Form 990 Schedule C

Introduction

Schedule C is a crucial component of the annual information return filed by tax-exempt organizations. This schedule serves as a platform for organizations to disclose information about their political campaign activities and lobbying activities.

In this resource guide, we will learn about the key aspects of Schedule C, from its purpose to filing requirements and commonly asked questions.

What is Schedule C?

Schedule C, Political Campaign and Lobbying Activities is a supplementary schedule that accompanies the standard Form 990/ Form 990-EZ and is filed annually by Section 501(c) organizations, and Section 527 organizations.

It empowers organizations to provide comprehensive disclosures regarding their involvement in political campaigns or lobbying activities.

Who must file Schedule C?

Non-profit organizations that file Form 990 or Form 990-EZ are generally required to complete Schedule C if they have engaged in any political campaign activities or lobbying activities during the tax year. This includes activities such as making contributions to candidates, engaging in grassroots lobbying, or conducting direct lobbying.

If an organization has an ownership interest in a joint venture that conducts political campaign activities or lobbying activities, the organization must report its share of such activity occurring in its tax year on Schedule C.

Schedule C Filing Requirements

All Section 501(c) organizations and Section 527 organizations that file Form 990/990-EZ must complete and attach schedule c tax form along with their organization's information return.

Below, we have provided Schedule C filing requirements for each part.

Part I A -Complete if the organization is exempt under section 501(c) or is a section 527 organization

Line 1

Briefly describe the political activities your organization conducted during the year in Part IV.

Line 2

Enter the total amount your organization spent on those activities.

Line 3

If volunteers helped with these activities, provide an estimate of the total hours they contributed.

Part I B-Complete if the organization is exempt under section 501(c)(3)

Line 1

Enter the amount of attachment 4955 tax owed by the organization. If none, enter 0.

Line 2

Enter the amount of attachment 4955 tax owed by any organization managers. If none, enter 0.

Line 3

Select “Yes” if you reported this tax on Form 4720 for the same tax year. Otherwise, select “No.”

Line 4

In Part IV, briefly explain the actions taken to correct the issue. This may include recovering the political expenditure (if possible) and putting safeguards in place to prevent it from happening again.

Part I C-Complete if the organization is exempt under section 501(c), except section 501(c)(3)

This section applies if your organization engaged in political activities described under section 527.

Line 1

Enter the amount of your organization’s own funds used for Section 527 political activities during the year.

Line 2

Enter the amount your organization transferred to other organizations (including your own separate segregated fund) for Section 527 political activities.

Line 3

Add Lines 1 and 2. Enter the total here and on Form 1120-POL, Line 17b.

Line 4

Select “Yes” if your organization reported taxable political expenditures on Form 1120-POL for this year.

Line 5

List each Section 527 political organization your organization made payments to during the year.

Columns (a), (b), and (c)

Enter the organization’s name, address, and EIN.

Columns (d)

Report the amount paid using your organization’s own funds.

Columns (e)

• Report any political contributions you collected and immediately forwarded to a separate political organization, such as a segregated fund.
• If there isn’t enough space, include additional information in Part IV.

Part II A-Complete if the organization is exempt under section 501(c)(3) and filed Form 5768

Item A

Check this box if your organization is part of an affiliated group. If selected, list each group member in Part IV, including their name, address, EIN, total expenses, and share of any excess lobbying expenses.

Item B

Check this box only if you selected Box A, and the “limited control” rules apply to your organization within the affiliated group.

This section is only for 501(c)(3) organizations that have chosen to file Form 5768 to make the 501(h) election. If your organization hasn’t filed this form, you can skip this section.

Column (a)

The total amounts reported by the organization filing the return.

Column (b)

The combined totals for the affiliated group members.

Line 1a

Enter the amount spent on grassroots lobbying (encouraging the public to contact legislators about specific legislation).

Line 1b

Enter the amount spent on direct lobbying (communicating directly with legislators or government officials about specific legislation).

Line 1c

Add Lines 1a and 1b. This is your total lobbying expense for the year.

Line 1d

Enter all other expenses related to carrying out your exempt purpose, excluding lobbying costs.

Line 1e

Add Lines 1c and 1d. This is your total exempt purpose expenditure amount.

Line 1f

Enter the total lobbying limit allowed for your organization. This is calculated based on your exempt purpose expenditures (Line 1e).

