In 2023, the Board of Directors of the Old Santa Fe Association decided to embark on a change of tax status, from our original 501(c)4 designation to a 501(c)3 IRS designation. Because tax issues are complicated, we designed this brief guide to improve our members' understanding of this change, specifically what will shift in OFSA’s political activities (not much) and how OSFA membership will change (donations will now be tax deductible for all).

In its nearly 100 years, OSFA has focused its activities on historic preservation advocacy in Santa Fe: through citizen participation in the Historic Districts Review Board (HDRB) and the City’s Planning Commission, through commentary and criticism on city processes, through public advocacy at the Governing Body (city council), and through email, op-ed, and print ad expression of its perspectives. In addition, OSFA has always held community service projects as well as events focused on Santa Fe history—lectures, books groups, tours, film screenings, archival preservation projects, and more. All of these activities will continue under the new tax status.
 
Federal tax laws already allow every charitable 501(c)3 nonprofit to engage in some legislative lobbying activities, so long as that lobbying activity only amounts to 20% or less of the organization’s expenditures.
 
What is lobbying? There are two types: Direct Lobbying is communication with a legislator (elected official) that expresses a view about specific legislation; Grassroots Lobbying is communication with the public that expresses a view about specific legislation and includes a call to action.
 
For OSFA, the lobbying we do is in front of the Governing Body (city council) and, rarely, the State Legislature. We will not need to lower the rate at which we advocacy for issues important to Santa Feans to these bodies.

Don't we do more lobbying than that? Not frequently. 
Our activism most regularly addresses quasi-judicial bodies such as the HDRB and the Planning Commission—actions at these bodies are not counted as lobbying under the IRS definition. We will not need to refrain from making comment on legislation (or in land use cases) with our new tax status.
 
Paid lobbying, volunteer lobbying and low-cost advocacy campaigns (through emails, op-eds, and occasional advertisements) are already part of OSFA’s monthly political activities. But these activities do not (and have not in the past) exceeded the 20% expenditures test for lobbying.

If you'd like to dive in a bit more, see this link for a Comparison of 501(c)3 and 501(c)4 Permissible Activities. More resources are provided at the bottom of this page, too.
 
Benefits of a status change from 501(c)4 to 501(c)3:

• Tax-deduction for members and donors
• Ability to apply for grants (501c4s are almost always disallowed from applying for grants).
• Increased Activities through better fundraising
• Improved profile and influence as an organization through history education and community service events.
• OSFA Board Members and any volunteer are still be allowed to advocate for positions regularly, without restriction (at HDRB, Governing Body, in print, etc.).

 
Changes:

• OSFA will Elect 501(h), which “allows a 501(c)(3) non-profit organization to participate in lobbying limited only by the financial expenditure on that lobbying, regardless of its overall extent. This allows organizations taking the 501(h) election to potentially perform a large amount of lobbying if it is done using volunteer labor or through inexpensive means” (Wikipedia)
• Limit to 20% of funded activity our “lobbying,” which at present is within the regular range of the Association’s functions (see table below)
• As the sole paid employee, the executive director will track and report his own public activities. This does not mean the ED will not lobby—he will continue advocacy of historic preservation through diverse means.
• OSFA will refrain from electioneering or directly supporting candidates for elected office. This does not preclude non-partisan candidate questionnaires, forums, or get-out-the-vote campaigns.
• Expand our education and outreach efforts (films, lectures, events, communications) on preservation topics.
• Continue to monitor city land use processes and communicate them with our membership and the public.

The Board of Directors has deemed this is the best path forward for the next 100 years of preservation advocacy in Santa Fe.

Still confused? Skeptical? We are happy to answer any questions.
Please write directly to Adam Johnson, the Executive Director at director@oldsantafe.org.

25 August 2023

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Resources for further inquiry:

501c3 vs 501c4: Key Differences and Insights for Nonprofits (Donor Box)

Comparison of 501(c)(3) and 501(c)(4) Permissible Activities (Bolder Advocacy)

Public Charities Can Lobby (Bolder Advocacy)

Advocacy and Lobbying Without Fear: What Is Allowed within a 501(c)(3) Charitable Organization (Nonprofit Quarterly)

What Nonprofits Need to Know about Lobbying in New Mexico (Bolder Advocacy)

What is Lobbying under the 501(h) Election? (Bolder Advocacy)