Political & Lobbying Activities. There are two categories of political activity that are pertinent to the 501(c)(3) charity. One is "political" activity and the other "lobbying" activity.
Political Activity - Charities are prohibited from intervening in political campaigns or encouraging the public to vote for or against a candidate in a public election. If you believe your organization will ever be involved in something that approaches endorsement, I can explain the parameters of this rule more thoroughly.
Lobbying Activity - Lobbying is attempting to influence legislation, either through direct lobbying (e.g. contacting lawmakers) or grassroots lobbying (encouraging people to contact lawmakers about specific legislation). Without the 501(h) election, a charity is permitted to conduct only "insubstantial" lobbying activities before jeopardizing its exempt status. The vagueness of this standard is the reason for the origination of the 501(h) election. With a simple one-page document, a 501(c)(3) can make this election, and just as easily revoke it in the future. The 501(h) status lays out clear guidelines in terms of legislative spending and affects no other aspect of the charity. For example, if your organization has $500,000 or less in exempt purpose expenditures, you may spend up to 20% of that on legislative activity.
Lobbying Expenditures. If your organization elects for the 501(h) status whereby you can use a portion of your funds for lobbying activities, you will have to keep track of those funds for reporting purposes. This
includes any time spent by a paid employee on lobbying activities.