Legal 201: Advocacy Grantmaking

1. Legal 201: Advocacy Grantmaking Kelly Shipp Simone, Deputy General Counsel Council on Foundations March 19, 2012 Grants Managers Network Conference

2. Agenda • Defining Advocacy • Grants to organizations that lobby • Public charities • Others • Lobbying defined • Civic engagement grants • GOTV, voter registration, etc.

3. Defining Advocacy

4. Defining Advocacy • Activity to influence public policy • Lobbying • Civic engagement • Rules differ for private foundations and public charities

5. Grants to Organizations that Lobby

6. Lobbying Basics • Private foundations • May not engage in activity defined as “lobbying” by Treasury Regulations • Public charities • May engage in lobbying so long as it is not more than an “insubstantial” part of its overall activities

7. Earmarking for Lobbying • Earmarked grants: • Public charities may earmark grants for lobbying • Earmarked grants count against a public charity’s lobbying limits • Private foundations may not earmark grants for lobbying

8. Grants to Public Charities* • General Support Grants • Not counted as lobbying even if grantee has lobbying activities • No written or oral agreement that it will be used for lobbying * If expenditure responsibility is required, the grant agreement must prohibit the use of the funds for lobbying

9. Grants to Public Charities • Specific project grants to public charities permissible if – • Fund up to the non-lobbying amount of the project budget • Reasonable reliance on budget from grantee • No earmarking of funds for lobbying activity • If public charities follow these rules, the grant should not count as a lobbying expenditure for the grantor public charity

10. Grants to Public Charities Total Project Budget: $100,000 Lobbying Portion: $30,000 Non-lobbying Portion: $70,000 How much could one private foundation fund? $70,000 How much could two private foundations fund? 100% so long as neither granted more than $70,000

11. Grants to Public Charities • Multiyear grants and project grant rules • Foundation has two options • Make sure grant amount actually disbursed in the year does not exceed budgeted non-lobbying amount for that year • Divide equally each year regardless of when the amounts were paid 2-year $100,000 project Year 1: $50,000 budget, $20,000 lobbying expenses ($30K non-lobbying) Year 2: $50,000 budget, $30,000 lobbying expenses ($20K non-lobbying) Private foundation grant: $35,000 in year 1; $5,000 in year 2 Grant exceeds non-lobbying amount in year 1 Result: Must allocate equally in each year of grant (i.e. $20 K each year) to meet the rules

12. Grant Agreements • Remember: Not required to prohibit the use of grant funds to public charities for lobbying unless grant requires “expenditure responsibility” • Sample language in toolkits at www.cof.org/legal

13. Grants to Non-Charities • Private foundations must prohibit the use of grant funds for lobbying in the grant agreement • Public charities may make the grant but rules regarding what counts as lobbying expense

14. Defining Lobbying (the IRS Way)

15. Types of Lobbying • Direct • Advocacy directly toward legislators • Grassroots • Encouraging others to get involved and contact legislators • Why the difference?

16. What is Lobbying? • Direct Communication Legislator

17. Legislators Defined Legislators: • federal, state & local level representatives and their staff • executive officials when participating in formulation of legislation • the public if it is a ballot measure • not members of special purpose boards (planning commissions, zoning commissions, school board) Joint Session of Congress

18. What is Lobbying? • Direct Communication Legislator Expressing a view About specific legislation

19. Legislation Defined Excludes • Regulations • Litigation • Executive orders • Enforcing law

20. Defining Lobbying

21. Call to Action • Telling to contact legislator(s) • Providing address, telephone number, and/or other contact information of legislator(s) • Providing mechanism to enable communication with legislator(s) • Identifying legislator(s)

22. Lobbying Exceptions • Nonpartisan Study or Analysis • Providing technical assistance • Self-defense communications • Jointly-funded projects (for private foundations only)

23. Nonpartisan Analysis or Research • Required elements: • Full and fair discussion of the facts • Report may advocate a position on an issue • May discuss legislative issues • May not directly call the recipient toaction • Appropriate distribution

24. Nonpartisan Analysis or Research Distribution • Any appropriate manner • With or without charge • Share with both sides of an issue

25. Providing Technical Advice • Must be provided to: • Legislative body • In response to a written request • May express opinions requested or opinions directly related to the advice or assistance being provided

27. Self-Defense Communications • May express a view to legislators about issues affecting the foundation’s • existence • tax-exempt status • powers and duties • the deductibility of contributions • Can be used proactively • Not applicable to grassroots lobbying

29. Jointly- Funded Projects • Leveraging can be a key strategy • Grant may be conditioned on government support • Communicating with government about an actual or potential jointly-funded project is permissible • Purpose must be the exchanging information on the subject matter of the programs • Can’t try to persuade the government official or employee to take positions on specific legislative issues

30. Grants for Civic Engagement

31. Grants for Civic Participation • Must be non-partisan • Variety of guidelines available for different activities (candidate debates, GOTV, voters guides) • Purposes • Encourage individuals to get involved in the process • Educate people about candidates

32. Grants for Civic Participation • Voter registration drives • Special rules for private foundation grants (and direct activity) • Key rules include: • Must be carried out over more than one election cycle • Must cover at least five states • Rules regarding the charities’ expenditures and contributions

33. Grants for Civic Participation • Voter registration drives • Some charities may have obtained Section 4945(f) rulings • Remember: Expenditure responsibility grants must prohibit use of grant funds for voter registration

34. Contact Information Advocacy Resources: www.cof.org/legal Grantmaking Advocacy • Kelly Simone 703-879-0716, simok@cof.org • Legal Services: legal@cof.org