Foundation Operations: Grantmaking-> Funding Strategies-> Advocacy
We are interested in funding some projects that include advocacy activities but want to be sure that we don't jeopardize the foundation's tax exempt status. What can a foundation legally fund when it comes to advocacy?
First of all, it is important to note that any restrictions apply primarily to lobbying, not to other forms of advocacy such as information campaigns or community organizing. Most foundations (with a few exceptions detailed below) may not lobby. This includes both direct lobbying, defined as any communication with legislators that attempts to influence legislation, where specific legislation is referred to, and a view on the legislation is given) and grassroots lobbying (communications that refer to specific legislation, reflect a view on the legislation, and include a call to action which is defined as a statement directing the reader to contact their legislator.
Foundations can, however, give grants to nonprofit organizations that do lobby, as long as:
grants of general operating support are not earmarked for lobbying; and
grants made to specific projects that have a lobbying component are for an amount less than the budget for the lobbying activities.
Foundations may lobby on their own behalf with regard to legislation that affects their powers, duties, tax-exempt status and the deductibility of contributions.
Second, it is important to note the rules apply differently depending upon your organization's tax status. Public charities may engage in lobbying as long as it does not become a substantial part of their activities. Under section 501 (h) of the Internal Revenue Code, public charities can choose to register with the IRS as an electing public charity. As an electing public charity, the organization is given greater freedom to engage in lobbying activities. In some cases, electing public charities can make expenditures for lobbying of between 5 percent and 20 percent of their budgets. Social welfare organizations do not have a limit on the amount of lobbying in which they can engage.
No nonprofit organization may engage in electioneering, which is any involvement in support or opposition to a candidate for public office (as opposed to ballot initiatives). No nonprofit organization may engage in electioneering.
So what is legal?
conduct examinations and discussions of broad social and economic problems -- even if these involve communicating with legislators or their staff. The key is not to discuss specific legislation or include communication that contains a call to action. For example, foundations may convene interested parties, including legislators, executive officials, and their staffs, around issues of concern as long as the discussions focus on topics other than the merits of specific legislation.
conduct and release nonpartisan analyses, studies, or research. In communicating such research, the foundation or its grantee may even take a position on specific legislation as long as all of the facts related to the issue are presented fairly and it is possible for the reader to form an independent opinion or conclusion.
respond to written requests for technical advice or testify at legislative hearings. When testifying before legislative bodies, unlike presenting nonpartisan analysis, foundation representatives are permitted to support or oppose specific legislation.
Foundations may also engage in other policy-related activities that fall outside of the IRS definition of lobbying. For example:
Most grassroots communications to the public about a general issue of concern are permitted as long as there is no reference to specific legislation, no position taken on the legislation, or no call to action and the communication does not take place within two weeks prior to a legislative vote. For example, conducting public education campaigns through radio or television advertisements, use of direct mail, and other forms of public communication about specific health policy issues are not considered lobbying when the objective is to educate the public rather than influence legislation and a legislative vote on the topic is not imminent.
Actions designed to address the implementation of existing laws by administrative bodies are also permissible. These encompass activities that range from foundation-initiated projects to formal collaboration with government to achieve shared goals.