The Problem

Meals for the Hungry is a 501(c)(3) organization that has made the 501(h) election. It sponsors the providing of food for the poor, and advocates public and private solutions to the problem of hunger. Meals for the Hungry has a total annual budget of $400,000 — that is, it spends $400,000 each year on its activities. That amount includes administrative expenses, but does not include fund raising costs, which are handled by a separately budgeted fund raising unit. As a part of that $400,000, Meals for the Hungry spends $50,000 annually to hire a lobbyist in Washington, D.C., who communicates with legislators about legislation on hunger issues. Another $50,000 of the budget pays for an on-going program to influence public opinion with regard to pending state legislation.

For purposes of sections 501(h) and 4911, calculate the following for Meals for the Hungry:

1. Exempt purpose expenditures (pay special attention to 4911(e)(1)(B)(ii)
2. The lobbying nontaxable amount
3. The grass roots nontaxable amount
4. Lobbying expenditures
5. Grass roots expenditures
6. Excess lobbying expenditures
7. The tax (if any) imposed by § 4911
8. The lobbying ceiling amount
9. The grass roots ceiling amount.
10. On these facts, is Meals for the Hungry in danger of losing its tax-exempt status? Why or why not?