1. February 8, 2004 Legal 201: Advocacy Grantmaking Kelly Shipp Simone, Deputy General Counsel Council on Foundations March 19, 2012 Grants Managers Network Conference

2. February 8, 2004 Agenda  Defining Advocacy  Grants to organizations that lobby Public charities Others  Lobbying defined  Civic engagement grants GOTV, voter registration, etc.

3. February 8, 2004 Defining Advocacy

4. February 8, 2004 Defining Advocacy  Activity to influence public policy Lobbying Civic engagement  Rules differ for private foundations and public charities

5. February 8, 2004 Grants to Organizations that Lobby

6. February 8, 2004 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. February 8, 2004 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. February 8, 2004 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. February 8, 2004 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. February 8, 2004 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. February 8, 2004 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. February 8, 2004 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. February 8, 2004 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. February 8, 2004 Defining Lobbying (the IRS Way)

15. February 8, 2004 Types of Lobbying  Direct Advocacy directly toward legislators  Grassroots Encouraging others to get involved and contact legislators  Why the difference?

16. February 8, 2004 What is Lobbying?  Direct Communication Legislator

17. February 8, 2004 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. February 8, 2004 What is Lobbying?  Direct Communication Legislator Expressing a view About specific legislation

19. February 8, 2004 Legislation Defined Excludes Regulations Litigation Executive orders Enforcing law

20. February 8, 2004 Defining Lobbying DirectGrassroots Communication LegislatorsPublic Expressing a view About specific legislation Call to action

21. February 8, 2004 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. February 8, 2004 Lobbying Exceptions  Nonpartisan Study or Analysis  Providing technical assistance  Self-defense communications  Jointly-funded projects (for private foundations only)

23. February 8, 2004 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 to action Appropriate distribution

24. February 8, 2004 Nonpartisan Analysis or Research Distribution Any appropriate manner With or without charge Share with both sides of an issue

25. February 8, 2004 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

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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

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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. February 8, 2004 Grants for Civic Engagement

31. February 8, 2004 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. February 8, 2004 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. February 8, 2004 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. February 8, 2004 Contact Information Advocacy Resources: www.cof.org/legalwww.cof.org/legal Grantmaking Advocacy Kelly Simone 703-879-0716, simok@cof.org Legal Services: legal@cof.orglegal@cof.org