Line 1g

Enter the maximum amount your organization is allowed to spend specifically on grassroots lobbying. This is the portion of your overall lobbying limit that applies only to activities aimed at encouraging the public to act on legislation.

Line 1h

Enter the amount by which your total lobbying expenses went over the allowed limit, if applicable. If you did not exceed the limit, enter 0.

Line 1i

Enter the amount by which your grassroots lobbying expenses exceed the allowed grassroots limit. If you stay within the limit, enter 0.

Line 1j

Select “Yes” if your organization reported Section 4911 tax on Form 4720 for this year. Otherwise, select no.

Line 2 is used to check whether your organization stayed within the allowed lobbying limits over a 4-year averaging period.

Line 2a

For 2022, 2023, 2024, and 2025, enter the lobbying limit amount from Part II-A, Line 1f, for each year.

Line 2b

This line calculates the total lobbying ceiling amount for the 4-year period.

Line 2c

For 2022–2025, enter the total lobbying expenses from Part II-A, Line 1c, for each year.

Line 2d

For 2022–2025, enter the grassroots lobbying limit from Part II-A, Line 1g, for each year.

Line 2e

This line calculates the grassroots lobbying ceiling amount for the 4-year period.

Line 2f

For 2022–2025, enter the grassroots lobbying expenses from Part II-A, Line 1a, for each year. Add each row across and enter the totals in Column (e).

Part II B-Complete if the organization is exempt under section 501(c)(3) and has NOT filed Form 5768

This section is for 501(c)(3) organizations that have not filed Form 5768 (the 501(h) election) or those that previously made the election but later revoked it. If either of these applies to your organization, you should complete this section.

Line 1

If your organization worked to influence legislation at any level whether local, state, national, or even foreign- you are required to disclose those activities and the costs associated with them.

Column (a)

Answer “Yes” or “No” to show whether the activity happened.

Column (b)

Enter the amount spent on that activity. Even if no money was spent, answer “Yes” in Column (a) if the activity took place

Line 1a

Think about the people who gave their time. If supporters helped with a legislative campaign or reached out to officials on your behalf, mark "Yes." Since they aren't paid, you usually won't have a dollar amount to be listed here.

Line 1b

This line accounts for the hours your paid team spent on advocacy. While you don't list their salaries as a standalone number here, you should include their prorated compensation in the specific expense categories below (Lines 1c–1i).

Line 1c

If you run ads on TV, radio, or social media to sway public opinion or legislative votes, all those production and placement costs go right her

Line 1d

Whether it’s a physical letter with a stamp or a massive email blast to your members about a new bill, track those communication costs in this section.

Line 1e

This covers everything from your monthly newsletter to a press release or a dedicated page on your website that tackles specific legislation.

Line 1f

Sometimes, the best way to lobby is to support another organization’s work. If you give money to another group specifically for their legislative efforts, report those funds here.

Line 1g

List the costs for the "hands-on" work meetings with legislators, phone calls to their offices, or trips to the state house to speak with staff.

Line 1h

Rallies, seminars, and speeches intended to push for legislative change can be expensive. Record the costs for venues, speakers, and materials here.

Line 1i

Advocacy doesn’t always fit into a neat box. If you did something not listed above, put the costs here. If it's a large amount, use Part IV to give a bit more detail on what you did.

Line 1j

Simply add up the amounts from 1c through 1i in Column (b). This total gives a clear picture of your organization's financial commitment to advocacy for the year.

Line 2

Use this section to report whether your organization’s lobbying activities affected its 501(c)(3) tax-exempt status and to disclose any related excise taxes, if applicable.

Line 2a

Select “Yes” if the lobbying activities reported in Line 1 became substantial enough that the organization no longer qualified as a 501(c)(3) tax-exempt organization. If the activities did not impact your exempt status, select “No.”

Line 2b

If the answer to Line 2a is “Yes,” enter the amount of tax charged to the organization under Section 4912, unless the tax was later removed or reduced (abated). If no tax is applied, enter 0.

Line 2c

Enter any Section 4912 tax assessed against the organization’s managers, if applicable. If no manager-level tax was imposed or the amount was abated, enter 0.

Line 2d

Select “Yes” if the organization reported and paid the Section 4912 tax by filing Form 4720 for the year. Otherwise, select “No.”

Part III A-Complete if the organization is exempt under section 501(c)(4), section 501(c)(5), or section 501(c)(6)

Complete this section only if your organization is exempt under Internal Revenue Service Section 501(c)(4), 501(c)(5), or 501(c)(6).

