Investing in Change:
A Funder’s Guide to Supporting Advocacy
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Investing in Change:
A Funder’s Guide to Supporting Advocacy
Table of Contents
Foreword ..� i
Preface ....� iii
Introduction: Making the Case for Advocacy ....................................................................... 1
Chapter I: Defining Advocacy ................................................................................................ 5
Chapter II: Rules for Private and Public Foundations Supporting Advocacy .................. 11
Chapter III: Grant Agreements ............................................................................................. 25
Chapter IV: Strategies for Building the Advocacy Capacity of Grantees ......................... 27
Chapter V: Evaluating and Reporting Advocacy ................................................................ 33
Chapter VI: Rules for Foundations Engaging in Advocacy ............................................... 43
Appendices
Appendix A: Sample General Support Grant Agreement Language ............................ 47
Appendix B: Sample Specific Project Grant Agreement Language .............................. 48
Appendix C: Rules for Foundation Support of Advocacy by Public Charities .............. 49
Appendix D: Rules for Foundations Engaging in Advocacy .......................................... 50
Appendix E: Resources ..................................................................................................... 51
Appendix F: Sample Benchmarks of Advocacy Effectiveness ....................................... 52
Appendix G: Alliance for Justice Publications ................................................................ 56
Appendix H: A Model for Funder Intervention to Support Advocacy ........................... 57
Most of us are familiar with the saying: “You can lead a
horse to water, but you can’t make him drink.” Unfortu-
nately, this statement accurately reflects the disappointing
state of efforts to encourage foundations to embrace public
policy advocacy as a routine aspect of their grantmaking.
While foundations have become increasingly aware that
public policy advocacy work is possible, many have yet to
see the value of such work for advancing their program-
matic interests. As a result, these foundations lack the nec-
essary “thirst” to expend any appreciable energy or effort
directed at becoming engaged in public policy advocacy.
In truth, the necessary leadership and stamina that
are required by a foundation’s board and staff to effective-
ly and responsibly engage in public policy can only come
from within a foundation. For those of us who believe in
the importance of this work, we must actively encourage
foundations to come to their own realizations that public
policy engagement is in their self-interest as it relates to
fulfilling their charitable aspirations for a better society.
It does not matter whether a foundation’s charitable
aspirations are characterized as conservative or progres-
sive, or its specific area of interest. What matters is that
our society benefits when foundations use the full range
of grantmaking strategies that are at their disposal to
achieve their charitable objectives. In so doing, founda-
tions maximize their potential for success, help to ensure
that diverse viewpoints are vetted through the democratic
process, and satisfy their public trust obligations.
Investing in Change: A Funder’s Guide to Supporting
Advocacy is an important work from a respected and
trusted source as to what foundations can, and cannot
do, as it relates to public policy advocacy, and I know it
will be a valued resource for grantmakers. It eliminates
the myriad myths and excuses that are often presented as
to why foundations do not engage in this work, includ-
ing that the law prohibits foundations from engaging in
public policy advocacy. In fact, the opposite is true. The
laws governing foundation engagement in public policy
advocacy have evolved to provide progressively clearer
guidance about what is allowed by law. What is not
widely acknowledged, or appreciated, is that the changes
in the laws and regulations have been driven, in large
part, with the intent of encouraging foundations of all
types to become comfortable with utilizing public policy
advocacy as a grantmaking strategy.
What this reference book does not do—and should
not be expected to do—is provide a foundation with
either the passion or the courage (and both are needed)
to find at least one area of programmatic interest within
its grantmaking portfolio that would benefit from public
policy action. Such passion and courage must come from
the foundation itself, ideally as it examines its respective
vision and mission statements. Even a foundation that
sees its mission as focused on supporting direct services
by nonprofit organizations may find that severe budget
cuts by federal, state, or local entities to these same orga-
nizations warrants a public policy response.
As more U.S. foundations discover the will from
within to recognize that the pursuit of public policy
advocacy is essential to fulfilling their vision for a better
society, we can look forward to great things for our cities,
our nation, and our world. We should expect noth-
ing less from institutions that collectively hold assets of
nearly $500 billion in the public trust.
Foreword
Emmett D. Carson, Ph.D., President and CEO of the Minneapolis Foundation and
Chairperson of the Board of Directors of the Council on Foundations
Foreword
i
Nonprofits, including all foundations and public chari-
ties, have championed many of the most important
advances we enjoy in our society today. Without their
leadership and advocacy efforts, we would not have
achieved our vast environmental and consumer protec-
tions or won the civil rights and women’s rights struggles
of the last century.
These organizations promote changes in govern-
ment, industry, and other institutions in order to affect
the lives of ordinary people in America and around the
world. They provide a mechanism for people to confront
important issues in their families and communities, and
empower them to make needed changes. Nonprofits
amplify the voices of underrepresented members of our
society. They tackle the seemingly unsolvable problems
that government and business avoid. They regularly
immerse themselves in the public policy arena through
tireless advocacy on behalf of the causes they champion.
But they could not do all of this alone. None of this
work would be possible without foundation support.
Foundation resources—in the form of financial support,
information, organizing, convening and more—en-
able nonprofit organizations to shape public policy and
conduct powerful advocacy work. Investing in Change:
A Funder’s Guide to Supporting Advocacy provides an in-
depth discussion of the various roles foundations can play
in the advocacy process.
Foundation leaders often recognize the potential
impact of advocacy efforts but are unsure which levels of
involvement are legal and appropriate. Common ques-
tions include:
Can a foundation fund a charity that lobbies?
Can a foundation support voter education?
Can a foundation’s staff or board members talk to
legislators about specific policy issues?
How can a foundation promote advocacy?
How can a foundation evaluate the advocacy activity
of grantees?
What advocacy activities can a foundation participate
in directly?
We developed Investing in Change to answer these
and many other questions raised by foundations wish-
ing to support and/or engage in advocacy. Investing in
Change consists of legal information, case examples, and
tips for supporting advocacy comfortably, legally, and
successfully.
This guide provides information to boards, trustees,
and staff of all foundations—private and public, large
and small, experienced and emerging. While some will
find it valuable to read cover-to-cover, others may use it
as an occasional reference to answer a specific question.
Investing in Change builds upon and complements
other publications created by the Alliance for Justice to
assist foundations and other nonprofits, including Myth
v. Fact: Foundation Support of Advocacy. For a complete
list of Alliance for Justice publications, see Appendix G.
Be aware that the legal issues on the following pages
are often fact specific. Although this guide provides legal
information on the federal tax laws and rules govern-
ing foundations and advocacy activity, it does not offer
specific legal advice. Foundations considering a particu-
lar activity or grant that touches on advocacy activity
should seek specific advice or approved guidelines from
expert counsel. They also should consult other laws not
addressed in depth here, particularly state and federal
election and disclosure laws.
Investing in Change: A Funder’s Guide to Supporting
Advocacy was written by Alliance for Justice staff Susan
Hoechstetter, Foundation Advocacy Director; Olga
Lozano, Senior Program Associate; Kelly Shipp Simone,
former Law Fellow; Liz Towne, Director of Advocacy
Programs; and Vernetta Walker, former Foundation
Advocacy Counsel. In addition, we would like to thank
Mosaica, The Center for Nonprofit Development and
Pluralism, for its input on chapters IV and V and Holly
Schadler from the law firm of Lichtman, Trister and
Ross, LLC, who provided our legal review.
