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Advocacy by Private Foundations

Podcast

Tim Mooney, Natalie Roetzel Ossenfort, Quyen Tu


 

We’ve talked about how private foundations can fund advocacy, but we are frequently asked what they can do themselves to push for policy change in the communities they serve. On this episode, we cover the do’s and don’ts of private foundation advocacy. 

Our Attorneys for This Episode:

Tim Mooney Natalie Roetzel Ossenfort Quyen Tu

We’ll get to the do’s in a bit, but first, the don’ts.

Don’t support or oppose candidates for public office and don’t engage in any activity that meets the definition of lobbying.

  • IRS rules – 501(h) definitions apply (direct & grassroots lobbying)
  • Any expenditure that meets the definition (paid staff or earmarked grant)
  • Consequence – excise taxes
    • 20% of the amount spent is assessed on the foundation
    • 5% of the amount expended (up to a maximum of $10,000 for a single expenditure) is assessed on a foundation manager if they “knowingly, willfully and without reasonable cause” agreed to the lobbying expenditure
  • There are plenty of things private foundations can do that are similar to lobbying or excepted from lobbying – it’s not worth getting the excise tax!

The do’s – options for private foundations

  • Non-lobbying advocacy
    • Activity that does not have all of the elements of either direct or grassroots lobbying within the 501(h) definitions
    • Meeting with legislators? Don’t advocate for specific legislation. Instead, speak about the issues within your portfolio broadly, and to the successes your funding has had. If asked what your stance is on a pending bill, do not answer (“It’s a trap!”) because that becomes direct lobbying.
    • Communicating with the public? Here you can boldly promote your stance on legislation so long as you don’t include a call to action, urging the public to contact legislators. This is a very underutilized option!
    • Ballot measures? Remember advocacy on these is direct lobbying so it’s best to avoid advocating on these as a private foundation. Educating without urging a vote one way or another avoids the excise tax.
    • Other forms of non-lobbying advocacy
      • Regulatory advocacy
      • Advocacy before special purpose boards (i.e. school boards, water districts, etc.)
      • Convening decision-makers to discuss a policy topic
      • Sign onto an amicus brief or otherwise participate in litigation
      • Education campaigns
  • Lobbying exceptions
    • Nonpartisan Analysis, Study or Research
      • Content: full and fair analysis
      • Distribution: broad public distribution and/or to government officials or employees
      • Can take a stance on legislation
      • Often print reports, but don’t have to be
      • Watch out for subsequent use rule
      • Earmarking a grant for this is also not lobbying
      • Annie E. Casey Foundation uses this exception a lot. Examples include advocating for expanding the Child Tax Credit, policy proposals (some that would require legislation) around student debt. They also earmark funds for reports done by grantees that fit in this exception, which is effectively the same as doing it themself.
      • Missouri Foundation for Health is kind of a bank shot example because technically it is a (c)(4) but because of a court settlement agreement going back to the tobacco litigation, it operates under private foundation rules. It commissioned a series of studies and came out strongly in favor of Medicaid expansion in MO as a part of it. This all snugly fits in the exception.
      • Last example comes from DC and the Bainum Family Foundation. It commissioned a report to document the shortage of high quality subsidized child care for those under 3 in lower income communities of Wards 7 and 8 of DC. The report was the basis of an entire campaign to advocate for a change in laws before the DC Council (which was successful!).
    • Requests for Technical Assistance
      • Providing information to legislative committees when invited is not lobbying
      • Must be invited in writing
      • Must be invited by the chair of the committee, subcommittee, or body
    • Self-Defense
      • Narrow exception – if there’s a pending bill that would impact the rights or responsibilities of private foundations, lobbying for or against the bill doesn’t count.
    • Examinations and Discussions of Broad Social, Economic and Similar Problems
      • Taking a stance on the general subject of legislation, without taking a stance on any legislation itself is not lobbying
      • This is a bit of a tightrope (remember our “it’s a trap!” example)

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