NP Action - Private Foundations and Policymaking: Grassroots Lobbying

Private Foundations and Policymaking: Grassroots Lobbying

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.

The foundation rules are even more generous with respect to efforts to influence public opinion on policy issues, including legislation. The law defines prohibited "grassroots lobbying" as (a) a communication with the public that: (b) refers to specific legislation; (c) reflects a view on that legislation; and (d) includes a "call to action" that encourages the recipient to contact a government official about the legislation.^* Under this definition, public communications -- including television and radio spots, web pages, and mass mailings -- that forcefully state a position for, or against, pending legislation will not violate the ban on foundation lobbying if they do not overtly encourage contacts with legislators or other government officials who participate in the formation of legislation.

Example: A foundation makes a grant to pay for the following radio spot. "The state assembly is considering a bill that would make gun ownership illegal. If this egregious legislation passes, you and your family will be criminals if you exercise your constitutional right to protect yourselves." The ad is not lobbying because it does not encourage listeners to contact a government official.^**

There are two exceptions to the general rule that a communication with the public will not be lobbying unless it includes a call to action. The first involves paid mass media advertisements on "highly publicized legislation."^*** Under a special rule, a paid ad concerning such legislation is presumed to be grassroots lobbying if it runs within two weeks of a vote on the legislation even if it does not encourage contacting government officials.

Example: Assume the radio spot on the gun bill described above runs within two weeks of a vote on the gun legislation and that the legislation is "highly publicized." The ad will be presumed to be lobbying because it refers to the bill.

The second exception to the "call to action" arises in the narrow case of referenda and ballot initiatives. The foundation rules treat communications with voters about these measures as direct lobbying.⁺ Accordingly, no call to action is necessary for such a communication to violate the ban on foundation lobbying. Simply expressing a view on the initiative or referendum will be sufficient.

Despite the more restrictive rules that apply in the case of referenda and ballot initiatives, there remains a significant roll for foundation-funded activities in this area. First, as for any communications with members of a legislative body, it is perfectly permissible for foundations to provide the public with information about the general subject of a referendum or initiative so long as there is no reference to the measure itself.

Example: In the weeks before the public votes on bonds that will provide funds for public schools, a foundation pays for television spots that emphasize the importance of education for children of all income levels. The ads do not refer the bond initiative. Therefore, they are not lobbying.
Example: A mid-sized city has placed on the ballot a measure that would authorize fluoridation in the city"s water. Around the same time, a local health foundation takes out an ad in several newspapers explaining the benefits of fluoride for oral health. As long as the ads do not refer to the ballot measure, they are not lobbying.

In states where items are placed on the ballot through a petition process, it is clear under the tax rules that an initiative or referendum is not "specific legislation" until its proponents begin collecting signatures.⁺⁺ Consequently, foundations can be confident that activities that occur earlier in the process " such as research to design an initiative or polling to test its viability " will not be lobbying.

^* See Treas. Reg. § 56.4911-2(b)(2). Under these rules, a communication includes a "call to action" only if it: (1) tells the recipient to contact a government official about the legislation; (2) provides the address or telephone number of a legislator (or employee of a legislative body); (3) provides a petition, tear-off postcard, etc. addressed to a government official; or (4) specifically identifies a legislator who will vote on the legislation as opposing the legislation, as being undecided, as being a member of the committee considering the legislation, or as being the recipient's representative. Identifying the sponsor of the legislation is not a call to action. [Source: Treas. Reg. § 56.4911-2(b)(2)(iii)]. ]

^** Based on Treas. Reg. § 56.4911-2(b)(5)(iv), Example (4).

^*** Whether legislation is "highly publicized" depends on the level of media coverage it receives and the extent to which the general public is aware of the legislation. See Treas. Reg. § 56.4911-2(b)(5)(iii).

⁺ See Treas. Reg. § 56.4911-2(b)(1)(iii).

⁺⁺ See Treas. Reg. § 56.4911-2(d)(1)(ii).