There are no limits on how much any nonprofit organization may spend on advocacy.
Conversely, there are limits placed by the IRS on how much some types of nonprofits may spend on lobbying. Thus, all expenses for lobbying activities need to be identified for accounting and spending limit purposes.
The current laws governing lobbying activities and expenses were created in 1976. These laws state that "no substantial part" of the organization's activities may be lobbying. To further clarify this somewhat ambiguous statement, Section 501(h) was added in which specific limits were identified. Nonprofit may 'elect' to adopt the Section 501(h) limits, an action most nonprofits are urged to do. See Section 7.
In order to fully explain this question we must first address the complexity of the nonprofit classification system. In all, there are over 30 different nonprofit classification codes, e.g. 501(c)(3), 501(c)(4), 501(c)(5), 501c(6), and 527. The classification for a nonprofit is awarded based on that organizations purpose. Some nonprofits are created for the sole purpose of advocacy/lobbying and those follow a different set of rules than others (and are classified as 501(c)(4)s).
In the case of the most common nonprofits [501(c)(3)'s] the rules are as follows:
Most generally, a nonprofit can spend up to 20% of its revenues on lobbying activities. This amount limit is based on a sliding scale keyed to annual expenditures. This is done by making the 501(h) election, a technical term for nonprofit allocating money toward lobbying. Under the 1976 Lobbying Law, nonprofits may spend 20% ($100,000) of the first $500,000 of their annual expenditures on lobbying; 15% of the next $500,000; and so on, up to $1 million with no penalty. Most experts believe that this monetary cap leaves organizations a more than adequate amount of money for such activities.
Please note that spending limits for grassroots lobbying differ from those for direct lobbying in that they are 25% of the total allowable lobbying expenditures.
For more specific information on lobbying, please go to the Independent Sector website.