October 1, 2009 | Read Time: 2 minutes
A new ruling from the Internal Revenue Service may get more community foundations involved in supporting advocacy efforts.
According to the Alliance for Justice, a Washington group that advises nonprofit groups about lobbying issues, the IRS has clarified the rules that govern how community funds and other grant-making charities can provide support for nonprofit organizations that lobby lawmakers.
“We hope this clarification will give more grant makers the confidence they need to fund aggressive advocacy,” the alliance’s president, Nan Aaron, said in a statement.
The IRS gave its opinion in a Private Letter Ruling issued to the Alliance for Justice, which is a charity. Such government rulings on complex legal issues apply only to the organizations that asked and paid for them; however, the rulings give other groups insights into the IRS’s thinking.
Federal law prohibits private foundations from lobbying, except on issues that affect their own existence. But federal regulations allow foundations to make “general support grants” to charities that lobby if the grants are not earmarked for lobbying — even if part of the money winds up supporting lobbying work.
In its statement, the Alliance for Justice noted that the IRS regulations make clear that a grant from one charity to another “is considered lobbying if it is earmarked for lobbying.” Unfortunately, the alliance said, regulations do not provide a “clear path” to determining if a grant is considered lobbying when it is not earmarked.
In its ruling, the IRS said that “the standard for public charities should be no more stringent than that which applies to private foundations.
It concluded that the charity in question in this case — the Alliance for Justice — could make “general support grants” to another charity and not count the money as lobbying “even if some or all of the funds are ultimately expended by the recipient charity for lobbying.”
To illustrate this, the alliance gave the following example on its Web site. The “Farmville Community Foundation” provides $10,000 for general support to the “Children’s Alliance of Farmville,” a charity that advocates on behalf of disadvantaged children.
The Farmville Community Foundation does not have to count the grant funds against its own lobbying limit even if the Children’s Alliance of Farmville uses the money to lobby, as long the grant was not designated to be used for lobbying.
