Considerable risk and uncertainty but may average 20-40 times the underlying leverage factor
Lobbying, or advocacy, is a strategy that can be applied to many philanthropic areas to magnify their impact. It may take the form of lobbying for legislative changes, or budgetary funding around a particular issue. It should be mentioned that careful rules must be followed by non-profits in the US when lobbying to maintain a tax exempt status.
It is worth examining what is known about lobbying in general. When I say "lobbying" here, I am talking about attempts to influence public policy in the broad sense, not the more narrow definition used by the Lobbying Disclosure Act.
Lobbying carries with it considerable uncertainty and risks, but the rewards can be substantial.
Direct spending on US congressional and presidential elections averages $2.5b/year (OpenSecrets.org).
|Congress||$3.66b every 2 years|
|Presidential||$2.62b every 4 years|
|Total||$2.49b every year|
By way of comparison lobbying expenses under the Lobbying Disclosure Act totaled $3.2b in 2013, making lobbying the primary financial means of influencing public policy. And this $3.2b estimate might be a significant underestimate of total lobbying related expenditures. This is because much of the work performed by grassroots organizations does not appear to be covered by the Lobbying Disclosure Act. An example of this is given by looking at advocacy organizations that seek to influence public policy in the international development space: One, Bread for the World, RESULTS, Friends of the Global Fight, US Global Leadership Campaign, Population Action Interntional, and Jubilee USA, reported an aggregate $66.7m expenditure on their 2013 990 tax filings (Foundation Center), but only $2.3m in 2013 Lobbying Disclosure Act regulations. Policy formulation, research, and education, the bulk of what these organizations do, are not covered by the Lobbying Disclosure Act. For these organizations total lobbying related expenditures are 29 times the Lobbying Disclosure Act amount.
In 2013, the total U.S. Federal budget was $3.5t including both mandatory and discretionary outlays. The ratio budget outlays to lobbying related expenditures (including overt political expenditures) might thus be anywhere from 600:1 to 36:1 depending on the proportion of lobbying expenditures covered by the Lobbying Disclosure Act. The lower end of this range is less believable because it is my understanding that perhaps 80% of lobbying is performed by lobbying firms on behalf of businesses, and that expenditures from businesses to lobbying firms are covered by the Lobbying Disclosure Act. A reasonably conservative guess then is that the ratio of budgetary outlays to lobbying related expenditures is 200:1.
Lobbyists are probably despised because they are effective. Were they ineffective at shifting resources, they would likely largely be ignored. It is difficult to determine what goes into determining the outcome of the US budget. Broadly, trying to decide between: what lobbyists want, what the electorate wants, what the politician believes the electorate wants (shaped by grassroot lobbying and astroturfing), and what the politician personally wants (ideology and re-election), it seems plausible to suggest that lobbying might exert sway over 10-20% of the US budget. Thus the payback for lobbying on budgetary issues might be 20-40:1.
At this level of payback, 20-40:1, lobbying only makes sense if the issue is one that already has a high impact. Lobbying for increased funding for flu vaccinations, which might have an underlying leverage factor of 10, would result in a 200-400 net leverage factor, but this would still be inferior to direct funding of malaria prevention in the developing world, which might have a 5,000 fold leverage factor. Obviously though, lobbying for increased funding for malaria prevention would have the greatest impact.
Here are the lobbying expenditures of some organizations and sectors of the economy that seem able to significantly influence legislation (OpenSecrets.org):
|National Rifle Association||$3m|
Note how much lower the reported lobbying expenditures are of the NRA, a grassroots organization, than the industry groups. This is likely because many of the activities of grassroots organizations are not covered under the Lobbying and Disclosurre Act. Based on the data above it seems reasonable to suggest that to be the dominant force in a major policy area requires expenditures of $50-200m/year.