Can family foundations play a role in presidential or local elections?
Well, sort of. The long answer is more complex than you might expect and private foundations who want to enter this arena must do so with care. The role you and your grantees can play in issues that might have heightened public attention in an election year lies in the nuanced IRS definitions of advocacy vs. lobbying. In understanding what you can and can’t do it is important to keep in mind that advocacy and lobbying are not synonymous.
Abby Levine, legal director of advocacy programs for Alliance for Justice likes to say “not all advocacy is lobbying but all lobbying is advocacy.” While all private foundations and nonprofits with a 501(c)(3) status are prohibited from participating in any way in partisan election-related activities, there are many legal ways private family foundations can advocate for a cause and their grantees can advocate or lobby for an issue directly.
Your advocacy capabilities are directly impacted by your tax status. Most private family foundations and public charities fall under the large tax-exempt 501(c)(3) umbrella. All 501(c)(3) organizations may not participate in partisan politics in any way, including support of or opposition for any candidate, but are fully within the law conducting your own advocacy efforts, or supporting advocacy efforts by your grantees. Advocacy can include research on issues important to your mission, community organizing, public awareness building about issues, and even talking with a legislator about an issue or about the work of one of your grantees. What you cannot do is talk about specific legislation or candidates.
There are two types of lobbying: direct and indirect. According to tax law direct lobbying is communicating with a legislator about specific legislation which would include drafting a bill, urging a yes or no vote, even asking that certain legislation not be introduced. Supporting specific ballot measures or asking the public to do so is also considered direct lobbying. Grassroots or indirect lobbying involves any communications to the public like a newspaper or TV ad, a website or a booth at a community function where you urge someone to take a specific political action. What is most important for family foundations to be aware of is that rules and regulations aren’t considered to be legislation and therefore don’t qualify as lobbying making it easier to fund organizations challenging a law or helping implement a piece of legislation.
While your grantees may lobby there is a prohibitive tax to prevent private foundations from lobbying that is assessed on both the foundation and the manager. Though private foundations can’t lobby themselves or earmark money for lobbying, they can support grantees who lobby through general support grants or specific project grants if those activities do not include lobbying. However, it is imperative that the amount of funding provided through a specific project grant is less than or equal to the specific project’s non-lobbying component. The one project area that carries additional restriction is funding voter registration drives. For more information on this topic, contact the Alliance for Justice.
Restricting grantees from lobbying is not necessary. Grant agreement language prohibiting use of grant funds for lobbying may limit your grantees’ effectiveness. For sample grantee language see Investing in Change: A Funder’s Guide to Supporting Advocacy by Alliance for Justice. Alliance for Justice also has a more complete guide and tools to Build Your Advocacy Grantmaking.
While there are detailed limits on lobbying, public charities are able to do more than private foundations. Levine points out “there are actually very generous limits for public charities, which can lobby as long as lobbying isn’t a substantial part of their activities.
In summary, keep in mind that as a private foundation you and your grantees may in no way play a role in partisan politics for any type of election. You and your grantees may not support or oppose a specific candidate. While you may not lobby your grantees can talk with legislators, candidates, or the public about legislation. You and your grantees can advocate for causes that you care about, conduct and share research on an issue, challenge a current law or regulation, convene nonprofits and decision-makers to discuss broad issues, or educate legislators about broad issues or about the foundation. While all of these things can be done during an election period, funding effective advocacy work is a long- term commitment. To learn more and to hear the stories of two family foundations active in advocacy efforts, listen to the replay or download the transcript of the National Center’s Webinar on Advocacy and Family Giving. (Available to Friends & FPOnline subscribers only).