We also would like to thank the many individuals
who participated in the formation of this publication,
far too many to name individually. Numerous funders
provided a wealth of good information and advice
Preface
Preface
iii
iv
Investing in Change: A Funder's Guide to Supporting Advocacy
throughout our writing process. This guide would not
have been possible without them.
This guide was produced as part of Alliance for
Justice’s Foundation Advocacy Initiative, which seeks to
increase foundation support for nonprofit involvement
in the policymaking process. The Foundation Advocacy
Initiative provides legal information to help foundations
navigate the laws governing their ability to support and
engage in advocacy activities. During the production of
this guide, the Foundation Advocacy Initiative received
generous support from the Beldon Fund, Ford Founda-
tion, George Gund Foundation, Joyce Foundation,
W. K. Kellogg Foundation, John S. and James L. Knight
Foundation, John D. and Catherine T. MacArthur Foun-
dation, Rockefeller Brothers Fund, Rosenberg Founda-
tion, Surdna Foundation, and the Unitarian Universalist
Veatch Program at Shelter Rock.
As always, thank you to each and every member of the
nonprofit community for the valuable, world-changing
work that you do every day. We wish you much success
with your advocacy efforts.
Nan Aron, President
How does a foundation know it is making a difference?
When a foundation gives money directly to a program
that provides a community service, the impact is seen
immediately: low-income children receive a new educa-
tional program, or services for AIDS victims continue
unabated. Supporting advocacy is a little different. The
impact may be harder to see and measure at first, but
changes in public policy are often a precursor to the
meaningful, long-term success vital to tackling larger
community challenges. Supporting advocacy is, quite
simply, one of the most powerful tools available to foun-
dations for creating real change.
Supporting advocacy is an investment that
can lead to systematic change.
Despite understandable concerns to the contrary,
foundations may safely support nonprofits that engage
in advocacy.
1
What’s more, foundations may engage in
advocacy themselves, within certain defined parameters.
This section explains why foundation support of advo-
cacy activities is critical. It also describes two major types
of foundations and offers several examples of foundation
support for advocacy.
Supporting Advocacy is Important
The term “advocacy” encompasses a broad range of
activities that can influence public policy. From research
and public education to lobbying and voter education,
advocacy is about using effective tools to create social
change. Recognizing the importance of these tools, many
public and private foundations support advocacy and
sometimes engage in it themselves. There are a number
of compelling reasons to embrace nonprofit public policy
advocacy work as a crucial component of an overall fund-
ing strategy:
Supporting advocacy is an investment that can lead
to systemic change. Public policy work is an effective
strategy for bringing about systemic, long-lasting change
that can affect large segments of the population for long
periods of time. For example, a change in Medicare drug
policy may result in millions of people gaining or losing
the ability to afford their medicine over many years. In
a recent speech, Edward Skloot, executive director of
the Surdna Foundation stated, “These are the markers
of distinguished philanthropy: going after root causes
of poverty, inequity, and disadvantage and, by doing it,
making lasting institutional and social change.”
Supporting advocacy is a way to leverage the
impact of available funds. Foundations that sup-
port nonprofit public policy work stretch their grant
dollars and see more far-reaching results from their
financial contributions. Winsome D. McIntosh, vice
president of the McIntosh Foundation, notes, “As a
small foundation, we’ve found supporting nonprofit
advocacy to be our most effective funding strategy.
Grantees that lobby can leverage every dollar of our
support to make an impact.”
Leveraging additional funds is particularly impor-
tant in an era of stringent cutbacks in state and federal
assistance. “Foundations cannot make up the services
gaps faced by government,” states Emmett D. Carson,
president and CEO of The Minneapolis Foundation.
“If advocacy can save one percent of the state budget
on housing, medical care, or other services, that means
millions of dollars toward those services. Support for
public education, advocacy, and lobbying can have
great benefits while the same amount spent on direct
services could not sustain programs over time.”
Supporting advocacy strengthens the voice of the
underrepresented and provides policymakers with
information they need to know. National, regional,
and local policymakers base policies upon the voices
they hear. Too often, however, the constituencies
Introduction: Making the Case for Advocacy
“CHARITY IS A MATTER OF PERSONAL ATTRIBUTE, justice a matter of public policy. Never can the
first be a substitute for the second.”
—William Sloan Coffin, Yale University Chaplain
Introduction
1
2
Investing in Change: A Funder's Guide to Supporting Advocacy
that need the most help are the quietest. Through
grantmaking, foundations can strengthen those voices
in policy debates.
Supporting advocacy also provides policymakers
with expertise from the charitable service orga-
nizations that are typically the first to respond to
community needs. The day-to-day experiences of
these organizations yield important information
and perspectives that policymakers need in order to
understand their constituencies’ concerns and to draw
conclusions about which approaches work and which
do not. Former Senator Timothy E. Wirth, president of
the United Nations Foundation and Better World Fund,
puts it this way: “[I]n the ebb and flow of public debate,
a free society needs the tension and testing of conflicting
ideas, and is stronger as a result. If you believe in some-
thing, leaving the field to others is not much of an op-
tion, any more than not voting, or not being informed
about our community, state, nation, or the world.”
Supporting advocacy helps a foundation achieve
its mission and helps public charities reach their
goals. Most foundations include in their missions
a broad, long-term goal to address significant areas
of need in the community. Advocacy is critical in
addressing most of these societal improvements.
Funding for advocacy activities balances foundation
support for direct service programs that provide more
immediate relief. The W.K. Kellogg Foundation made
this point on its website: “As always, our mission
is to improve the lives of individuals and families.
Through policy work, however, we extend the im-
pact of our grantmaking to a far broader level. For
example, the lessons we learn can inform decisions
that determine how we educate children, protect the
environment, or provide health care.”
Supporting advocacy bolsters a foundation’s unique
role in bringing together diverse members of the
community. The work of foundations is carried out at
the intersection of government, educational institu-
tions, business, the media, and other groups. As a
result, foundations involved in public policy are in
a unique position to convene players in the broader
community to work for the common good.
McKnight Foundation President Rip Rapson, accept-
ing the first Paul Ylvisaker Award for Public Policy
Engagement from the Council on Foundations, rec-
ognized the importance of involving all sectors of the
community in achieving program goals: “Our welfare
reform work proceeded from the belief that helping
people move from welfare to work was a community
responsibility, not the task of any single sector. We
used our financial support to encourage employers,
government agencies, nonprofits, religious organiza-
tions, civic groups, and individuals to assume collec-
tive responsibility—to act as a community. And our
twenty-two cross-sector partnerships did just that—de-
veloping tailored strategies that ranged from childcare
to transportation, from job training to mentoring.”
While foundation leaders have varied reasons and
methods for supporting advocacy, the common thread is
the recognition that advocacy can be an important tool for
success, no matter what the goal.
There are Many Legal Opportunities to
Support Advocacy
Foundations, like other nonprofits, may lend their
expertise to the policy debate in perfectly permissible
ways. They can support organizations that carry out ad-
vocacy activities and they can engage in certain types of
advocacy themselves. The Internal Revenue Service (IRS)
rules, however, vary according to the type of entity and
the nature of the advocacy activity.
This guide discusses the federal tax rules applicable
to private foundations and public foundations (often
referred to as community foundations).
A private foundation is a 501(c)(3) organization
supported by one or a few individuals or sources. Private
foundations generally award grants to support other
organizations’ charitable activities.
