Philanthropists have long had to think twice about giving to public
charities that lobby for government support or policy changes. The tax laws were
so unclear as to whether lobbying invalidated the charities’ tax-advantaged status that the IRS itself was, at best, inconsistent. Indeed, two years
ago, the IRS called off the audit of a group of charities after pleas from other
concerned nonprofits, which argued the tax code does not penalize public
charities that conduct a degree of lobbying.The IRS has finally cleared up
this uncertainty in a letter issued to Charity Lobbying in the Public Interest
(CLPI). In it, the IRS states that private foundations can make tax-exempt
grants to 501(c)(3) public charities that lobby, “provided such grants are not
earmarked in whole or part for lobbying.” Foundations can protect themselves by
stating in grant awards that “there is no agreement, oral or written, that
directs that the grant funds be used for lobbying activities.” Elizabeth
Heagy, president of CLPI, has struggled for years to encourage public charities
to lobby for legislative support of their social service programs, and is
heartened by the IRS clarification. “The letter should dispel the myths about
charities being able to lobby,” she says. Private foundations may continue to
engage in policy-related activities, such as offering technical advice or
nonpartisan analysis to legislative bodies. They can also publicly express their
views on legislation. “We feel the clarification affirms what is already in
practice, and hope it will encourage other foundations to participate in shaping
public policy,” says Ellen Dadisman, vice president at the Council on
Foundations.
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