2011 Texas Legislature and Nonprofits

Jason SaboFounder – Frontera Strategyfronterastrategy@gmail.com

Overview• What happened and why?• What is going to be the impact?• What are we going to do about it?• Cardinal Rules of Lobbying• Discussion

State Budget: What happened?

• Historic cuts to the Foundation School Program of $4 billion and an additional $1.4 billion in cuts to public education grants and no new funding for student growth – despite annual increase of ~80,000 students.

• Cuts to hospitals, doctor and dentist provider rates, and other health care services.

• Cuts to a host of prevention programs currently funding nonprofits.

• Rural and small nonprofits without access to other funding sources are particularly vulnerable.

What does that mean for the Waco area?

• Waco ISD loses $8.9 million in 2012/2013• Midway ISD loses $7.5 million in 2012/2013• Bosqueville ISD loses $460,000 in 2012/2013• LaVega ISD loses $1.5 million in 2012/2013• Connally ISD loses $1.1 million in 2012/2013• China Spring ISD loses $2.4 million in 2012/2013• Presidio ISD loses $2.1 million in 2012/2013

Source: Texas Tribune

What is the impact?

• Cuts to school districts will mean:– Teacher layoffs– School closures– Elimination of dropout prevention and CIS– Elimination of full-day pre-kindergarten– Fewer electives and BIGGER classes

• Health care cuts will make it even harder to find providers – particularly in rural Texas.

• Local nonprofits will have more competition for less money from private sources.

• In response to budget cuts and shrinking revenue, local officials are more likely to raise taxes.

How is that possible?$27 billion shortfallGreat RecessionStructural Deficit of ~$10 billionNo New Taxes Pledges

+ Refusal to Utilize Rainy Day Fund (2012/2013)

Really Awful Cuts to Education and Health and Human Services

The Question is Obvious.What are YOU going to

do about it?

Nonprofit Advocacy in the New Normal

• Politics have NOT changed. Advocates need to focus on low-cost or FREE ideas and legislation.

• The “Radical Center” remains the most potent and effective spot for nonprofits.

• Now more than ever, a consistent and focused approach is necessary for success. If nonprofits try to be everything to everyone, they will accomplish nothing.

Remember the Ripple!

• The impact of the budget cuts goes WAY beyond public schools and human services non-profits and the story must go beyond as well.

• Engage and inform the public.– Editorials and letters to the editor– Campaign appearances

• Capture stories of real impact at all levels.• Conversation must be about restoration not about

the prevention of more cuts.• Engage your community with basic information.

What are Advocacy and Lobbying?• Advocacy is the umbrella term and includes

identifying, embracing and promoting a cause. (Poverty is bad.)

• Lobbying is a specifically focused form of advocacy with the purpose to influence legislation. (Poverty is bad, so pass HR 999 to alleviate its impact on children.)

• Remember, your state has its own laws. Today’s presentation just concerns federal law.

Wait just one minute, Mr. Sabo!Is lobbying by nonprofits legal!?!?

YES! Completely, absolutely, totally…

Lobbying by 501(c )(3) nonprofits is 100% legal.

If you take the “H Election” (Expenditure Test), numbers are EASY.• A generous amount:

• 20 percent of the first $500,000 of annual expenditures;

• 15 percent of the next $500,000;• 10 percent of the next $500,000;• 5 percent for every additional $500,000 up to

$1 million.• ABC nonprofit with expenditures of $500,000.

• 20% of $500,000 = $100,000 = Overall lobbying limit.

Substantial Part:• No certain and definitely

allowable amounts of lobbying expenditures

• A single year violation may result in the loss of tax-exempt status

• Importance of an issue is a relevant factor in determining permissible lobbying activity

• Possible additional reporting burden on tax form 990

Expenditure Test:• Clear and specific

definitions of lobbying• Certain and definitely

allowable amount of lobbying expenditures

• No jeopardy to tax-exempt status for a single year violation

• Importance of an issue is not a factor in measuring permissible lobbying activities

• Possibly less reporting burden than substantial part test

Can nonprofits use private foundation funds to lobby?

