CEP: Elections Are Coming, and the Time to Act Is Now!

Summer is heating up and so too are efforts to register voters and get out the vote in advance of what is promising to be an exciting election season. Not only will voters take to the polls to decide who will represent them in local, state, and federal government, but they will also vote on critical ballot measures, legislating on a variety of issues from abortion access to minimum wage, and more.

Nonprofits of all shapes and sizes have a role to play in the lead-up to November. Whether it’s educating voters about how, when, and where to vote or educating candidates on the issues facing local communities, nonprofit advocates are certain to take center-stage in the weeks and months to come.

So how can foundations support their grantees as they look to ensure that all eligible voices are heard during the 2024 general election? Luckily, they have a number of options. While 501(c)(3) private and public foundations are prohibited from supporting or opposing candidates for public office, they are permitted to fund and engage in several nonpartisan election season advocacy activities. Here are a few steps your foundation can take now to amplify the impact of your grantees’ work as we head into the Fall.

1. Embrace the power of general operating support. Not only do general operating support grants convey a sense of trust in foundations’ public charity grantees, but they also provide grantees with maximum flexibility to engage in nonpartisan election activities and other kinds of advocacy. By choosing not to earmark grants for any particular project or purpose, public and private foundations can make grants to public charities, and those organizations can then put the funds to use for any permissible 501(c)(3) purposes. Flexible funding of this type allows grantees to choose how to use their grant funds. For example, they could decide to utilize general operating support grants for educational campaigns, nonpartisan GOTV activities (including voter registration), or policy advocacy (including nonpartisan support for ballot measures). Though private foundations are subject to an excise tax for grants that are earmarked for lobbying (including ballot measure advocacy) and some voter registration activities, they are not subject to a taxable expenditure if a public charity grantee chooses to use general operating support for these purposes.
2. Make grants for nonpartisan election activities. Generally speaking, federal tax law permits both public and private foundations to make specific project grants to public charity grantees for nonpartisan GOTV work, voter education, and candidate education campaigns. Be aware, however, that special rules apply to private foundation funding of voter registration activities. Private foundations are only permitted to earmark grants for nonpartisan voter registration drives if the drives are conducted in five or more states over multiple election cycles. Double-check that you meet the requirements of Section 4945(f) of the Internal Revenue Code before designating private foundation grant funds for voter registration purposes.
3. Remember the Project Grant Rule. If general operating support is not an option for your foundation, the project grant rule provides an opportunity to fund public charity projects that include ballot measure advocacy (lobbying) and voter registration activities. So long as there are multiple funding sources, private foundations may request an allocated budget from a potential grantee and provide funding up to the non-lobbying and non-voter registration portions of the project budget without prohibiting lobbying or voter registration and without being subjected to an excise tax. Though not explicit in the tax code, it is likely that public foundations may also use this rule to their advantage if they want to fund projects that include, in part, ballot measure advocacy without having to count the grant amount against their own lobbying limits.
4. Provide (or fund) training on relevant state and federal law. In recent months, we’ve witnessed members of Congress and state legislative committees calling for the investigation of nonprofits engaging in election season advocacy and GOTV work. Simultaneously, many states have enacted laws that complicate how certain election activities (like voter registration) can be conducted by nonprofit organizations. To ensure that your grantees are protected from potential allegations of misconduct, create opportunities for them to train their staff and volunteers on important election season advocacy rules, including the state and federal laws that apply to their work.
5. Consider funding 501(c)(4)s. Unlike 501(c)(3) public charities, 501(c)(4)s are permitted to engage in partisan advocacy as a secondary organizational activity. While public and private foundations are prohibited from funding the partisan election activities conducted by 501(c)(4) social welfare organizations, they can make grants to these groups for nonpartisan work. Public (Community) Foundations may make (c)(4) grants to support any activities that are permissible for 501(c)(3) public charities, including lobbying and nonpartisan GOTV efforts and voter registration drives. Private Foundations must utilize expenditure responsibility when funding non-public charities, but that does not mean they can’t provide critical support for nonpartisan 501(c)(4) activities. In addition to other requirements, expenditure responsibility grants mandate that private foundations prohibit the use of grant funds for lobbying (including ballot measure advocacy), voter registration, and partisan political work, but they offer an excellent opportunity to fund the educational and charitable initiatives of 501(c)(4)s, freeing up grantees’ unrestricted (c)(4) dollars for their secondary partisan activities.

If you have questions about your foundation’s ability to support or engage in election season advocacy, please reach out to Bolder Advocacy’s free technical assistance hotline.

The information contained in this blog is provided for informational purposes only. The information is not a substitute for legal, tax, or other professional advice tailored to your specific circumstances and may not be relied upon to avoid penalties that may be imposed under the Internal Revenue Code or state law. 

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