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Winter 2007
A Primer on Advocacy: Q&A
Q: What Are Lobbying, Advocacy & Public Policy?
A: "Public policy" generally refers to the principles guiding any level of government or its representatives on a given topic, as expressed in laws, administrative practices, regulations, funding priorities, and executive or judicial orders. Participating in the public policy process can mean conducting and getting involved in a wide range of activities that can include legislative lobbying, administrative or regulatory advocacy, judicial advocacy, public interest research, public education efforts, community organizing, voter and candidate education, accessing and disseminating public information, and facilitating and building partnerships, coalitions and negotiations among nonprofits and government.
Lobbying is one specific form of public policy engagement that is often a key strategy for making and changing specific laws. Lobbying is defined by federal tax law as any attempt to influence specific legislation. More specifically, lobbying is any attempt to influence public officials in support of, or in opposition to, any bill that has been introduced, or any draft bill that may be introduced, in any legislative body, such as a city council, state legislature or Congress. Lobbying includes communicating with legislators and their staff directly and encouraging others to contact their legislators.
As an example, it is not considered lobbying to meet with legislators to educate them about a broad social problem, like air pollution. But it is lobbying if you meet with legislators to express a preference for a specific legislative proposal to reduce car emissions.
The term "advocacy" covers a much broader range of activities to push for changes in public policy, and these activities may or may not include lobbying. One way of differentiating between lobbying and advocacy is to understand that lobbying always involves advocacy, but advocacy does not necessarily involve lobbying. According to Charity Lobbying in the Public Interest, almost all social change has started with non-lobbying advocacy but ended with major lobbying efforts. For example, the civil rights movement included sit-ins, marches and other forms of protest that were advocating for equal rights. Ultimately, that advocacy led to the enactment, through extensive lobbying, of the Civil Rights Act of 1964.
Q: Can Private Foundations Lobby?
A: As described in MCF’s Legal FAQs Guide, federal law does not allow private foundations to lobby, with a few exceptions. Private foundations that engage in prohibited lobbying are subject to financial penalties imposed by the Internal Revenue Service. However, certain nonpartisan research and discussions of broad social problems are not treated as lobbying even though they reflect a particular viewpoint. And under certain conditions, private foundations may provide legislative testimony and engage in so-called "self-defense" lobbying.
More specifically, there are six major exceptions to the federal lobbying restrictions for private foundations:
- Nonpartisan research: Certain educational or research activities are expressly excluded from the legal definition of lobbying. A private foundation may fund or present an independent and objective report on a chosen subject, even if the report advocates a particular viewpoint on proposed legislation, so long as there is a sufficiently complete and balanced discussion to enable members of the public to form their own opinions or conclusions on the issue. This "nonpartisan analysis, study or research" must be made widely available and cannot be distributed selectively to persons on one side of the issue.
- Discussions of broad social problems: A related exception pertains to "examinations and discussions of broad social, economic and similar problems." Examinations and discussions of such problems do not constitute lobbying even if the problems are of a type with which government would be ultimately expected to deal, and even if the communications are made to legislators, so long as the discussions do not address the merits of a specific legislative proposal and do not directly encourage recipients to take action with respect to legislation.
- Legislative testimony and technical assistance: The private foundation lobbying rules also permit foundation representatives to provide testimony or other technical assistance to governmental bodies or committees if the foundation is doing so in response to a written request by the body or committee and the testimony or assistance is available to every member of the requesting body or committee.
- "Self-defense" lobbying: A fairly narrow exception permits lobbying when the proposed legislation would affect the existence of the private foundation, its powers and duties, its tax-exempt status or the deductibility of contributions to the foundation.
Membership communications: When a public charity grantee has elected to be governed by Section 501(h) of the Internal Revenue Code (see "Should Community Foundations Elect?" below), another exception excludes legislative communications by membership organizations among their own members so long as they do not include a direct call to action. Foundations can fund electing charities’ membership newsletters, updates and other such communications that contain legislative information but do not specifically call upon the charities’ members to take legislative action.
- Jointly funded programs: A narrow exception to the lobbying definition allows private foundations (but not their grantees) to present information to government officials about a program that is, or may be, funded by both the foundation and the government, provided that the communications are limited to the program.
Q: What Is Prohibited Lobbying?
A: The legal restrictions on private foundation lobbying do not include all activities that have to do with legislation. An activity related to legislation is prohibited lobbying only if it constitutes "direct" or "grassroots" lobbying.
The technical definitions of these terms are quite extensive.
- "Direct" lobbying, generally speaking, is a communication with a member or employee of a legislative body (or certain other government officials) that both (a) refers to specific legislation and (b) reflects a view on the legislation.
- "Grassroots" lobbying is any attempt to influence the opinions of the general public about specific legislation. In order to be grassroots lobbying, a communication must (a) refer to specific legislation, (b) reflect a view on the legislation, and (c) encourage the recipient to take action, such as contacting his or her legislator.
Legislation-related communications that do not fall within one of these two definitions are not prohibited by the lobbying rules that apply to private foundations.
