367 
‘‘(i) an organization described in sub-
section (c)(3) which is exempt from tax-
ation under subsection (a), 
‘‘(ii) a constituent part of an organi-
zation described in subsection (c)(3) which 
is exempt from taxation under subsection 
(a) and which, if organized and operated 
as a separate entity, would constitute an 
organization described in subsection (c)(3), 
or 
‘‘(iii) owned and operated by the 
United States, a State, the District of Co-
lumbia, or a possession of the United 
States, or a political subdivision or an 
agency or instrumentality of any of the 
foregoing; 
‘‘(2) such organization is organized and oper-
ated on a cooperative basis and allocates or pays, 
within 81⁄2 months after the close of its taxable year, 
all net earnings to patrons on the basis of services 
performed for them; and 
‘‘(3) if such organization has capital stock, all 
of such stock outstanding is owned by its patrons. 
For purposes of this title, any organization which, by rea-
son of the preceding sentence, is an organization described
368 
in subsection (c)(3) and exempt from taxation under sub-
section (a), shall be treated as a hospital and as an organi-
zation referred to in section 101(b)(1)(A)(iii). 
‘‘(f) COOPERATIVE SERVICE ORGANIZATIONS OF OP-
ERATING EDUCATIONAL ORGANIZATIONS.—For purposes 
of this chapter, if an organization is— 
‘‘(1) organized and operated solely to hold, 
commingle, and collectively invest and reinvest (in-
cluding arranging for and supervising the perform-
ance by independent contractors of investment serv-
ices related thereto) in stocks and securities, the 
moneys contributed thereto by each of the members 
of such organization, and to collect income there-
from and turn over the entire amount thereof, less 
expenses, to such members, 
‘‘(2) organized and controlled by one or more 
such members, and 
‘‘(3) comprised solely of members that are orga-
nizations described in clause (ii) or (iv) of section 
101(b)(1)(A)— 
‘‘(A) which are exempt from taxation 
under subsection (a), or 
‘‘(B) the gross profits of which are ex-
cluded from taxation under section 251(a), then 
such organization shall be treated as an organi-
369 
zation organized and operated exclusively for 
charitable purposes. 
‘‘(g) EXPENDITURES BY PUBLIC CHARITIES TO IN-
FLUENCE LEGISLATION.— 
‘‘(1) GENERAL RULE.—In the case of an orga-
nization to which this subsection applies, exemption 
from taxation under subsection (a) shall be denied 
because a substantial part of the activities of such 
organization consists of carrying on propaganda, or 
otherwise attempting, to influence legislation, but 
only if such organization normally— 
‘‘(A) makes lobbying expenditures in ex-
cess of the lobbying ceiling amount for such or-
ganization for each taxable year, or 
‘‘(B) makes grass roots expenditures in ex-
cess of the grass roots ceiling amount for such 
organization for each taxable year. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) LOBBYING
EXPENDITURES.—‘Lob-
bying expenditures’ means expenditures for the 
purpose of influencing legislation (as defined in 
section 4911(d)). 
‘‘(B) LOBBYING
CEILING
AMOUNT.—The 
lobbying ceiling amount for any organization
370 
for any taxable year is 150 percent of the lob-
bying nontaxable amount for such organization 
for such taxable year, determined under section 
4911. 
‘‘(C) GRASS
ROOTS
EXPENDITURES.— 
‘Grass roots expenditures’ means expenditures 
for the purpose of influencing legislation (as de-
fined in section 4911(d) without regard to para-
graph (1)(B) thereof). 
‘‘(D) GRASS
ROOTS
CEILING
AMOUNT.— 
The grass roots ceiling amount for any organi-
zation for any taxable year is 150 percent of 
the grass roots nontaxable amount for such or-
ganization for such taxable year, determined 
under section 4911. 
‘‘(3) ORGANIZATIONS
TO
WHICH
THIS
SUB-
SECTION APPLIES.—This subsection shall apply to 
any organization which has elected (in such manner 
and at such time as the Secretary may prescribe) to 
have the provisions of this subsection apply to such 
organization and which, for the taxable year which 
includes the date the election is made, is described 
in subsection (c)(3) and is not described in para-
graph (4) and is not a private foundation.