ALP: How can a private foundation support a charity that lobbies?
Many private foundations associate advocacy with lobbying. As a result, these foundations overlook a valuable and legal tool to promote their charitable objectives. A “foundation” means a Section 501(c)(3) organization that is a private foundation. A “public charity” or “charity” means a Section 501(c)(3) organization that is not a private foundation.
Foundations may not lobby. But foundations can be advocates. And foundations can support charities that lobby – so long as foundation funds are not earmarked for lobbying. By following IRS rules, foundations can safely play a role in formulating public policy – they can be advocates.
An effective advocacy tool available to a private foundation is grant making to public charities that lobby. There are two IRS safe harbors for foundation grants to charities that lobby. The safe harbors apply even if the charity uses grant funds to lobby, so long as there is no earmarking.
- General Purpose Grants. A foundation may safely make a general purpose grant to a charity that lobbies, so long as the grant is not earmarked for lobbying. Earmarking means a written or oral understanding between the foundation and the charity that the grant will be used for lobbying.
- Project Specific Grants. The second safe harbor covers project specific grants, even when the project includes a lobbying component. A foundation may fund the non-lobbying portion of the project. The foundation should review and (so long as it has no reason to doubt their accuracy) may rely on the charity’s project budget to determine how much will be spent on lobbying. The foundation need not concern itself about other sources of the charity’s funding. There can be no earmarking of grant funds for lobbying.
- Grant Agreements. Many private foundations have boilerplate in their grant agreements prohibiting charities from using foundation funds for lobbying. This boilerplate is not necessary. Replace it with a statement that “There is no agreement, written or oral, that directs that grant funds be used for lobbying activities.”