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Private Foundations and Policymaking: Historical Context
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This material is excerpted from Private Foundations and Policymaking: Latitude Under Federal Tax Law (May 2002), by Thomas A. Troyer and Douglas Varley of Caplin & Drysdale, Chartered. The original research paper was commissioned by The Center on Philanthropy and Public Policy (CPPP) at the University of Southern California for its 2002 Forum, "Leveraging Philanthropic Assets For Public Problem Solving," under its Foundations and Public Policymaking project, funded by The David and Lucile Packard Foundation. The materials are made available here by kind permission of the authors and publisher. |
Congress enacted the ban on foundation lobbying as part of the Tax Reform Act of 1969, which established the current regulatory regime for foundations. Prior to 1969, Congress had paid only episodic attention to foundations. In particular, policymakers gave little thought to the role of foundations in the formation of legislation.
Indeed, the most comprehensive assessment of foundations during that period, the Treasury Department Report on Private Foundations*, did not mention legislative activities by foundations as an abuse that needed to be addressed. When historical circumstances came together in 1969 for passage of broadscale foundation legislation, however, Congress added the flat prohibition against foundation lobbying (along with several other restrictions) to the package of reforms the Treasury Department had recommended. The record reveals little about the precise motivation underlying this part of the legislation. Most likely the new, stricter rule for foundations simply reflected the unusually fierce hostility Congress felt toward foundations at the end of the 1960s.
Since that time, legislative activity by foundations has enjoyed the same general lack of congressional attention as before 1969. Although Congress has occasionally taken up the issue of the appropriate level of policy involvement by charities in general-- most notably in 1976 when it enacted new rules to encourage public charities to participate in the legislative process-- foundations have been largely ignored. Thus, while the specter of the Tax Reform Act of 1969 and the threat of congressional retaliation looms large in the minds of foundations (and their legal advisors), in fact in the more than thirty years since 1969, Congress as not once tightened the 1969 rules for foundations.
*See Senate Committee on Finance Committee Print 89th Cong., 1st Sess. (1965)