Page 378

TITLE 26-INTERNAL REVENUE CODE of investment services related thereto) in stocks and securities, the moneys contributed thereto by each of the members of such orga- nization, and to collect income therefrom and turn over the entire amount thereof, less ex- penses, to such members, (2) organized and controlled by one or more such members, and (3) comprised solely of members that are or- ganizations described in clause (ii) or (iv) of section 170(b)(1)(A)- (A) which are exempt from taxation under subsection (a), or (B) the income of which is excluded from taxation under section 115(a), then such organization shall be treated as an organization organized and operated exclu- sively for charitable purposes. (g) Definition of agricultural For purposes of subsection (c)(5), the term "agricultural" includes the art or science of cul- tivating land, harvesting crops or aquatic re- sources, or raising livestock. (g)I Prohibition of discrimination by certain social clubs Notwithstanding subsection (a), an organiza- tion which is described in subsection (c)M shall not be exempt from taxation under subsection (a) for any taxable year if, at any time during such taxable year, the charter, bylaws, or other governing instrument, of such organization or any written policy statement of such organiza- tion contains a provision which provides for dis- crimination against any person on the basis of race, color, or religion. (h) Expenditures by public charities to influence leg- islation (1) General rule In the case of an organization to which this subsection applies, exemption from taxation under subsection (a) shall be denied because a substantial part of the activities of such orga- nization consists of carrying on propaganda, or otherwise attempting, to influence legisla- tion, but only if such organization normally- (A) makes lobbying expenditures in excess of the lobbying ceiling amount for such or- ganization for each taxable year, or (B) makes grass roots expenditures in excess of the grass roots ceiling amount for such organization for each taxable year. (2) Definitions For purposes of this subsection- (A) Lobbying expenditures The term "lobbying expenditures" means expenditures for the purpose of influencing legislation (as defined in section 4911(d)). (B) Lobbying ceiling amount The lobbying ceiling amount for any orga- nization for any taxable year is 150 percent of the lobbying nontaxable amount for such organization for such taxable year, deter- mined under section 4911. (C) Grass roots expenditures The term "grass roots expenditures" means expenditures for the purpose of in- fluencing legislation (as defined in section 'So in original. Two subsecs. (g) have been enacted. 4911(d) without regard to paragraph (1)(B) thereof). (D) Grass roots ceiling amount The grass roots ceiling amount for any or- ganization for any taxable year is 150 per. cent of the grass roots nontaxable amount for such organization for such taxable year, determined under section 4911. (3) Organizations to which this subsection applies This subsection shall apply to any organiza- tion which has elected (in such manner and at such time as the Secretary may prescribe) to have the provisions of this subsection apply to such organization and which, for the taxable year which includes the date the elec- tion is made, is described In subsection (c)(3) and- (A) Ls described in paragraph (4), and (B) is not a disqualified organization under paragraph (5). (4) Organizations permitted to elect to have this subsection apply An organization is described in this para- graph if it is described in- (A) section 170(b)(1)(A)(i) (relating to educational institutions), (B) section 170(b)(1)(A)(iii) (relating to hospitals and medical research organiza- tions), (C) section 170(b)(1)(A)(iv) (relating to or- ganizations supporting government schools), (D) section 170(b)(1)(A)(vl) (relating to or- ganizations publicly supported by charita- ble contributions), (E) section 509(a)(2) (relating to organiza- tions publicly supported by admissions, sales, etc.), or (F) section 509(a)(3) (relating to organiza- tions supporting certain types of public charities) except that for purposes of this subparagraph, section 509(a)(3) shall be ap- plied without regard to the last sentence of section 509(a). (5) Disqualified organizations For purposes of paragraph (3) an organiza- tion is a disqualified organization if it is- (A) described in section 170(b)(1)(A)(l) (relating to churches), (B) an integrated auxiliary of a church or of a convention or association of churches, or (C) a member of an affiliated group of or- ganizations (within the meaning of section 4911(f)(2)) if one or more members of such group is described in subparagraph (A) or (B). (6) Years for which election is effective An election by an organization under this subsection shall be effective for all taxable years of such organization which- (A) end after the date the election is made, and (B) begin before the date the election is revoked by such organization (under regula- tions prescribed by the Secretary). (7) No effect on certain organizations With re:;pect to any organization for a tax- able year for which- Page 37/8