Funding Advocacy: What’s Legal, What Works

11 Dupont Circle, NW • 2nd Floor • Washington, DC 20036 202-822-6070 • www.allianceforjustice.org

May 8, 2003

We all understand that foundations are feeling the pinch, but it’s more important in tough times than in easy times to support advocacy work, because very hard decisions have to be made in tough times.

Marcia Avner, Public Policy Director

Minnesota Council of Nonprofits

Examples of Advocacy

Foundations Can: Research, educate, and lobby in certain cases Convene meetings of nonprofits & funders

around issues Depending on content, submit op-eds or

letters to the editor Develop advertising campaigns Talk to the media Testify before the legislature in certain cases

Research – W.K. Kellogg Foundation

(2001) Let's Fix This, a public information campaign to raise awareness of homelessness among Minnesota's children.

Convene Meetings – The Minneapolis FoundationThe Minneapolis Foundation engaged the community and seek solutions to this alarming crisis.

Proposition 188 would have “regulated” smoking in public spaces. The ads revealed who supported the proposition (Phillip Morris, R.J. Reynolds Tobacco Co., Brown & Williams) and who opposed it (American Cancer Society, American Lung Association of California, American Heart Association, California Dental and Medical Associations).

Proposition 188 was defeated.

Ad Campaigns – California Wellness Foundation

Congressional Testimony

John, Sir Elton, chairman, Elton John AIDS Foundation, CA

Public Private

Foundation - Limitations

Lobbying Limited Taxable Expenditure

Electoral Activities

No partisan electioneering

No partisan electioneering Special voter registration rules

Direct & Grassroots Lobbying

Direct Lobbying

Call to Action

About Specific Legislation

Expressing a View Expressing a View

General PublicLegislator

Communication

Grassroots Lobbying

Communication

About Specific Legislation

(Includes public for ballot measures)

Legislators26 C.F.R. § 56.4911-2(b)(1)(i)(A)

State

Local

Federal

Representatives and their staff Members

of Congress

State Assembly Members

City Council

Members

Ballot Measures

Work on: ballot initiatives referendaconstitutional amendmentsbond measures

Members of the general public vote directly on these

legislative actions, therefore theyare treated as LEGISLATORS

LOBBYING

Default Test Lobbying must be an “insubstantial part” of

overall activities Includes cost-free activities

Lobbying Limits

501(h) Expenditure Test Clear dollar-based limits ($1 million cap) Clear definition of lobbying Must elect with Form 5768 Private foundations

cannot elect

Sample 501(c)(3) making the 501(h) election with $2 million budget

TOTAL LOBBYING $250,000Grassroots Total: 25% X 250,000 = $62,500

20% x $500,000 = $100,000

15% x $500,000 = $ 75,000

10% x $500,000 = $ 50,000

5% x $500,000 = $ 25,000

Calculating Lobbying Limits

Lobbying Exceptions

Nonpartisan Analysis, Study, or Research

Full and fair discussion of the issue Broadly disseminated Can express a view and have indirect call to

action

Request must be in writing

Made by a government body, committee, subdivision

Technical Advice or Assistance

Communication about legislation that might affect the foundation’s:

Powers and duties

Tax-exempt status

Deduction of contribution to the foundation DEFENSIVE

USE

“Increase payout”

PROACTIVE USE

Repeal of excise tax on private foundation investment income

Self Defense

Examinations and Discussions of Broad Social, Economic, and Similar

Problems

Public and private foundations can fund advocacy.

Private foundations cannot earmark grants for lobbying, without incurring a taxable expenditure.

FUNDING ADVOCACY

EARMARKING:

Give pursuant to an agreement,oral or written, that the grant will be used for specific purposes

Private Foundation Safe Harbors

The tax code includes rules specifically for general support and project grants from private foundation grants to support advocacy

General Support Grants

General Support Grants to501(c)(3)’s

Most Support

Budget review not required

Grant is NOTa taxable expenditure

even if usedto lobby

Specific Project Grants

Private Foundation:Project Grants to 501(c)(3)’s

Grant amount may not exceed non-lobbying expenditures in budget

$100,000 Single Year Project Budget

Specific Project Grant from Private Foundation #1$50,000

Specific Project Grant from Private Foundation #2

$50,000

$50,000 < $60,000

No taxable expenditure

$50,000 < $60,000 No taxable expenditure

Grant Agreements

Grant Agreements

Clauses that restrict the use of grant funds for lobbying are unnecessary in grants to public charities

WARNING: Does your grant agreement contain the following language:

No portion of this grant shall be used to carry on propaganda, or otherwise to attempt, to influence legislation, the outcome of any public election…

Talk to your officers, directors, trustees and staff about supporting public policy advocacy.

MAKE YOUR CASE

Lobbying is legal

Anything that compromises grantees’ efforts to influence public policy diminishes their capacity to contribute to society

Consider:

The type and mix of advocacy you want to support

Communications that convey the foundation’s goals (RFPs, website, annual reports)

DEFINE YOUR ADVOCACY GOALS

Review grant agreements for restrictions

Make advocacy resources available to grantees

Take leadership on your issues (convene, research, collaborate, educate)

RECOGNIZE ADVOCACY OPPORTUNITIES

Build Relationships Collaboratives can be more effective than going it alone.

Sheltering Arms Foundation (MN):

Identify partners who have specific expertise and can keep on top of issues on a daily basis.

Seek opportunities to align the Foundation with larger nonprofit or advocacy coalitions that have the capacity to reach and mobilize many people and organizations.

Consult with other foundations that have expertise and find out what’s worked from their experience.

TAKE RISKSThere is more risk in doing nothing.

Potential impact on the community/society

Strengths and weaknesses of the organization

Overall level of risk vs. return

Risk Evaluation Criteria:

Ask about experience representing foundations/nonprofits

Experience representing foundations/nonprofits that fund or engage in lobbying

Opinion on the appropriateness of such activities

ASK AN ATTORNEY

We can train your staff, board, grantees

Provide technical assistance

Provide easy to understand print resources

CONTACT THE ALLIANCE FOR JUSTICE