Public foundations are publicly supported charities
that make grants to support the charitable activities of
other organizations. Public foundations are subject to far
fewer restrictions than private foundations.
Many foundations already successfully and legally
support advocacy. Some do so through small grants for a
distinct activity or product, such as a one-time grant to a
public charity for producing a report on a specific policy
issue. Others provide general support grants for their
grantees to use as needed, or multi-year project grants for
a variety of advocacy efforts by different organizations.
For example, the Rosenberg Foundation, a private foundation,
embarked on a 10-year campaign to improve child support in
California. Through a series of 74 grants to 16 organizations,
the foundation gave $6.6 million to fund a range of advocacy
The Rosenberg Foundation: Advocacy Campaign to Improve Child Support in California
Overview
The Rosenberg Foundation is a private foundation. One of the foundation’s main priorities is strengthening the economic well-
be�
were living in single-parent homes and dependent on child support payments from non-custodial parents. California was collect-
ing support in only 12.5 percent of cases, compared to a national average of 18 percent.
Program Strategy
Ove�
emphasized policy advocacy at local, state, and federal levels. The initiative consisted of:
Grassroots organizing and advocacy
State and federal policy analysis and advocacy
Research
Communications
Child support policy development
Active foundation role in strategy development and convening of grantees
Key Program Accomplishments
Increased amount and uniformity of California’s support guidelines
Shift in the public and policymakers’ focus from “deadbeat fathers” to system failure and the needs of children
Strengthening of state enforcement tools, including revocation of driver’s licenses, suspension of business and recreational
licenses, and establishment of a registry to track delinquent parents
Franchise Tax Board program established to collect delinquent support
State’s decision to abandon an ineffective $147 million statewide computer system
State’s adoption of liberal child support cooperation requirements in welfare reform
State legislature’s reorganization of the child support program
The impact of the project is measurable: total child support collections in California increased from $1.1 billion in fiscal year
1996 to $2.1 billion in fiscal year 2001. The rate of collections jumped from about 12.5 percent in 1993 to 39 percent in 2001.
Introduction
3
activities, including grassroots organizing, state and federal
policy analysis, research, and communications. One key result
was a major shift in focus from “deadbeat fathers” to the needs
of children. The bottom line: total child support collections in
California increased from $1.1 billion in fiscal year 1996 to
$2.1 billion in fiscal year 2001.
The following is a more detailed account of the
Rosenberg Foundation program. This guide includes a
number of case examples to demonstrate the feasibility of
supporting advocacy regardless of a foundation’s mission
or method of operation.
When someone says “advocacy,” the next word that often
comes to mind is “lobbying.” Lobbying is certainly an
important part of advocacy work, but advocacy efforts
may be much broader. Advocacy can include organizing,
picketing, litigating, speaking to government officials,
and other methods of influencing political, economic,
and social systems. In many cases, these are both permis-
sible and appropriate activities to fund. No matter the
method, advocacy is essential to improving life for
all Americans.
This chapter provides a general understanding of the
types of advocacy activities that nonprofits may consider
when trying to influence public policy at the federal,
state, and local levels. Multiple forms of advocacy may
be desirable in order to move public debate on a particu-
lar issue. The examples given below provide a common
starting point for thinking about the many ways that
nonprofit entities support and engage in advocacy. A
detailed discussion of the rules and limitations related to
those activities can be found in Chapter II. Activities that
involve more than one avenue for advocating change,
such as public education, are discussed at the end of this
chapter under “Cross-Cutting Activities.” This chapter
concludes with a discussion of the basic components in
many successful advocacy campaigns.
Avenues for Advocating Change
Avenues for Advocating Change
Executive Branch
Judicial Branch
Legislative Branch
Electoral Process
Executive Branch
Efforts to influence officials in the executive branch
of federal, state, or local government is a powerful tool.
Under federal law, nonprofits and foundations can do as
much of this advocacy as they want.
2
Executive branch
advocacy can take the form of:
Commenting on regulations
Requesting enforcement of laws
Advocating for or against executive orders
Otherwise trying to influence administrative
decisions on policy and program implementation
There are several points of impact within the execu-
tive branch: administrative agencies, executive officials,
and special purpose boards. As you will read in Chap-
ter II, public and private foundations may engage in
executive branch advocacy with few limits so long as the
advocacy is directed at influencing administrative, and
not legislative, actions.
Administrative Agencies
Administrative agencies, such as a state department of
consumer protection or the U.S. Department of Health
and Human Services, are responsible for a range of activi-
ties including creating new regulations, enforcing laws,
implementing policy, mediating disputes, and providing
services and grants. The types of advocacy activities that
nonprofits engage in most frequently with administrative
agencies are directed at the development of regulations
and enforcement of laws.
Creating Regulations: The executive branch of the
federal, state, and local government creates regulations to
interpret and apply law. Advocacy in this arena may in-
clude written or oral comments on regulations or discus-
sions with executive staff and other officials responsible
for drafting regulations. For example, if an organization
is concerned with predatory mortgage lending, the orga-
nization may urge the U.S. Department of Housing and
Urban Development to propose regulations that would
limit the ability of lenders to charge certain types of fees.
Defining Advocacy
5
Chapter I: Defining Advocacy
“WHEN WE TALK OF MAKING AN IMPACT, I think of a continuum of activity, starting with
problem formulation at one end, moving through research and policy analysis, stimulating
discussion of diverse views, and ultimately advocating a particular policy action.”
—Jonathan F. Fanton, president, John D. and Catherine T. MacArthur Foundation
6
Investing in Change: A Funder's Guide to Supporting Advocacy
Enforcing Laws: Once a law is enacted, executive
branch agencies are responsible for enforcing the law.
Nonprofits may advocate for proper enforcement or play
an oversight role by urging the government to enforce
existing laws. For instance, many foundations and other
organizations have been pushing for enforcement of the
Americans with Disabilities Act (ADA). They are urging
agencies to hire additional staff to clear a backlog of
complaints alleging violations, writing briefs to require
states to adhere to the ADA, and seeking better technical
assistance and guidance from administrative agencies.
Executive Officials
Executive officials include heads of the executive
branch (such as the president, governor, or mayor),
cabinet level officials, and similar high-ranking admin-
istration officials. One type of executive action that
nonprofits may seek to influence is an executive order,
which is an order issued by the president, governor, or
mayor that is not legislation but has the force and effect
of law. For example, a nonprofit could ask the president
to issue an executive order to establish a commission to
strengthen social security.
Special Purpose Boards
Special purpose boards include school boards, hous-
ing authorities, zoning boards, and other special purpose
administrative bodies. Examples of advocacy with special
purpose boards include testifying before the local school
board about the importance of increasing the teacher to
student ratio in schools or proposing to the county zon-
ing board that a section be re-zoned from commercial to
residential use.
[Note: It is important before commencing these activities
at the state or local level to ensure that the board is acting
in an administrative, and not a legislative, capacity. If the
board is acting in a legislative capacity, attempts to influ-
ence its actions could be lobbying.
3
]
Judicial Branch
Advocacy occurs in the judicial branch through litiga-
tion. Parties can advocate their position on an issue by
litigating legal claims within the court system or filing a
“friend of the court” brief in litigation filed by another
party. Many foundations and public charities have used
litigation as an effective tool to preserve and expand the
rights and protections of underrepresented Americans.
