Our primary funder, Heath and Human Services, addresses lobbying on their website: 
The Department of Health and Human Services (HHS) fully supports federal restrictions on lobbying using federal funds by HHS grant recipients. In general, recipients of federal funds are not allowed to use said federal funding to lobby federal, state, or local officials or their staff to receive additional funding or influence legislation. The citations below provide a statutory/ regulatory background as well as Department-wide restrictions and links to the implementing legislation, regulation, or guidance. If you have further questions, please contact the Chief Grants Management Official within the appropriate awarding agency.
As a general matter, these lobbying restrictions preclude recipients from:
- Spending federal funds to influence an officer or employee of any agency or Congressional member/staff regarding federal awards;
- Failing to submit required certification and disclosure forms (i.e., SF-LLL);
- Using grants funds provided to non-profit organizations or institutions of higher education to influence an election, contribute to a partisan organization, or influence enactment or modification of any pending federal or state legislation; or
- Expending federal funds to influence federal, state, or local officials or legislation.
“Spending federal funds” includes spending time or other resources such as indirect costs and direct travel or other expenses. You must keep track of these separately if you lobby, and should have a place on your Personnel Activity Report or time sheet that breaks out any time spent lobbying and make sure you aren’t paying that or the related indirect costs with federal funds. (This website also gives the background from regulations and history.)
“Lobbying” is also defined by the IRS:
Direct lobbying refers to attempts to influence a legislative body through communication with a member or employee of a legislative body, or with a government official who participates in formulating legislation. Grass roots lobbying refers to attempts to influence legislation by attempting to affect the opinion of the public with respect to the legislation and encouraging the audience to take action with respect to the legislation. In either case, the communications must refer to and reflect a view on the legislation.
In other words, if you are seeking to influence a vote on legislation, you are lobbying, whether you personally ask for a yes or no vote, or you urge others convince their representatives to vote yes or no. If you choose to lobby, there are several things you need to sign or file. 45 CFR Part 93, Appendix A, contains a Certification Regarding Lobbying that you must keep on file. Annually the IRS form 990 asks you about lobbying. You are allowed to do this, remember, but have to show it isn’t your major activity. If you lobby, say so on your 990.
You also must clearly identify the time spent in lobbying, including travel time, on your time sheet or personnel activity report. If the Executive Director doesn’t use a time sheet, s/he must still complete a record of this time. (The requirement is that you complete an after-the-fact accounting of your time and sign it.) Then the time and indirect costs related to the time must be paid for separately from federal grants or pass-through dollars. Typically fund raising dollars or income from projects not tied to the federal grant are used for this purpose.