbying, including: leading, directing, conducting, and publishing research; and disseminating educational information.  Charities may engage in many different types of advocacy, and so long as that activity does not constitute lobbying, 501(c)(3) organizations are generally not limited in the amount of time or money they can spend on advocacy.

Lobbying, on the other hand, is subject to specific, restrictive rules.  Charities may engage in only an insubstantial amount of lobbying, and must take care not to jeopardize their tax-exempt status or run afoul of other lobbying restrictions.  Lobbying is any attempt to influence legislation, which can include acts, bills, resolutions, or ballot initiatives by Congress, state legislatures, local councils, or similar governing bodies.  An organization whose employees contact or urge others to contact members or employees of one of these bodies for the purpose of influencing (by encouraging them to adopt, reject, support, or oppose) legislation, is engaging in lobbying.

State and Local Lobbying Registration, Reporting, and Disclosure Requirements

In addition to following the strict federal tax rules governing the type of lobbying and amount of lobbying an organization can engage in,  charities should also be aware of any state and local requirements to register (including registration of certain employees as lobbyists, or registration of the organization itself, which retains and pays lobbyists) and to report lobbying expenditures and activities on a regular basis.¹ Federal and state lobbying rules can be confusing and complicated, and often depend on several factors, including: (1) whether the organization employs an in-house lobbyist or an outside lobbyist; (2) whether any of the organization’s employees are lobbying; (3) the total amount of expenses the organization spends on lobbying activities; and (4) the timing of any contacts or communications made with federal or state officials.

After the organization makes a determination about which federal and state registration requirements apply to its lobbying activities, the organization and its lobbyists must file regular reports (often quarterly or semi-annually) until the registration terminates (the method by which registrations are terminated also varies from state to state), or otherwise expires.

If an organization decides to engage in lobbying activities, it is critical to ensure that executive staff are aware of the applicable requirements for registration, reporting, and disclosure.  Failure to comply can result in fines, censure from the regulatory agency, and possible negative press exposure for the organization.

1 While this article is focused on the lobbying rules as they pertain to 501(c)(3) public charities, it is worth noting that 501(c)(4) organizations, which may engage in unlimited lobbying in furtherance of their tax-exempt missions, are more likely to trigger lobbying registration and disclosure requirements.

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