Lobbying

Q1: Are private foundations allowed to lobby?

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This is part of "What Every Grantmaker Should Know & Frequently Asked Legal Questions."

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No, with a few exceptions. Foundations that engage in prohibited lobbying are subject to financial penalties imposed by the Internal Revenue Service. Certain nonpartisan research and discussions of broad social problems are not treated as lobbying even though they reflect a particular viewpoint. Under certain conditions, foundations may also provide legislative testimony and engage in so-called "self-defense" lobbying.

The four exceptions to lobbying restrictions for private foundations:

  • Nonpartisan Research: Certain educational or research activities are expressly excluded from the 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 only 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 expected to deal ultimately, and even if the communications are made to legislators, so long as the discussion does not address itself to the merits of a specific legislative proposal and does 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 if 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 proposed legislation would affect existence of the private foundation, its powers and duties, tax-exempt status, or the deductibility of foundation contributions.

Q2: Does lobbying include all activities that have to do with legislation?

No. For these purposes, an activity that has to do with legislation is prohibited lobbying only if it constitutes "direct" or "grassroots" lobbying. The technical definitions of these terms are quite extensive.

Generally speaking, "direct" lobbying 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 attempting 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.

Q3: May a private foundation make a general support grant to an organization that lobbies?

Yes, as long as the grant is not earmarked to be used for lobbying.

Lobbying by a public charity is not prohibited. In fact, the needs and issues addressed by public charities are often well-served by the lobbying and advocacy efforts of those organizations, to the extent allowed by law. A private foundation may make a general support grant to a public charity even if the public charity is known to engage in some lobbying activities and is likely to use some of the grant for that purpose.

Q4: May a private foundation make a grant for a project that will involve lobbying?

Yes, as long as the grant doesn't exceed the budgeted non-lobbying expenses of the project.

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 is entitled to rely in good faith on the grantee's budget for the project.

Q5: Are public charities, including community foundations, allowed to lobby?

Yes, within limits. "No substantial part" of a public charity's activities may consist of lobbying (see next question).

Q6: How much lobbying is permitted for public charities?

As a general rule, "no substantial part" of the activities of a public charity may consist of lobbying. The IRS and the courts have consistently declined to provide a clear rule about what constitutes a "substantial part." 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 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 half-page 501(h) election form — with the IRS.

Q7: Is an organization that lobbies required to register as a lobbyist?

An organization that employs an in-house lobbyist for federal lobbying must register under the federal Lobbying Disclosure Act if it expects to incur, or does incur, lobbying expenses that exceed $24,500 in a semiannual period.

A "lobbyist" is a person who is compensated for multiple lobbying contacts and whose lobbying activities constitute at least 20 percent of his or her services for the organization during any six-month period. Registered organizations must file semiannual reports with the Secretary of the Senate and the Clerk of the House of Representatives. Separate requirements apply to lobbying firms and self-employed lobbyists.

Minnesota lobbying rules require the individual lobbyist to register, not the organization. However, organizations that pay lobbyists are required to file certain reports with the Minnesota Campaign Finance and Public Disclosure Board.

For More Information

See also What Every Grantmaker Should Know: Public Policy Engagement.