Anyone with children or who is of a certain age will recognize the quote “Phenomenal Cosmic Powers! Itty Bitty Living Space!” as the late Robin Williams’ character in Walt Disney’s animated movie Aladdin describing what life is like as a genie in a lamp.

For nonprofit hospitals that want to advocate for a health-care policy agenda, the restrictions placed on them by Section 501(c)(3) of the tax code can feel much the same way.

One of the most favored exemptions, 501(c)(3) allows charitable organizations to pull in donations that are even deductible on the givers’ taxes, but the section also restricts such organizations from substantial lobbying action and direct involvement in political campaigns.

However, according to tax and governmental relations attorneys that I spoke to, tax-exempt hospitals can still engage in the political world as long as they are smart and careful in their approach.

Although the hospitals are restricted from directly endorsing a political candidate for office, they can sponsor nonpartisan informational forums that allow all viable candidates to come and express their views on health-care policy questions.

Additionally, the IRS has provided tools to allow nonprofits to determine how much of their budget can be used for lobbying for their desired policy goals.

If nonprofit hospitals are careful and deliberate in how they engage the political process, they can find that they can retain those phenomenal powers of tax exemption and broaden their living space in the political realm to a much more comfortable size.

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