WASHINGTON, Jan. 25 (AScribe Newswire) -- A recent letter of clarification from the Internal Revenue Service (IRS) to the Washington, D.C.-based Charity Lobbying in the Public Interest (CLPI) dispels common misperceptions about foundations funding nonprofits that lobby. The legality of foundation funding of nonprofits that lobby remains one of the most misunderstood elements of nonprofit activity today. Many foundation executives - and unfortunately, many of their professional advisors - assume foundation funding of groups that lobby is illegal and not an appropriate activity. The IRS letter demonstrates the inaccuracy of this assumption.
Thomas A. Troyer, Esq., chairperson of CLPI, noted that, "This letter from the IRS makes abundantly clear that foundations may fund nonprofits that lobby. It also provides suggested language, which foundations may safely use in their grant letters to nonprofits to facilitate that funding. Lobbying is particularly important for small, local, community based nonprofits because it can greatly expand the impact of their limited resources. In clarifying the rules under which grants to such nonprofits can be made, the IRS letter will be helpful both to foundation grantmakers and to their recipients."
Elizabeth M. Heagy, Esq., president of CLPI, emphasized that the letter answers, "clearly, concisely, and helpfully, many of the most commonly asked questions about foundation funding of nonprofits that lobby." She pointed out that a multitude of charitable purposes can be advanced by lobbying, including "improving education, expanding access to child care, providing prescription drug coverage for seniors, preventing drunk driving and enhancing research on cancer, Alzheimer's disease and many other illnesses. The IRS rules make very clear that, generally, private foundations need not fear funding groups that lobby so long as they don't earmark their grant funds for lobbying."
The IRS Information Letter specifies the circumstances under which private foundations themselves may engage in a wide range of policy-related activities that influence the formation of public policy. It also describes the conditions under which a foundation can make a grant to a nonprofit for a specific project that includes lobbying. In addition, the letter makes clear the latitude permitted community foundations both to lobby and to earmark funds for lobbying by nonprofits. Troyer pointed out that community foundations are permitted the same lobbying latitude as other nonprofits, so their rules regarding lobbying have greater flexibility than private foundations.
"Private foundations have been cautious about funding groups that engage in lobbying," according to Thomas Layton, president of the Wallace Alexander Gerbode Foundation and member of the CLPI Board of Directors. "However, our foundation and many other foundations have found that one of the very best ways for a foundation to substantially increase the impact of its grant dollars is to fund groups that engage in public policy. The multiplier effect of providing grant funds to those groups very often results in the delivery of much more service - in education, medical research, health care, and a host of other charitable fields - than the same amount of money granted for funding direct services. It's important for foundations to take advantage of this new information from the IRS regarding the broad leeway they have to fund groups that engage in policy issues."
"At a time when nonprofits need to be working with policymakers on a broad range of human services budget cuts and other critical issues facing our country and communities, this letter will provide powerful reinforcement for nonprofits' engagement in the public policy arena and an important clarification for foundations that want to support their work," Mr. Troyer concluded. The IRS Information Letter and additional information about this issue are available at http://www.clpi.org/lobby_law_hm.html.
Note: The term "nonprofits" refers to 501(c)(3) tax-exempt organizations under the Internal Revenue Code other than private foundations.
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CONTACT: Elizabeth M. Heagy, Esq., 202-387-2008, liz@clpi.org or Tesia Love, 202-387-5146, tesia@clpi.org
ABOUT CLPI: Charity Lobbying in the Public Interest (CLPI)
promotes, supports, and protects nonprofit advocacy and
lobbying in order to advance charitable missions and
strengthen participation in our democratic society. A
national nonprofit based in Washington, D.C., CLPI
accomplishes this through training, championing the
importance of nonprofit participation in the public policy
process, and coalition-based monitoring of nonprofit
advocacy rights. These efforts are supported by numerous
educational resources, available at www.clpi.org.
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