Q: Can Private Foundations Make Grants for Lobbying?
A: Although federal law places many restrictions on private foundations’ own lobbying activities, it allows private foundations to make general support grants to organizations that lobby and to make grants for projects that involve lobbying, within the following restrictions:
- Project Support Grants: When a grant is designated for a particular project, and the project involves some lobbying activity, the grant will not violate the private foundation lobbying prohibition as long as the amount of that grant, together with all other grants by the same foundation for the same project for the same year, does not exceed the amount budgeted by the grantee for project activities other than lobbying. In making this determination, the foundation can rely in good faith on the grantee’s budget for the project. If, however, the foundation has reason to doubt the grantee’s information or reasonably should doubt the grantee’s information, then the foundation may not rely on the information.
- General Support Grants: Since the law does not prohibit lobbying by public
charities (See "Can Community/Public Foundations Lobby?" below), a private foundation is allowed by law to make a general support grant to an organization that lobbies, as long as the grant is not earmarked to be used for lobbying. (A grant is earmarked if the grantee is required to use it for a specific purpose or recipient, or if the grantor has the right to impose such a requirement.) A private foundation may make a general support grant to a public charity even if the charity is known to engage in some lobbying activities and is likely to use some of the grant for that purpose. Unlike specific project grants, the regulations do not require a private foundation to seek information about a charity’s lobbying budget when the charity applies for a general support grant.
Foundations frequently include boilerplate language that prohibits grantees from engaging in lobbying or other advocacy activities. However, federal tax law does not require foundations to include lobbying provisions in grants made to public
charities. Alliance for Justice offers more information on the issue of grant agreements and advocacy, including a sample grant agreement.
Q: Can Community/Public Foundations Lobby?
A: Community/public foundations operate under lobbying laws and regulations that are much less restrictive than those for private foundations. Public charities, including community/public foundations, are allowed to lobby as long as "no substantial part" of a public charity’s activities is lobbying.
The IRS and the courts have consistently declined to provide a clear rule about what constitutes a "substantial part." The "substantial part" rule does not clearly define lobbying or state how much money a charity may spend on lobbying.
To take advantage of some more objective rules on this point, public charities (other than churches and certain church-related organizations) may choose to be governed by Section 501(h) of the Internal Revenue Code, which allows the organization to expend a specified portion of its budget for lobbying. In general terms, total direct lobbying expenses for a given year may not exceed 20 percent of the first $500,000 of an organization’s expenses, plus 15 percent of the second $500,000, plus 10 percent of the third $500,000, plus 5 percent of the remainder, subject to an overall $1 million limit. In addition, grassroots lobbying expenditures may not exceed 25 percent of the overall lobbying limit. These rules apply only if the public charity has filed Form 5768 — the 501(h) election form — with the IRS.
Q: Should Community Foundations Elect?
A: If a community/public foundation is becoming more actively involved in public policy issues, many organizations would advise the foundation to seriously consider "electing" to be treated under the "expenditure" test in Section 501(h). The process involves filing the one-page IRS Form 5768, and the election may be withdrawn later using the same form.
Both the Council on Foundations and Charity Lobbying in the Public Interest identify many advantages to a community/public foundation in filing Form 5768, including:
- A single, clear spending yardstick for lobbying, not the vague "substantial" test.
- The statute and regulations are generous to an electing organization in defining what is lobbying.
- The 501(h) rules provide fairly generous lobby expenditure limits.
- The IRS has declared that electing is a neutral factor for audit selection purposes. On the contrary, it states that 501(c)(3) organizations that have elected are more likely to be in compliance with the law than non- electing 501(c)(3) organizations.
- Sanctions as applied to electing charities are more flexible, measuring a four-year period rather than every year standing alone.
- It does not count any efforts by volunteers (such as board members) where no expenditures occur; such activity is included under the "substantial" test.
Q: What Is Allowed for Election-Related Activities?
A: Private and community/public foundations are prohibited by law from funding or engaging in projects that appear to support or oppose candidates for public office. As 501(c)(3) organizations, foundations may not make campaign contributions, make expenditures on behalf of candidates, endorse candidates for public office, or communicate anything that explicitly or implicitly favors or opposes a candidate.
However, Alliance for Justice identifies some election-related activities that foundations may support, including the following:
- Public education and training sessions about participation in the political process
- Candidate education on public interest issues
- Candidate debates and forums
- Nonpartisan get-out-the-vote drives
- Nonpartisan voter registration drives (with certain restrictions for private foundations)
- Canvassing the public on issues
- Ballot measure work through specific project grants
Foundation officials and employees acting in their individual capacities may work on political campaigns outside of work hours or using their available leave, but they may not use foundation facilities, equipment, personnel or other resources to provide support to, or oppose, a candidate or campaign.
Legal Disclaimer: None of the information in this article should be construed as offering legal advice. The specific advice of legal counsel is recommended before acting on any matter discussed herein.
Acknowledgement: MCF thanks Gina Kastel from Faegre & Benson LLP for her assistance in preparing this article.
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© Copyright 2007 Minnesota Council on
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