Legislative Branch
Although many attempts to influence the legislative
branch constitute lobbying, some do not. There is a great
deal of policy-related work that both public and private
foundations may conduct, but familiarity with the rules
is critical. The rules for supporting public charities (and
other nonprofits) that work with the legislative branch
are found in Chapter II of this guide, while the rules for
foundations engaging in their own legislative advocacy
are found in Chapter VI.
What is Considered Non-Lobbying Advocacy?
Examples of non-lobbying advocacy include public
education campaigns and the convening of key play-
ers to discuss policy issues. For example, the California
Endowment and the California Wellness Foundation,
both private foundations, convened grantees and other
stakeholders for educational discussions about the state
budget. This type of activity was not considered lobbying
because it was not preparing for or discussing strategy for
influencing specific legislation.
In addition, training people on how to conduct advo-
cacy activities, including lobbying, is not treated as lobby-
ing if the training is not directed at specific legislation.
What is Considered Lobbying?
An organization that wants to influence specific
legislation can attempt to do so by going directly to a
legislature or by urging the general public to contact the
legislature. This activity is lobbying, whether it occurs
at the federal, state, or local level. Generally, lobbying
occurs when a person or group of people express an opin-
ion to a legislator on a specific piece of legislation or on a
legislative proposal. Lobbying also includes a communi-
cation that asks the public to speak to a legislator about
specific legislation or a legislative proposal.
Private Foundations
A private foundation may not lobby or earmark funds
to support lobbying. However, as discussed in Chapter
II, a private foundation may provide funds to public
charities that lobby.
Public Foundations
Under federal law, lobbying may not make up a
substantial part of a public foundation’s total activity.
A public foundation may choose from one of two tests
to determine its amount of permissible lobbying: the
“insubstantial part test” or the “expenditure test.”
The insubstantial part test requires that lobbying
activities be an insubstantial part of a public charity’s
overall activities.
4
“Insubstantial” is not defined by the
IRS, but many tax practitioners advise their clients that
the charity’s lobbying activity should be less than five
percent of its overall activity.
The 501(h) expenditure test provides clearer guid-
ance.
5
It sets limits on lobbying based on the size of the
public charity’s exempt purpose expenditures. Gener-
ally, “exempt purpose expenditures” means the amount
of money the organization will spend in its fiscal year.
Roughly, no more than 20 percent of an organization’s
budget may be spent on lobbying and no more than 25
percent of that amount may be grassroots lobbying.
The following chart illustrates the differences between
the expenditure test and the insubstantial part test.
The 501(h) Expenditure Test
vs. The Insubstantial Part Test
501(h) Expenditure Test Insubstantial Part Test
Generally allows an
organization to spend more
of its budget on lobbying (up
to 20 percent); grassroots
lobbying is limited to 25
percent of total lobbying.
Lobbying activity is
restricted to an insubstantial
percentage of the annual
activities; no separate limit
for grassroots lobbying.
Objective test with definite
expenditure guidelines and
clear definitions of lobbying.
Unpaid volunteer activity not
counted against limit.
Subjective test with no
clear definition of lobbying;
IRS considers the overall
character and emphasis of
the lobbying activities; may
count unpaid volunteer
activity against limit.
Direct and grassroots
lobbying expenditures must
be separately reported on
IRS Form 990.
Direct and grassroots
lobbying fall under one
limit; total figures must be
maintained and reported on
IRS Form 990.
Penalty for exceeding
allowable lobbying expen-
ditures is usually an excise
tax, but the IRS may also
revoke tax-exempt status
if in a four-year period the
organization exceeds its
lobbying limits by greater
than 150%.
Penalty for exceeding
allowable lobbying is
revocation of tax-exempt
status and an excise tax on
the amount of the excess
lobbying expenditures.
For purposes of those public foundations that elect
the 501(h) expenditure test, the IRS further distinguishes
between two forms of lobbying activity: direct and grass-
roots lobbying.
Direct lobbying occurs when an organization com-
municates with a legislator or legislative staff about a
specific piece of legislation and reflects a view on that
legislation.
6
Specific legislation can include proposed leg-
islation or legislation that has already been introduced in
a legislative body. For example, a letter from a nonprofit
to a senator urging her to support a legislative ban on
hunting dolphins would be direct lobbying.
Direct lobbying also encompasses any communica-
tion with the general public expressing a view about a
ballot initiative, referendum, bond measure, or similar
procedure. In these cases, the public assumes the role of a
legislative body by deciding public policy.
Grassroots lobbying is a communication with the
general public that reflects a view on specific legislation
and encourages people to contact their legislative represen-
tatives or staff in order to influence that legislation.
An organization encourages the general public to take
action when it:
Asks them to contact their legislator
Provides the name, telephone number, email address,
or other contact information of the legislator
Offers a mechanism to contact the legislator (such as
a postcard or petition), or
Identifies legislators who will be voting on the legisla-
tion, who are undecided or opposed to the organiza-
tion’s position, or are the recipient’s legislators
7
Exceptions to Lobbying
Not all activities that might influence a legislative
debate are considered lobbying. Four types of activity
are specifically excluded from the statutory definition
of lobbying: 1) nonpartisan analysis, study, or research;
2) requests for technical advice or assistance; 3) self-
defense communications; and 4) examinations of broad
social, economic, and similar problems.
8
These excep-
tions are discussed individually below.
Nonpartisan Analysis, Study, or Research. The
definition of lobbying excludes substantive research
studies that objectively and factually discuss a legisla-
tive issue while advocating a particular position.
One example of this type of advocacy is a report on a
particular issue that is balanced enough to permit the
public to form independent opinions about the subject.
The report’s authors may draw conclusions as long as
they are evenhanded in presenting opposing opinions.
Such a report must be widely distributed and must not
be shared exclusively with audiences who agree with the
Defining Advocacy
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Investing in Change: A Funder's Guide to Supporting Advocacy
authors. In addition, the report may not direct readers to
contact legislators about the issue.
Requests for Technical Advice or Assistance. An
organization’s response to a request by a congressio-
nal committee or other government body to testify
or provide written testimony at a hearing is another
lobbying exception. The request must be in writ-
ing and made on behalf of the entire government
body, not at the request of an individual legislator.
The organization’s response may be oral or written
and must be made available to every member of the
requesting body. The preparation time and associated
expenses (e.g., production of materials, travel costs)
are not lobbying expenses.
Self-Defense Communications. Lobbying also
excludes communications with a legislative body re-
garding legislation that could affect an organization’s
existence, powers, tax-exempt status, or the deduct-
ibility of contributions to the organization.
This “self-defense” exception is reasonably nar-
row and should be used with caution. For example,
the self-defense exception would apply if Congress
proposed legislation to eliminate the tax deductibility
of contributions to tax-exempt organizations. Any
tax-exempt organization that receives tax deductible
contributions, including foundations, could oppose
this legislation under the self-defense exception.
Examinations and Discussions of Broad Social,
Economic, and Similar Problems. This exclusion
occurs when an organization communicates with a
legislator or the general public without referring to
specific legislation.
It is not lobbying, for example, to talk about prob-
lems of health care for the uninsured if an organiza-
tion does not discuss a specific legislative solution or
proposed legislation. It would be lobbying, however, to
discuss legislation to fund a national healthcare program
that provides health insurance for all Americans.
