Advisory Opinions

Reporting of Lobbying for Trade Associations and Members

Indiana Lobby Registration Commission

(Ratification vote at public meeting on June 2, 1998)


Chairman Bepko - abstain
Vice-Chairman Krahulik - yes
Commissioner Hicks - yes
Commissioner Abbs - yes

Questions and written comments may be directed to
Indiana Lobby Registration Commission,
115 W. Washington, Suite 1375, Indianapolis, IN 46204
(317) 232-9860


Trade associations whose principal purpose is lobbying must register and report as compensated lobbyists. Members of those associations must register and report as employer lobbyists if the principal purpose of the trade association i s lobbying and more than $500 of their individual annual dues are used for lobbying activities.


An incorporated trade association, "X", has seven (7) members. Each member pays $20,000 annual dues to X. In exchange for these dues, X provides certain membership benefits to those members, one benefit being the lobbying of the Indiana legislature on matters which affect the industry represented by the trade association. The principal purpose of the trade association is lobbying. More than $500 of each member's annual dues is spent by the trade association in furtherance of its principal purpose of lobbying. X must register as a compensated lobbyist. Each member must register as an employer lobbyist.


>Trade association "Y" has several hundred members who pay annual dues of $250. Y uses almost all of its membership funds to lobby the Indiana legislature. Though Y’s principal purpose appears to be lobbying, its members do not pay greater than $500 in a registration period to meet that principal purpose. Thus, Y has no duty to register as a compensated lobbyist, though it must register as an employer lobbyist. Likewise, Y’s members have no duty to register as employer lobbyists.


Trade association "Z" has several hundred members, each of which pays greater than $500 in annual dues. However, less than 50% of Z’s total budget is spent on lobbying the Indiana legislature. Although Z lobbies, its principal purpose is not lobbying. Thus, Z has a duty to register as an employer lobbyist, but not as a compensated lobbyist. Z's members need not register as employer lobbyists by virtue of their membership.


The issue is whether an association must register under I.C. 2-7-2-3 or I.C. 2-7-2-4. The distinction between the two statutory provisions is that section 3 requires registration for one who is compensated for lobbying and section 4 requires registration for one who compensates. . . for lobbying.

There are two primary factual issues: (1) whether the trade association has a principal purpose of lobbying; and, (2) whether the members of such an association are paying compensation in the form of annual dues, $500 or more of which is attributable to the trade association’s principal purpose of lobbying.


When a lobbyist registers as a compensated lobbyist, the lobbyist must disclose its clients on the reporting form. I.C. 2-7-2-3(2). An employer lobbyist must disclose those lobbyists whom it employs or compensates to lobby on its behalf. I.C. 2-7-2-4(2).

A "lobbyist" is "any person who (1) engages in lobbying; and (2) in any registration year, receives or expends an aggregate of five hundred dollars ($500) in compensation or expenditures reportable under this article for lobbying, whether the compensation or expenditure is solely for lobbying or the lobbying is incidental to that individual's regular employment." I.C. 2-7-1-10(2).

"Person" means a human being, corporation, limited liability company, partnership, association, firm, or educational institution. I.C. 2-7-1-12. Moreover, other known bodies of law define " associations" as "persons". Specifically, the Sherman Act states, in pertinent part, "[t]he word "person" or " persons" wherever used in this Act shall be deemed to include corporations and associations existing under or authorized by the laws of either the United States, the laws of any of the Territories, the laws of any state, or the laws of any foreign country." 15 U.S.C. § 7 (1964); id. § 12.

"‘Lobbying’ means communicating by any means, or paying others to communicate by any means, with any legislative official with the purpose of influencing any legislative action." I.C. 2-7-1-9. Most trade associations which lobby are registered as employer lobbyists.

"Compensation means anything of value given as payment for doing or refraining from doing any activity." I.C. 2-7-1-2. Dues are " anything of value." Additionally, "payment" means "a payment, compensation, reimbursement, distribution, transfer, loan, advance, conveyance, deposit, gift, pledge, subscription, or other rendering of money, property, services, or anything else of value, whether tangible or intangible, and any contract, agreement, promise, or other obligation, whether or not legally enforceable, to make a contract." I.C. 2-7-1-11. Dues can be considered transfers, conveyances, subscriptions, other rendering of money, and anything else of value.

B. Principal Purpose (the "includer")

The laws of Indiana and other states specifically authorize the formation of trade associations, many of which are incorporated. The Indiana Lobby Registration Commission has recognized the right of individuals to form associations and corporations and has determined that it will not look beyond these entities to hold members or shareholders responsible for the obligations of the entity under the lobby registration laws. In those cases, however, where it appears that the purpose of forming the entity is to avoid the lobby registration laws, it is the position of the Commission that the substance of the transaction should govern the application of the lobby registration laws, not the form. In other words, there may be cases where the true dynamics of the relationships cause the entity to be simply a "lobbying shell."

If a trade association is formed and conducts a variety of different types of activities and services, including lobbying, the members of the association will not necessarily have to register and report. Of course, the association, itself, is responsible for registering and reporting as an employer lobbyist as long as more than $500 is expended during the reporting period. Where the principal purpose of the trade association is lobbying, a different result will follow. In such a case, the trade association may be a lobbying shell and the real relationship may be one in which the members are employer lobbyists and the trade association is a compensated lobbyist.

The determination of whether a trade association has a principal purpose of lobbying is fact specific and must be decided on a case-by-case basis. One factor to be considered is whether greater than 50% of the trade association’s total budget goes toward lobbying activities. If so, then the principal purpose of the association is lobbying and the association must register as a compensated lobbyist and those members whose dues attributable to lobbying exceed $500 in annual dues must register as employer lobbyists.

If more than 50% of the trade association’s total budget is expended on lobbying activities, then the principal purpose of that trade association will be presumed to be lobbying. This presumption that the principal purpose is lobbying can be overcome only with substantial factors to the contrary. Where the presumption is not overcome, then the association must register as a compensated lobbyist and those members whose dues attributable to lobbying exceed $500 in a registration year must register as employer lobbyists.

It should be noted, however, that in the case where a member enters into an additional agreement or contract with the association for lobbying activities and pays the association greater than $500 in a reporting period, in addition to the regular annual membership dues, the member is required to register and report as an employer lobbyist, and the association is required to register and report as a compensated lobbyist for that specific member.

C. Greater than $500.00 (the "excluder")

Even if the principal purpose of a trade association is lobbying, it will not be necessary for all members automatically to register as employer lobbyists. A member will be required to register only if more than $500 of the member’s annual dues are applied to lobbying activities. If the proportionate part of a member's annual dues applied to lobbying activities does not amount to $500, then the statutory requirement for the definition of lobbying has not been met and the members will not have to register and report.