Line 1

Indicate whether 90% or more of the membership dues received were not tax-deductible for members.

Line 2

Select “Yes” if the organization qualifies for the small in-house lobbying exception. To qualify:

• The organization did not make political campaign or foreign lobbying expenditures during the year; and
• Its lobbying activity was limited only to in-house direct lobbying, totaling $2,000 or less, excluding overhead costs.

If the organization had other lobbying or political expenses during the year, even if in-house lobbying was $2,000 or less, select “No.”

Line 3

Select “Yes” if the organization previously agreed to carry forward lobbying or political campaign expenses from a prior tax year and include them in the current year’s reasonable estimate.

Part III B-Complete if the organization is exempt under section 501(c)(4), section 501(c)(5), or section 501(c)(6)

Part III-B is primarily for organizations exempt under sections 501(c)(4), 501(c)(5), or 501(c)(6) that engage in lobbying or political advocacy. The purpose of this section is to show the IRS how membership dues were applied. Specifically, it tracks whether any portion of those dues funded lobbying efforts, as these amounts are generally not deductible as business expenses for the members.

Organizations filling out this section must choose one of two paths: Notify members clearly about the percentage of their dues used for these activities. Pay a proxy tax on those expenditures instead of providing notice. Pay a proxy tax on those expenditures instead of providing notice.

Line 1

On this line, enter the total sum of dues and related payments received during the tax year. This total should account for:

• Standard membership dues.
• Voluntary contributions from members.
• Assessments gathered to cover general operating costs.
• Specialized fees collected specifically for political or lobbying campaigns.

Essentially, this figure represents the total financial support provided by members to keep the organization running or to fund specific advocacy.

Line 2

This section identifies the money spent on activities that do not qualify for tax deductions

Line 2a

Report any costs incurred this year for the following:

• Attempts to influence legislation.
• Efforts to support or oppose political candidates.
• Campaigns intended to sway public opinion on elections or specific laws.
• Direct outreach to executive branch officials aimed at influencing their decisions.

Do not include political expenses already taxed under section 527(f) or internal "in-house" lobbying costs if they totaled $2,000 or less for the year.

Line 2b

Enter any lobbying or political costs that were brought forward from the previous year. This usually happens if your lobbying costs were higher than the total dues collected last year, or if a proxy tax waiver was granted with the agreement to adjust these costs later.

Line 2c

Combine Lines 2a and 2b. This final sum represents your total nondeductible lobbying and political spending for the current reporting period.

Line 3

If the organization sent dues notices to members explaining that part of their dues was nondeductible because of lobbying or political activities, enter that total amount here.

Example:

• Total membership dues = $100,000
• Members notified that 25% is nondeductible

Line 3 amount = $25,000.

This shows the IRS that members were properly informed.

Line 4

Only fill this out if you sent notices to members, but your total lobbying costs (Line 2c) ended up being higher than the amount you disclosed (Line 3). In this case, you can agree to carry the excess over to next year’s estimate. If you did not send notices, enter zero. Remember, any amount listed here must be included as an expense on next year’s report.

Line 5

This line identifies the portion of lobbying-related dues that members were not properly notified about. If notices were missed or late, the organization might be liable for a tax.

The calculation depends on your specific financial situation:

1. Dues exceed Lobbying Expenses

Take your total lobbying expenses (Line 2c) and subtract both the amount reported to members (Line 3) and any carryover (Line 4).

2. Lobbying Expenses exceed Dues

Subtract the amounts from Lines 3 and 4 from your total dues (Line 1).

Any leftover expenses that aren't taxed now must be carried forward to the following year. If there is a taxable balance, it must be reported on Form 990-T.

Part IV - Supplemental Information

Part IV gives your organization a place to add explanations or extra details that don’t fit directly into the earlier parts of Schedule C. Whenever the form asks for a written description or more background information, this is where you provide it so the filing can be clearly understood by the Internal Revenue Service.

Use this section to support responses connected to:

• Part I-A, Line 1
• Part I-B, Line 4
• Part I-C, Line 5
• Part II-A, Line 1 (list of affiliated organizations)
• Part II-A, Lines 1 and 2
• Part II-B, Line 1

You can also use Part IV anytime you feel an explanation will help clarify what your organization reported elsewhere on Schedule C.

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1. Provide Organization Details -Choose the tax year for which you want to file a return, and provide your organization's details.
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