• Yes! Nonprofits may use “non-earmarked” or general purpose funds to lobby.

• Community foundations can earmark grants for lobbying.

• More and more foundations understand that advocacy and lobbying produce the greatest returns on philanthropic dollars.

State and Local nonprofits CAN:• Write and encourage people to write letters concerning specific legislation. • Meet with and speak to public officials about legislation.• Testify at a public hearing.• Provide research, analysis and commentary• Publicly endorse or oppose specific legislation.• Invite a legislator to visit

Nonprofits CANNOT:• Raise funds for candidates as an organization.• Publicly support or oppose a candidate.• Conduct PARTISAN voter registration.

BUT – remember – after work you are a citizen and have thefull rights and obligations of anyone in our democracy. Just be mindful of your actions and don’t be stupid...

What activities are NOT lobbying?• Self-Defense (Matters affecting a nonprofit’s own tax

status, powers or advocacy rights.)• Contacts with elected officials or executive branch

about proposed regulations. • Lobbying by volunteers (AKA Cruise Missiles)• Communication with the organization’s members on

legislation with no call to action.• Participation in a legislative hearing at the invitation of

a committee or member.

Review of Nonprofit Lobbying 101

• Advocacy is easy!• Lobbying is legal!• Lobbying is FUN!• Check to see if you have filed a 501(h)

Election. If not, consider filing as soon as possible.

• Keep track of your lobbying expenses as you would expenditures on any other activity.

There is no wrong way for YOUR nonprofit to get involved – just get

involved!

Wherever is best for YOUR nonprofit is the best place to start lobbying

and moving policy.

Making Yourself Heard

1. Focus on 1 or 2 issues.2. Be accurate and have meaningful data

at your fingertips.3. Be timely.4. Keep it simple.5. Be honest and be credible.

The Cardinal Rules of Lobbying

• Deciding where to focus is the hardest part of your advocacy. You MUST prioritize.

• If you try to be everything to everyone, you will get nothing done and NOT protect your appropriations.

• For the time being, THINK FREE BILLS!• Cardinal Rule of Lobbying: Pick your top one or

two FREE priorities and stick with them to the end.

Focus Focus Focus

• Data and statistics are increasingly important.• You MUST have the ability to show the

effectiveness, efficiency and return on investment of everything you do.

• Cardinal Rule of Lobbying: Messengers matter. Numbers might be the same but the impact can be very different.

Be accurate and have meaningful data.

• Speed is important. If you don’t provide answers to legislators and staff quickly, they will ask someone else for the same info.

• Become a resource both on your issue and on constituent services generally.

• Cardinal Rule of Lobbying: Always respond quickly to requests for information, but don’t stretch the truth in order to be fast.

Be timely and respond quickly.

• “Jason, shut up, you’re killing my bill!”• We know more about our issues than anyone

else and we LOVE to let the world know how smart we are.

• Cardinal Rule of Lobbying: If you can’t explain your issue in one page, you need to reassess your approach.

Keep it simple.

• Never, never, never stretch the truth.• If you don’t know the answer to any question,

it’s OK to say “I don’t know.”• Create the Excuse to Return• Cardinal Rule of Lobbying: If you are going to

oppose or contradict legislators’ bills or proposals, tell them beforehand.

Be Honest, Candid and Credible

• Regardless of what they ask, FOCUS.• The first person to call back gets in the story. The

first person to be coherent gets quoted.• Nothing is worse than being called out as

dishonest in the press.• Journalists ARE social media. Listen and respond

AND become a journalist in your own right.• Lobby the media like you do the legislature.

The Same Strategies Apply to Media

What did he just say?Jason Sabo

Voice and Text: 512.450.2125fronterastrategy@gmail.com

@texassabowww.facebook.com/jasonsabo