Organizations that work on—or are considering working on—ballot measures need funding to support that work. Whether they seek funds specifically for ballot measure activities or to fund their overall mission, organizations often turn to foundations. Foundations that care about policy issues should pay attention to ballot measures, as ballot measures are increasingly being used to set policy.
Supporting grantees’ efforts
Foundations—both public and private—may support 501(c)(3) public charity grantees that are engaged in ballot measure activity. Most work on ballot measures is considered to be lobbying, however, therefore funders should learn and follow the rules about funding lobbying set forth in federal tax law.
Private foundations cannot “earmark” grants for ballot measure work—they cannot make grants with the expectation or agreement that the funds will be used to support or oppose a ballot measure. However, they can make grants to public charities for a variety of purposes, including:
- general support, which the public charity grantee can then decide to use for ballot measure work
- a specific project, even one including lobbying, as long as the grant does not exceed the non-lobbying portion of the grantee’s budget for the project
- activities to educate the public about the ballot measure process
- public policy research and education projects during the period before circulation of initiative petitions, so long as the initiative is merely a possibility and the project has multiple purposes and is not exclusively intended to advance a future ballot measure
- communications that qualify as nonpartisan analysis and therefore are not considered to be lobbying
- communications that are neutral—do not reflect a view on the ballot measure but urge voters to study the issue
Private foundations may not find it strategic to make grants to ballot measure committees (usually set up as 501(c)(4) organizations). Private foundations making such grants must use “expenditure responsibility”—meaning they must follow steps to ensure the grant funds are not used for lobbying—greatly limiting the ability of grantees to use these funds for ballot measure campaigns.
In addition to the activities described above, public foundations may make grants fully or partially earmarked for lobbying. Unlike private foundations, public foundations can lobby, which means they can also make grants specifically to support or oppose ballot measures. Public foundations can provide financial or in-kind support to ballot measure committees, even those structured as 501(c)(4)s.
In addition to funding the ballot measure activities of their grantees, foundations – both public and private – have the opportunity to play a role in ballot measure advocacy themselves.
Public foundations can oppose or endorse ballot measures directly, since they can lobby subject to their lobbying limits (either the insubstantial part test or the 501(h) expenditure test). Private foundations cannot lobby, but may express their views on the merits of ballot measures in limited circumstances. They can provide neutral educational information—information that does not refer to any specific ballot measure or does not take a position on it. In addition, they can produce a communication that meets the nonpartisan analysis exception to the definition of lobbying, and may also use the self-defense exception when appropriate.