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What to Know About Advocacy Grants

Podcast

Natalie Roetzel Ossenfort,



On this episode of Rules of the Game, we’re going to talk about money. Because at this point you already know that 501(c)(3) public charities and 501(c)(4) social welfare organizations are allowed to lobby and pursue robust advocacy agendas, but how can they secure funding to make their short and long-term advocacy goals a reality? Stick with us for the next few minutes, and we’ll hopefully have the answers you are looking for. 

Our hosts for this episode:

Natalie Ossenfort Jen Powis

MISCONCEPTION #1: Foundations are not allowed to fund lobbying

REALITY: Both public and private foundations can fund grantees that lobby 

COMMUNITY FOUNDATIONS 

    • Just another type of public charity 
    • Allowed to engage in lobbying and directly fund grantee lobbying activities 
    • Lobbying grants will count against lobbying limit of foundation and public charity grantee 

PRIVATE FOUNDATIONS 

    • Rules for private foundations are a bit more restrictive than those for public charities / community foundations 
    • Not allowed to engage in lobbying and effectively prohibited from earmarking grants for lobbying purposes (if they do these activities, the foundation and managers are subject to a prohibitive excise tax) 
    • This does not mean that private foundations can’t fund grantees that lobby: 
      • General support grants are not earmarked for any particular purpose, so a grantee could choose to use those funds for lobbying without exposing their private foundation funder to an excise tax  
      • Specific project grants are another option. So long as the grantee’s project budget clearly delineates between lobbying and non-lobbying expenses, the private foundation can fund up to the non-lobbying portion of the project budget without earmarking funds for lobbying / exposing itself to an excise tax.  
        • Grantees can go to multiple PF’s, each can give up to the non-lobbying portion of the grant request. 

GENERAL 

    • Both private and public foundations must prohibit their funds from being used for partisan political purposes/support or opposition of candidates 
    • Grantees should carefully check the language of their grant agreements to see if lobbying is prohibited. Language that says that the funds are “not earmarked for lobbying” is not the same as language that says that lobbying is prohibited.
    • EXAMPLES that sound restrictive, but actually permit lobbying:  
      • “Lobbying and Non-Permitted Uses: This grant is not in any way earmarked to support or carry on any lobbying or voter registration activity. Grantee warrants that none of these funds will be used to influence legislation unless permitted by law.” 
      • “This grant is not earmarked for influencing legislation within the meaning of IRC Section 4945(e), and the foundation and Grantee have made no agreement, oral or written, to that effect.” 

MISCONCEPTION #2: Foundations can’t fund public charity voter registration drives 

  • Both private and public foundations can fund the NONPARTISAN voter registration activities of public charities, but the rules for private foundations can be a bit complicated… 
  • VR Drive must be nonpartisan, over multiple election cycles, in five or more states and cannot be subject to conditions requiring use of the funding in a specific state or election cycle. 
  • There are also requirements related to the grantee’s finances (e.g. at least 85% of organization’s income must be spent on activities relating to the purposes for which it was organized) 
  • Public charities can receive an advanced ruling from IRS certifying their ability to receive private foundation voter registration grants (confirms that organization meets the requirements of sec. 4945(f) of tax code) 

MISCONCEPTION #3: Foundations are not allowed to fund 501(c)(4)s. 

REALITY: Both private and public foundations can fund 501(c)(4)s…. if they know the rules 

COMMUNITY FOUNDATIONS 

    • Can fund any work conducted by 501(c)(4) that the community foundation itself would be allowed to engage in (e.g. lobbying, but NOT partisan political activity) 
    • IRS presumes that grant to 501(c)(4) is for lobbying  
      • needs to count against public foundation’s grassroots lobbying limit (unless grant was expressly made for direct lobbying purposes and foundation can show that funds were spent on direct lobbying) 
      • Grant will not be counted as a lobbying expense if it is a controlled grant expressly given for non-lobbying purposes (prohibits lobbying with grant funds) 

PRIVATE FOUNDATIONS 

    • Must use “expenditure responsibility” when making grants to organizations that are not 501(c)(3)s 
      • Must conduct a pre-grant inquiry and execute a written grant agreement. The foundation must ensure that funds are spent only for the purposes expressly agreed upon. 
      • Must obtain detailed reports from grantee about how funds are spent 
      • Must provide complete report of expenditures to IRS on annual 990-PF 
      • Must prohibit partisan political activities AND lobbying. Because of this, it’s often easier for 501(c)(4)s to raise lobbying funds from individuals and community foundations. 

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