The following overview is simplified for educational purposes. It is not legal advice, and should not be relied on as such. Consult a qualified attorney for legal advice on the lobbying prohibition imposed on private foundations.
Private foundations’ expenditures for legislative lobbying are prohibited as “taxable expenditures” by Section 4945 of the Internal Revenue Code. For the purpose of deciding what is prohibited lobbying, private foundations may rely on the definitions found in Sections 501(h) and 4911 of the Internal Revenue Code, which define lobbying for those public charities that have chosen to have their lobbying governed by Section 501(h).
Under Section 501(h), the following activities count as direct lobbying:
- Communications with legislators or employees of a legislative body that refer to a specific legislative proposal and reflect a view on that proposal. Communications to executive branch officials count only if the principal purpose of the contact is lobbying.
- Communications with the public that refer to and reflect a view on an initiative, referendum, bond, or other ballot measure, in the area where the vote will take place.
- Communications to an organization’s members suggesting that they contact legislators or other officials to support or oppose a specific legislative proposal.
Under Section 501(h), the following activity counts as grass roots lobbying:
- Communications with the general public or any segment thereof that refer to and reflect a view on a specific legislative proposal and include a call to action (i.e., encourage recipients to contact their legislators on the proposal).
Under Section 501(h), the following activities are not lobbying:
- Research that is not primarily conducted in preparation for lobbying.
- Communications to anyone which discuss but do not reflect a view on a specific legislative proposal. And most communications to members or the public that reflect a view on a specific (non-ballot measure) legislative proposal but do not have a “call to action.”
- Communications made to influence an executive, administrative, or judicial decision, rather than a legislative decision. Special purpose bodies, such as school boards, are not legislatures.
Private foundations may take advantage of the following additional exceptions:
- Conducting or disseminating nonpartisan analysis, study, or research.
- Technical advice/assistance given to a legislative body or government agency in response to a written request from the body or agency.
- Lobbying in “self-defense” on legislation that would affect the existence, powers, duties, or tax-exempt status of the foundation, or its ability to receive deductible contributions.
- Communications with legislators or government agencies concerning a project that is or may be jointly funded by the private foundation and government.
Additional rules apply to private foundation grant making activities:
- Lobbying expenditures by a private foundation’s public charity grantees will be attributed to the private foundation funder, resulting in a prohibited taxable expenditure, if the foundation earmarks the grant for the lobbying activity.
- Public charity grantee lobbying expenditures from unrestricted or general support grants are not attributable to the private foundation funder.
- A private foundation may make a grant to support a specific project of a public charity, if the grantee’s nonlobbying project budget is larger than the grant.
- Private foundations may only make grants to non-public charity grantees following expenditure responsibility procedures, which require an express lobbying prohibition in the private foundation’s grant agreement.
In some situations, a private foundation may want to expressly prohibit use of its grant funds for lobbying in its grant agreement. In others, it is sufficient to specify that the grant funds are not earmarked for lobbying, which would not contractually prohibit the grantee from using them for lobbying.