Election-Related Activity
Election-related activity may be either partisan or
nonpartisan. Partisan activity, as more fully defined in
Chapter II, is any activity that directly or indirectly sup-
ports or opposes a candidate for public office. Founda-
tions and public charities are only permitted to engage in
nonpartisan activity, such as voter education and get-out-
the-vote efforts.
Foundations and public charities are prohibited from
engaging in partisan electoral activity, but they are
permitted to engage in nonpartisan voter education
and registration activity.
Permissable nonpartisan activities include:
Voter Education. Nonpartisan voter education
covers a multitude of activities, including develop-
ing candidate questionnaires and voting records, and
sponsoring candidate debates.
Get-Out-the-Vote Activities. Get-out-the-vote
(GOTV) is any activity that gets people to the polls.
GOTV includes phone calls to individuals advising
them of an upcoming election or the location of their
polling place, or providing rides to the polls on Elec-
tion Day.
Voter Registration. Voter registration includes facili-
tating a person’s ability to register to vote by provid-
ing a voter registration form, referring a person to the
voter registration office, or asking a person to register.
While public charities and public foundations may
engage in nonpartisan voter registration, private foun-
dations are subject to specific rules in their support
and engagement of these activities.
Cross-Cutting Activities
Nonprofits use a variety of cross-cutting activities to
influence public policy, targeting multiple points of im-
pact. These activities include public education, research,
convening key players, and organizing. A discussion of
any limits on these efforts for nonprofits can be found in
Chapter II and VI.
Special Exception for Private Foundations:
Jointly Funded Projects
It is not lobbying when a private foundation:
Makes a grant to an organization conditioned on the
receipt of matching support from a governmental
body; or
Discusses with government officials a jointly funded
program or potential program.
This exception applies as long as the discussion does
not include a direct attempt to persuade the officials
or employees to take positions on specific legislative
issues outside of the jointly funded program.
9
Public Education. Examples of public education
include distributing informational brochures, posting
flyers, holding a rally, or putting information on an
organization’s website.
Media. Public education also occurs indirectly
through earned and unearned media. Media advocacy
is the process of targeting, informing, educating, and
securing the support of the media to advance advo-
cacy objectives.
For example, letters to the editor, op-ed pieces,
and advertising campaigns are a way to educate the
public about a particular issue. Media advocacy can
include influencing editorials, developing relation-
ships with the news media, and using those relation-
ships to disseminate an educational message to the
general public about a particular issue.
Research. Research is a tool frequently used by
nonprofit organizations to influence public policy. By
sharing research results with legislators, the general
public, government agencies, and other nonprofits,
an organization can effectively spread the word about
issues it deems important.
Convening Key Parties. Some foundations bring
together key players to discuss an issue or ways to address
it. Those players may include grantees and other public
charities, foundations, policymakers, constituents, govern-
ment administrators, business representatives, and others.
For example, the California Endowment, a private
foundation, held three public forums in September
2002 to facilitate a substantive dialogue among state
and county officials, health policy experts, and the
public to help inform efforts to redesign the health
care system in Los Angeles County. The county health
care system was in crisis resulting from a budget
deficit, rising health care costs, and an increasing
number of uninsured individuals. The California
Endowment issued a report outlining the issues and
recommendations that arose from the forums. The
forums helped give a voice to all affected by the crisis.
Organizing Individuals or Communities. Many
nonprofits engage in organizing individuals or groups
of individuals to work together toward a common goal.
For example, a private or public foundation may fund
a child-focused public charity to organize parents of
children with learning disabilities to meet to discuss
their concerns about the availability of special education
services. As explained on the website of the Funding
Exchange, a network of social justice foundations, orga-
nizing can be a powerful tool that “amplifies the voices
of those whose interests are too often overlooked.”
Basic Components of Successful
Advocacy Efforts
At any one time, successful advocacy efforts require
one or more activities. In some cases, all of the above-
mentioned activities might be utilized in a far-reaching
campaign. Target audiences and the avenues used for
affecting change (such as the executive, judicial, or legis-
lative branch, or the electoral process) will vary. Factors
such as public opinion, state budgets, and elections also
have a great impact, requiring organizations to be flexible
and open to changing strategies.
Educating, Influencing, and Organizing Target
Audiences in Your Advocacy Efforts
As you read in the previous section, nonprofits may
use a variety of methods to gain support for their advocacy
efforts. Organizations can persuade through credible and
useful research, tap into the political power of organized
communities, skillfully seek out influential allies, work
effectively with the media, and develop productive relation-
ships with decisionmakers. To be most effective, they need
to work with one or more of the following target audiences:
Communities. The advocate’s community may include
members of the lead nonprofit organization, individu-
als in the neighborhood or other geographic area, and
individual members of other organizations working on
related issues. Keeping members of this community
well-informed about when and how to contact deci-
sionmakers or when to take other actions is a crucial
component of a well-organized advocacy effort.
Allies/Stakeholders. An effective advocacy campaign
seeks out potential allies wherever possible, including
those who might be opponents on other issues. The
greater the number and diversity of voices brought to
a policy debate, the better the chance of success.
Media. Newspapers, newsletters, magazines, radio,
television, and the Internet offer powerful vehicles
for reaching and activating target audiences. The
key to an effective relationship with the media is
to understand how the media operates and what
is important to them. When trying to draw media
attention to an issue, recognize what makes a story
Defining Advocacy
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10
Investing in Change: A Funder's Guide to Supporting Advocacy
timely and interesting to readers or viewers, as well
as what is valuable to journalists. For example, this
may mean timing the release of a new study to coin-
cide with the introduction of legislation supporting
an organization’s position on that issue.
Decisionmakers. These include members of Con-
gress and their staff, state and county legislators,
city council members, city, county, state, and federal
regulators, judges, jurors, and other policymakers.
The general public can also be the decisionmaker
when ballot measures are being considered. Identify-
ing who has the power to make the decision helps
determine which decisionmaker to contact and who
else is needed to approach that person. Just identifying
and gaining access to some decisionmakers, such as key
federal or state legislators, can sometimes take months
or longer.
The following chart provides examples of how an
effort to reform state child support laws might work to
educate, influence, and organize targeted audiences. Be
aware—some of the activities may constitute lobbying
and therefore may be subject to limitations and restric-
tions by the rules discussed in Chapter II.
Sample Advocacy Activities and Target Audiences for a Model State Child Support Reform Campaign *
Target Audiences
Community Allies/Stakeholders Media Decisionmakers
State child support
recipients, activists, and
family and child welfare
organizations.
Public officials, health
organizations, and others
with ties to child support
recipients.
Local press, radio, and
television.
State legislators, governor, state
regulators, and staff of each.
Educate
Develop and distribute
reports and issue updates
on child support in the
state. Get input from the
community.
Develop and distribute
reports and issue updates
to other organizations, as
well as officials from state
human resources depart-
ment.
Distribute reports and
press releases to news-
papers, run paid ads on
radio, and conduct press
conferences.
Provide background information
on issues to state legislative and
executive branch staff. Testify be-
fore the state legislature. Prepare
and provide written comments to
state human resources depart-
ment on proposed child support
regulations.
Influence
Present examples of suc-
cessful advocacy by others
and possible benefits of
child support advocacy to
this community.
Provide information on
how child support reform
would benefit potential
allies’ constituencies.
Respond quickly to media
questions with credible
information and invite
media to selected coali-
tion meetings.
