The Payoff of Lobbying: It Works Big Time for the Corporate Sector but for Nonprofits?

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October 10, 2011; Source: Washington Post | Plenty of organizations have been studying the return on investment of nonprofit lobbying, notably the series produced by the National Committee for Responsive Philanthropy, with reports on advocacy in the Mid-South, Pennsylvania, Illinois, the Northwest, and Los Angeles. The NCRP blurbs reference a financial calculation of the benefit from nonprofit advocacy—$91 for every dollar spent on advocacy in Los Angeles, $114 for the Mid-South, $122 in Pennsylvania, and $150 in the Northwest Region.

But advocacy is a broader term that encompasses, but is not synonymous with, lobbying and lobbyists. The NCRP analysis might or might not be different were it to simply focus on nonprofit lobbying.

Does lobbying as opposed to broader advocacy pay off for the nonprofit sector? It certainly does for the for-profit sector. A research firm called Strategas looked at the 50 companies that spend the most on government lobbying (as a percentage of their assets) and compared their performance against the S&P 500. According to the research, hiring a corporate lobbyist “looks like a spectacular investment, comparable to the returns of the most blistering hedge fund.” The big lobbying companies have outperformed the S&P by 11 percent since 2002, even providing good returns for those companies during the recession.

Ezra Klein of the Washington Post cautions that “correlation isn’t causation,” and these companies might have performed just as well had they spent their lobbying millions on other things. Moreover, corporate lobbying expenditures, while huge compared to the lobbying budgets of the nonprofit sector, are tiny in comparison to these big companies’ total assets, expenditures, and profits. Klein notes, however, that many of the corporations spending big money on K Street advice are closely tied to government either in terms of regulation (Wall Street, the tobacco companies, etc.) or contracts (the defense companies).

Lobbying is a legitimate and important nonprofit activity. Even though there are nonprofits that lobby for earmarks, contracts, and competitive grants, most of the nonprofit lobbying we see is on the issues—to maintain or expand federal programs that benefit the communities and constituencies served by the nonprofit advocates. In the current fiscal climate, lobbying to stave off the worst of the budget cuts is just as—if not more—important than lobbying to generate new programs and resources. Maybe NCRP—or perhaps groups that are much more lobbying-focused, such as the Alliance for Justice or the Center for Lobbying in the Public Interest—have research that documents the leverage and payoff from nonprofit lobbying.—Rick Cohen