Private foundations have mobilized quickly to evaluate whether and how the recent executive orders impact their missions, grantees, and broader communities. Foundations also have been considering more public responses to the orders, including potential advocacy efforts. Foundations can and should advocate in keeping with their respective missions and tax-exempt statuses but must proceed carefully and deliberately in order to avoid engaging in impermissible lobbying or political campaign activity.
Lobbying Prohibition
Private foundations are strictly prohibited from directly or indirectly engaging in attempts to influence legislation at any level of government unless an enumerated exception applies. “Legislation” for these purposes means actions by Congress, state legislatures, local councils or similar governing bodies, or public referenda or ballot measures. It includes the introduction, amendment, enactment, defeat, or repeal of acts, bills, resolutions, or similar items. Importantly, however, administrative, regulatory, and executive actions are not “legislation” for these purposes.
The private foundation rules also include important exceptions to the lobbying prohibition. Two exceptions most likely relevant here are the (a) nonpartisan analysis, study, or research exception, and the (b) technical advice or assistance exception.
- The nonpartisan analysis, study, or research exception permits a foundation to issue a report or other communication that advocates a particular position or viewpoint as long as there is a sufficiently full and fair exposition of the pertinent facts to enable the public or an individual to form an independent opinion or conclusion. The report or other communication may even refer to and reflect a view on specific legislation, provided that it does not include a direct encouragement (as specifically defined in the Treasury Regulations) to take action. Determining whether a particular report or communication qualifies for this exception can be a highly subjective exercise.
- The technical advice or assistance exception permits a foundation to take a position on specific legislation as long as the communication is in response to a written request by a government body, a governmental committee, or a subdivision of either. The written request must be in the name of the body, not an individual member thereof, and the foundation’s response must be narrowly restricted to only the scope requested by the governmental body. The response must be made available to every member of the requesting body, committee, or subdivision.
The self-defense exception to lobbying is unlikely to apply to communications regarding the executive orders or, in most cases, the legislation that may flow from them. That exception is extremely narrow and only applies to lobbying with respect to matters that go to the heart of an organization’s existence, powers, duties, tax-exempt status, and deductibility of contributions to it. It does not apply to policy matters, even those at the center of a foundation’s beliefs or values.
Critical Reminder! Political Campaign Prohibition
Private foundations, like public charities, are strictly prohibited from engaging in any political campaign activity. Foundations advocating in response to the recent executive orders must do so in a way that does not constitute opposition to (or support for) any candidate for public office at any level of government. Foundation directors, officers, and staff may do so in their personal capacities and on their personal time, but they must take care that such actions are not attributable to the foundation.
Possible Advocacy Actions
There are a variety of actions a foundation can take that do not constitute impermissible “lobbying” or “political campaign activity” for 501(c)(3) purposes. In each case, the foundation should first make sure that such actions are consistent with its specific purposes and mission as stated in its governing documents. Some foundations have very broad charitable purposes that may more clearly encompass advocacy related to the executive orders, whereas others have much more specific, narrow purposes that may not clearly encompass such advocacy. The foundation’s Board of Directors also should approve the advocacy strategy—and potentially even specific advocacy actions—in advance.
Selected examples of advocacy in which foundations can engage include:
- Advocating for broad policies at the local and state levels that mitigate harmful effects of the executive orders, as long as such advocacy addresses regulatory and administrative actions rather than legislation (including the state budget).
- Educating the public about the likely consequences of the executive orders on the community.
- Monitoring the implementation plans to be developed by federal agencies in response to the executive orders and recommending more desirable strategies.
- Collaborating with other foundations on letters to the editor and other public statements that do not reference specific legislation or include “calls to action” for readers to contact their legislators about legislation.
- Proactively preparing to utilize the technical advice or assistance exception by developing template written requests that can easily be shared with members of government bodies, committees, and subcommittees, looking for input from the foundation.
- Advocating that President Trump revoke one or more executive orders, or issue new executive orders that ameliorate some of the more objectionable components of the existing orders.
- Making general operating grants to public charities that lobby for legislative solutions or reactions, provided that the grants are truly unrestricted as to use or purpose.
- Making grants that allow grantees to obtain skilled guidance on how to analyze and navigate the executive orders and other developments.
- Assuring foundation directors, officers, and employees that they retain the right to lobby and engage in political campaign activity in their personal capacities and not on foundation time or using foundation resources, using guidelines and practices similar to those relevant to employees conducting campaign-related activities on personal time.
This Alert does not constitute legal guidance in any manner. These are complicated issues in a rapidly evolving environment. C3 Legal would be pleased to talk with you about how these rules might apply to your foundation.
[Caution! Be aware that other federal, state, and local laws requiring lobbyist registration and reporting often have different definitions and rules from those discussed in this Alert. Compliance with the 501(c)(3) rules does not guarantee compliance with those other rules. Your organization should consult with qualified lobbying counsel for guidance on compliance with those rules.]