Keep decisionmakers informed of
the advocates’ position on legisla-
tive and regulatory proposals and
the reason for those positions.
Respond quickly to questions with
credible information.
Build Rela-
tionships and
Organize
Conduct meetings with the
community and suggest
advocacy actions and
results.
Build a child support reform
coalition of different organi-
zations to work together on
the issue.
Keep in touch on regular
basis with members of the
media.
Organize community activists,
organizational advocates, and
other allies to contact or visit
decisionmakers.
*Some of the activ�
In order to influence public policy, foundations and their
grantees must understand the tax rules. This chapter
will explain the rules for private and public foundation
support of advocacy. Chapter VI will discuss the rules for
foundations actually engaging in advocacy themselves.
Overview of the Rules
The rules governing support of lobbying and
election-related activity vary based on the following:
Type of foundation (private or public)
Grantee’s tax-exempt status (public charity or other
tax status)
Type of advocacy being funded (lobbying, election-
related activity, or other)
For example, private and public foundations face many
of the same rules when supporting election-related activity;
however, lobbying rules for each type of foundation differ
depending on whether the grantor is a public or private
foundation and whether the grantee is a public charity
or other type of organization. Both private and public
foundations may make grants to various types of organiza-
tions. Note that while a grantee does not necessarily have
to be a 501(c)(3) organization, foundations typically prefer
to fund public charities. The previous chart shows how the
rules apply to 501(c)(3) public charities.
Before making a grant, a foundation must verify the
tax-exempt status of a prospective grantee. A founda-
tion should request and review the prospective grantee’s
determination letter from the Internal Revenue Service
to confirm its tax-exempt status and ensure that it re-
mains effective. If the grantee is not a 501(c)(3) public
charity, special rules apply (as discussed later in this
chapter). A list of current 501(c)(3) public charities is
available in IRS Publication 78.
10
There are three broad categories of advocacy activi-
ties, each of which has different legal restrictions depend-
ing on the type of organization involved. This chapter
will analyze the rules on funding each of these activities.
Lobbying. Lobbying is an attempt to influence spe-
cific legislation by communicating views to legislators
or asking people to contact their legislators.
11
This
includes legislation actually introduced in a legislative
body, under discussion, or merely being proposed. A
limited amount of lobbying is permitted by public
charities and public foundations, and generally is
prohibited by private foundations.
12
There are also
other types of legislative advocacy that do not meet
the definition of lobbying. For more information on
non-lobbying activities and lobbying exceptions, refer
to Chapter I.
Electoral-Related Activity. Election-related activity
includes “partisan election-related activity” (activity
that supports or opposes candidates for public office)
and “nonpartisan election-related activity” (activities
that do not attempt to influence an election by sup-
porting or opposing a candidate). Foundations and
public charities are prohibited from participating in
partisan electoral activity but permitted to engage in
nonpartisan election-related activities.
13
Permissible
Rules for Private and Public Foundations Supporting Advocacy
11
Chapter II: Rules for Private and Public Foundations Supporting Advocacy
“WE FOUND THAT THE FEDERAL RULES GOVERNING ADVOCACY are not that complex—especially with
the proper resources to clarify and demystify what is permissible for foundations and their grantees.
Understanding the rules—and ensuring our grantees do too—has paid off as we assess public policy
advocacy by our grantees on the issues of concern to our foundation.”
—Ellen Widess, senior program officer, Rosenberg Foundation
Federal Tax Law and Public Charities
501(c)(3) Public Charities
Examples
Alliance for Justice
Human Rights Campaign
Foundation
Federal Tax
Treatment
Tax-exempt
Contributions are tax deductible as
charitable contributions
Lobbying Activity
Limited
Election-Related
Activity
May not support or oppose a candidate
for public office
May engage in nonpartisan electoral
activity
12
Investing in Change: A Funder's Guide to Supporting Advocacy
nonpartisan election-related activity includes voter
registration, GOTV, issue advocacy, and candidate
education, among other things.
General Advocacy. Advocacy that falls outside the
definition of lobbying is permitted without limita-
tion. This includes public education, non-lobbying
advocacy, regulatory work, litigation, and work before
administrative bodies, such as a school board.
The following charts summarize the rules for private
and public foundations that support any of the three
categories of advocacy activities.
Rules for Private Foundations Supporting Advocacy
In 1969, Congress established a new category of Sec-
tion 501(c)(3) organizations—private foundations—and
passed additional rules governing their activities.
14
Among these rules is a provision that effectively prohibits
private foundations from engaging in lobbying. Private
foundations that spend money on lobbying or instruct a
public charity to use a grant to engage in lobbying incur
a taxable expenditure on those activities.
15
The tax is so
substantial that it acts, in effect, as a lobbying prohibition
for private foundations.
Section 4945 of the Internal Revenue Code imposes
an initial tax equal to 10 percent of a private foundation’s
taxable expenditure and an additional 100 percent tax on
taxable expenditures that are not corrected. In addition,
taxes are imposed on foundation managers who know-
ingly agree to make a taxable expenditure.
The regulations enacted by the IRS, however,
provide safe harbors for private foundations to
support public charities that lobby, so long as the
foundation does not earmark the money for such
activities.
16
In addition, statutory exceptions to lobby-
ing broaden the advocacy activities which foundations
may fund.
17
Thus, the reforms in 1969 maintained a
significant advocacy role for private foundations. Private
foundations continue to be able to influence a broad
range of governmental activities outside of lobbying and
partisan electoral activity
Private Foundation Support for Advocacy by
Public Charities
Private foundations enjoy the greatest flexibility to
fund advocacy when supporting activities of a 501(c)(3)
public charity.
Rules for Supporting Public Charities
Private Foundation Public Foundation
Lobbying
Grants may not be earmarked for lobbying and
must comply with rules discussed later in this
chapter
Earmarked grants for lobbying are allowed within permitted
lobbying limits
Grants that are not earmarked for lobbying are not subject
to limits
Election-Related
Activity
Prohibited from supporting partisan electoral
activity
May support nonpartisan election-related
activity
Prohibited from supporting partisan electoral activity
May support nonpartisan election-related activity
General Advocacy
Permitted without limitation if for tax-exempt
purposes
Permitted without limitation if for tax-exempt purposes
Rules for Supporting Non-Public Charities
Private Foundation Public Foundation
Lobbying
Prohibited Permitted within limits and subject to rules
discussed later in this chapter
Election-Related
Activity
Prohibited from supporting partisan electoral
activity
May support nonpartisan election-related
activity subject to rules discussed later in this
chapter and expenditure responsibility
Prohibited to support partisan electoral activity
May support nonpartisan election-related activity subject to
rules discussed later in this chapter
General Advocacy
Permitted for tax-exempt purposes and subject
to expenditure responsibility
Permitted for tax-exempt purposes consistent with public
charity status
Lobbying
Private foundations may support public charities that
engage in legislative activities, but they must follow specific
rules. Most importantly, when making a grant to a public
charity, the funds may not be “earmarked” for lobbying.
Why? Earmarked funds create a taxable expenditure to the
foundation. A grant is considered earmarked for lobbying
if it is conditioned upon an oral or written agreement that
the grant be used for lobbying purposes.
The prohibition on earmarking does not mean that
private foundations must require grantees to refrain from
using grant funds for lobbying. In fact, a grant agreement
that forbids use of the funds for lobbying is unnecessarily
restrictive. For more information, see Chapter III.
