Faulk, Kim & MacIndoe, Bounded Rationality: The Role of Knowledge of Regulations in Nonprofits’ Engagement in Policy Advocacy
This study examines the dynamics of nonprofit engagement in advocacy, lobbying, and civic activities through the lens of bounded rationality. Although 501(c)(3) nonprofits are legally permitted to advocate and lobby on behalf of their constituents and the sector, only 31 % reported engaging in such activities over the past five years. To better understand this relatively low level of involvement, our analysis first investigates nonprofits’ understanding of federal and Internal Revenue Service (IRS) regulations governing permissible activities, as well as the factors that shape their knowledge of these rules. Second, we analyze the relationship between regulatory knowledge and policy engagement, controlling for organizational and contextual variables that are informed by the existing literature. Our findings show that, while internal and external factors can mitigate the constraints imposed by bounded rationality, knowledge of the rules is significantly associated with policy engagement. We conclude that limited understanding of the legal parameters surrounding 501(c)(3) advocacy and lobbying remains a significant barrier to nonprofit policy engagement.
Lloyd Mayer