October 27, 2005 | Read Time: 2 minutes
Some nonprofit officials are concerned that legislation could soon be proposed in the U.S. House of Representatives to disqualify charities from receiving federal money from a new housing fund if they have lobbied or carried out any other advocacy activities — such as voter registration — within 12 months of applying for a grant.
The legislation is likely to be added to the Federal Housing Finance Reform Act of 2005 (HR 1461), a bill pending in Congress that is intended to enhance oversight at Fannie Mae and Freddie Mac, government-sponsored companies that were created to establish a market for secondary mortgages.
The bill calls for the two companies to dedicate 5 percent of their after-tax profits to a new fund that will promote low-cost housing for needy families.
But critics say the advocacy provision some House members are promoting could unfairly gag nonprofit groups and prevent them from doing legitimate work.
The advocacy provision was crafted in response to concerns about the housing fund from a group of conservative Republicans who charged that it would become a slush fund for political advocacy.
Lawmakers are considering adding a provision to the housing-fund bill that would prohibit charities involved in any kind of political activity, even if those activities are paid for with private money, from receiving grants from the new fund. The prohibition would extend to groups that are affiliated with other organizations that engage in political activities.
In addition to concerns raised by charity officials, at least one member of Congress has publicly rejected the advocacy provision.
Barney Frank, of Massachusetts, the senior Democrat on the House Financial Services Committee, said in a written statement that the provision would force charities “to choose between providing housing and assisting Americans with the opportunity to vote.”
Gary D. Bass, executive director of OMB Watch, a Washington group that monitors federal regulations, said the provision would have even broader implications for the nonprofit world, creating “a chilling effect on free speech and association rights protected by the First Amendment.”