Under federal tax law, private foundations may make
two types of grants that avoid creating taxable expendi-
tures, while permitting grantees flexibility in the use of
their funds. The IRS refers to these as general support
grants and specific project grants.
18
General Support Grants
A general support grant is a grant to a public charity
that is not earmarked for a particular purpose and spe-
cifically is not earmarked to be used in an attempt to
influence legislation. Note that a foundation’s knowl-
edge that a public charity has lobbied in the past does
not render the grant earmarked for lobbying. Provided
there is no agreement between the private foundation
and the public charity as to how the money should be
spent, the public charity may use the grant funds for
any purpose, including lobbying. If the grantee uses
the money for lobbying, the foundation will not incur
a taxable expenditure.
19
Example: General Support Grant
The Markham Foundation, a fictitious private founda-
tion, makes a general support grant to the Alliance for
Research and Education (ARE), a fictitious 501(c)(3)
public charity. The written agreement between Markham
and ARE confirms that the funds are not earmarked for
lobbying and allows ARE to use the funds for purposes
consistent with its charitable status. There are no oral
understandings between the Markham Foundation and
ARE that are inconsistent with this agreement. ARE
accepts the grant and uses a portion of the funds for its
direct lobbying activities. The grant by the Markham
Foundation is not a taxable expenditure and ARE is free
to use the funds as it chooses.
Specific Project Grants
A private foundation may make a specific project grant
to a public charity for a project that includes lobbying.
When making a specific project grant, the founda-
tion must review the grantee’s budget and may give a
grant in an amount up to the non-lobbying portion of
the budget. The grantee must spend the funds for the
designated project; it does not have the discretion to
spend the funds on another project, even one in the
same broad program area, or for general purposes. If
these conditions are met and there is no agreement that
is inconsistent with this understanding between the
private foundation and the public charity as to how the
money is spent (and it is not earmarked for lobbying),
there is no taxable expenditure to the foundation.
20
This is true even if the grantee subsequently uses some
of the foundation’s money for lobbying under the
designated project.
In determining if the grant amount is less than
the non-lobbying portion of the budget for a specif-
ic project, the foundation may rely on the grantee’s
proposed budget for the project so long as it has no
reason to doubt its accuracy. The foundation may
wish to obtain a statement signed by the grantee’s
treasurer or other officer certifying the proposed
budget for the specific project and that the project’s
budgeted non-lobbying expenses are less than the
amount of the grant.
If, however, the foundation has reason to doubt
the grantee’s information or, in light of all the facts
and circumstances, reasonably should doubt the
accuracy of the documents provided, the foundation
may not rely on that information.
21
Note that if the
foundation awards more than one grant to a grantee
in the same year for the same project, the amount of
all grants to that grantee must not exceed the amount
budgeted for the project’s non-lobbying activities.
22
Example: Specific Project Grant
ARE applies for a specific project grant from the
Markham Foundation. ARE’s project seeks to educate
the public on the importance of preserving wildlife
habitats. In addition, the project intends to influence
legislation by seeking to urge legislators to introduce a
bill to preserve certain habitat lands. ARE is seeking a
$100,000 grant for the project, of which it has bud-
geted $80,000 for non-lobbying activity and $20,000
Rules for Private and Public Foundations Supporting Advocacy
13
14
Investing in Change: A Funder's Guide to Supporting Advocacy
for lobbying. The Markham Foundation reviews ARE’s
budget and gives ARE an $80,000 specific project grant.
Markham’s agreement expressly states that the funds are
not earmarked for lobbying. The grant does not create a
taxable expenditure for the foundation, even if ARE uses
some of the $80,000 grant money for lobbying.
If, however, the Markham Foundation made a grant in
the amount of $90,000, the grant would then exceed the
non-lobbying portion of the specific project. A portion of
the grant—$10,000 (the amount of the grant minus the
non-lobbying activity)—would be considered a taxable
expenditure.
These same specific project grant rules apply when
multiple foundations fund a specific project.
Example: Multiple Foundations Funding
a Specific Project
ARE applies for a specific project grant from the
Markham Foundation and the Washburn Foundation
(both fictitious private foundations). ARE is seeking
a $50,000 grant from each of the two foundations
for its project to educate the public on the importance
of preserving wildlife habitats. ARE has budgeted
$80,000 for non-lobbying activity and $20,000 for
lobbying legislators to introduce a bill to preserve
certain habitat lands.
The Markham Foundation gives ARE a $50,000
specific project grant based on ARE’s budget, ensur-
ing that the grant is not earmarked for lobbying. The
Washburn Foundation also gives ARE a $50,000 specific
project grant based on ARE’s budget. Since neither
grant individually exceeded the total non-lobbying
portion of the project, neither grant creates a taxable
expenditure for either foundation. This is the case even
though, added together, the total amount of the grants—
$100,000—exceeds the total non-lobbying portion of
the budget.
Multi-Year Specific Project Grant. Some private foun-
dations award multi-year specific project grants. These
grants operate under the same rules as a single-year
specific project grant, except that the private foundation
may choose whether to measure its grant award against
the non-lobbying portion of the budget in the year
the grant is given (the “per year election”) or to divide
the grant equally across all the years of the project (the
“equal application election”). The same method must be
used in all years of the grant.
Per Year Election
A private foundation choosing a per year election
(measuring a grant against the year it is awarded)
would treat the multi-year specific project grant as
if it were a series of single-year grants. The foun-
dation would measure the amount actually given
per year against the non-lobbying portion of the
project that year. If the non-lobbying portion of
the budget exceeds the grant amount given in that
year, then the private foundation would incur a
taxable expenditure in that year.
Example: Multi-Year Specific Project Grant,
Per Year Election
ARE seeks a three-year specific project grant from the
Markham Foundation. ARE’s three-year project will
educate the public on the importance of preserving
wildlife habitats and will introduce a bill to preserve
certain habitat lands. ARE requests a $300,000
grant from the Markham Foundation for the project.
The project budget presented by ARE indicates that
the project will spend $600,000 over three years, at
a rate of $200,000 per year. ARE intends to spend
$10,000 for lobbying in year one, $20,000 in year
ARE Habitat Project Budget:
$80,000 Public Education
$20,000 Lobbying
$100,000 Total
Markham Foundation Grant: $80,000
Taxable Expenditure: -0-
ARE Habitat Project Budget:
$80,000 Public Education
$20,000 Lobbying
$100,000 Total
Markham Foundation Grant: $90,000
Taxable Expenditure: $10,000
ARE Habitat Project Budget:
$80,000 Public Education
$20,000 Lobbying
$100,000 Total
Markham Foundation Grant:
Washburn Foundation Grant:
Taxable Expenditure
$50,000
$50,000
-0-
two, and $100,000 in year three. The Markham
Foundation awards ARE a $300,000 grant and
agrees to pay ARE $200,000 in year one, $50,000 in
year two, and $50,000 in year three.
Because the Markham Foundation chooses to mea-
sure the grant against the non-lobbying portion of the
project per year, the foundation would incur a taxable
expenditure of $10,000 in year one. The reason: The
Markham Foundation gave ARE $200,000 in year
one, which exceeded by $10,000 the non-lobbying por-
tion of the project for that year. The foundation would
not incur a taxable expenditure in years two and three,
however, since its grants in each of those years is well
below the non-lobbying portion of the grantee’s budget.
