March 3, 2005 | Read Time: 2 minutes
The Internal Revenue Service is reassuring private foundations that grants they make to charitable organizations that lobby are permissible under the federal tax code.
The tax agency answers 16 questions about foundation grants in a letter to Charity Lobbying in the Public Interest, a nonprofit group that asked the government to clarify lobbying laws as they apply to private foundations.
“The legality of foundation funding of nonprofits that lobby remains one of the most misunderstood elements of nonprofit activity today,” said a statement from Charity Lobbying in the Public Interest.
The group added: “Many foundation executives — and, unfortunately, many of their professional advisers — assume foundation funding of groups that lobby is illegal and not an appropriate activity. The IRS letter demonstrates the inaccuracy of this assumption.”
Federal law prohibits private foundations from lobbying (except on issues that affect their own existence). But the law allows them to make grants to nonprofit groups that lobby if foundations do not earmark the grants for lobbying and if other conditions are met.
Even so, some foundations have been reluctant to provide even general support to charities that lobby.
In its new letter, the Internal Revenue Service explains the law, including the conditions under which private foundations can make grants to charities for specific projects that include lobbying work, as long as such grants do not cover the lobbying portion of the project.
The revenue service also specifies the circumstances under which private foundations themselves may legally engage in a range of policy-related activities that influence the formation of public policy.
What’s more, the IRS explains the latitude under the law for community foundations, which are generally classified as charities, to lobby and to earmark funds for lobbying by other nonprofit organizations.
A copy of the letter from the Internal Revenue Service, and an analysis of the letter by Charity Lobbying in the Public Interest, is available online at http://www.clpi.org/lobby_law_hm.html.
