Measuring Lobbying: Expenditure Test

The Expenditure Test is a more specific standard that the IRS uses to measure a nonprofit’s lobbying activities, if a nonprofit has elected to use this standard. Under the expenditure test, the extent of an organization’s lobbying activity will not jeopardize its tax-exempt status nor incur a penalty, provided that its expenditures related to lobbying activities do not normally exceed a specified amount, which is calculated based on the organization’s overall budget.