Equal Application Election
A private foundation choosing an equal application
election (measuring its multi-year grant in equal
portions over the life of the project) would measure
the total amount of the grant against the total non-
lobbying portion of the multi-year project. If the
total grant exceeds the total non-lobbying portion
of the project, then the private foundation would
incur a taxable expenditure.
Example: Multi-Year Specific Project Grant,
Equal Application Election
Same facts as above except the Markham Foundation
applies the $300,000 total grant equally over each year
of the project term, or $100,000 per year. The founda-
tion would not incur any taxable expenditure since the
non-lobbying portion of the project is $190,000 in the
first year, $180,000 in the second, and $100,000 in
the third. The $100,000 grant per year does not exceed
the non-lobbying portion of the project in any year.
A taxable expenditure may also occur if the founda-
tion becomes aware of inaccuracies in the grantee’s bud-
get but continues to fund the public charity. If, after the
foundation has disbursed the first-year grant and before it
disburses the second-year grant, the foundation has rea-
son to believe that the grantee’s budget inaccurately rep-
resents its lobbying and non-lobbying expenditures, the
foundation should not pay the second-year installment to
avoid a taxable expenditure. If the foundation has reason
to doubt the budget and still proceeds to make the grant,
the foundation may incur a taxable expenditure.
Election-Related Activity
A private foundation looking to fund nonpartisan
election-related activity must adhere to special rules.
Several bodies of law apply to the political activities of
nonprofits. These include federal statutes, regulations,
and rulings under the Internal Revenue Code; the Fed-
eral Election Campaign Act and its regulations; and state
and local laws governing elections.
501(c)(3) organizations, including private founda-
tions, are absolutely prohibited from engaging in activity
that directly or indirectly supports or opposes a candidate
for public office.
23
This prohibition applies to candi-
dates in federal, state, and local elections. Determining
whether an organization is participating or intervening,
directly or indirectly, in a political campaign on behalf of
or in opposition to a candidate for public office depends
upon the “facts and circumstances” of each case.
Despite this prohibition on partisan activity, founda-
tions and public charities have a recognized role in support-
ing and conducting nonpartisan activities to educate voters
and mobilize individuals to exercise their right to vote. As
discussed in the previous chapter, various IRS rulings state
Rules for Private and Public Foundations Supporting Advocacy
15
Multi-Year Specific Project Grant
16
Investing in Change: A Funder's Guide to Supporting Advocacy
that voter education activities conducted in a nonpartisan
manner by tax-exempt organizations are allowable.
While specific rules apply to each type of activity,
certain general guidelines apply to the planning and con-
duct of all voter education and registration activities.
Partisan statements of candidate or political party
preference are prohibited. No support or opposition
to a candidate or political party may appear in writ-
ten or oral statements. This restriction includes not
only communications or publications that are distrib-
uted or made available as part of the project but also
buttons, bumper stickers, t-shirts, and the like.
Projects may not be designed or targeted to influ-
ence voter acceptance or rejection of a candidate.
For example, targeting media ads or distributing
literature in a particular voting district to directly or
indirectly assist or oppose a candidate or influence the
outcome of an election is not permitted. Indications
of such targeting would include focusing on swing
areas in a voting district or “battleground states.”
Coordinating activities with a candidate’s cam-
paign or a political party is also prohibited. Voter
education and registration activities may not be
coordinated with candidates, campaigns, or a political
party. [Note, however, if an organization is sponsor-
ing a candidate debate or issue briefing, discussions
with campaign staff or the candidate about the invita-
tion and logistics are acceptable.]
Voter Education
Educational activities, such as organizing candidate
debates and forums and distributing candidate question-
naires and voting records, are acceptable as long as they are
carried out in a nonpartisan manner. Private foundations
may support such activities without limits. The nonparti-
san character of these activities is judged by examining all
the facts and circumstances surrounding the activity.
While this guide briefly introduces some of the rules
governing these nonpartisan activities, it does not begin
to address the myriad nonpartisan activities that private
foundations may fund and public charities may engage
in. For a more detailed look at nonpartisan activities, see
Rules of the Game: An Election Year Legal Guide for Non-
profit Organizations, available from the Alliance
for Justice.
Publication of Voting Records
A 501(c)(3) organization may publish and distribute
voting records of incumbent Members of Congress or other
elective bodies, such as a state legislature or town council.
24
A voting record lists selected pieces of legislation, a brief de-
scription of each, and an indication of how members voted.
Generally, the record must include all incumbents, and not
single out certain legislators or members of one political par-
ty. It should not identify candidates for reelection or relate
the voting records to a political campaign. There should be
no comparisons drawn between an incumbent’s record and
his or her opponent’s stand on an issue, or editorializing on
specific votes or voting patterns. The record should discuss a
broad range of issues.
How widely voting records may be distributed depends
principally on whether or not the publication includes
editorial comment on incumbents’ votes. If the publica-
tion reports such votes with an indication of whether they
voted in accordance with the organization’s position on
the issue (using a plus or minus, for example), distribution
must be more restricted. Voting records that include no
“plus or minus” of incumbents’ records may be distributed
more broadly to the general public and media.
Also note that the distribution of the report may not
coincide with an election campaign. If the report goes
out annually after the end of a legislative session in the
fall as a regular activity of the organization, sending it in
the fall of an election year may be permissible.
Finally, beware of battleground states. Charities
must avoid targeting distribution of the record to swing
districts, to electorally sensitive areas, or only to areas or
states where elections are taking place.
Public Forums: Nonpartisan Candidate Debates
A 501(c)(3) organization may invite candidates to a
public forum to discuss their views and answer questions
on issues of interest to the organization. The forum may
not promote or advance one candidate.
25
In planning
such events, sponsors must consult both tax, as well as
federal and state election law.
All legally qualified candidates from the voting district
on which a public forum is focused must be invited to
participate. A sponsoring group may limit invitations to
only “viable” or “significant” candidates. For example, if
the debate is for candidates running for the U.S. House of
Representatives, all “viable” candidates running for the con-
gressional seat must be asked. Third-party or independent
candidates who are not “viable” need not be invited.
The IRS has stated that all facts and circumstances
will be reviewed in determining whether the political
prohibition is violated by not inviting all legally quali-
fied candidates, including: (a) whether inviting all legally
qualified candidates is impractical; (b) whether the
organization adopted reasonable, objective criteria for
determining which candidates to invite; (c) whether the
criteria were applied consistently and not arbitrarily; and
(d) whether other factors suggest that the debate was
conducted in a neutral, nonpartisan manner.
26
Some additional rules to consider:
At least two candidates must appear at the forum.
If the debate is held during a primary election, a sponsor-
ing group is not required to invite candidates of both par-
ties to the debate. A separate Democratic and Republican
party debate may be organized.
The forum must address a broad range of issues, and
not just issues considered to be of important educa-
tional interest to the organization’s members.
Questions should be prepared and presented by a
nonpartisan, independent panel of individuals knowl-
edgeable about the issues covered.
A moderator should be designated to ensure that the
ground rules are observed and to make clear that the
views expressed are those of the candidate and not of
the sponsoring organization.
Each candidate must be allowed an equal opportunity
to speak and answer questions on his or her views.
The candidates must be treated fairly and the mod-
erator should disavow any preference or endorsement
by the sponsoring organization.
Voter Registration and Get-Out-the-Vote
Voter registration and get-out-the-vote (GOTV) activi-
ties encourage the public to exercise their right to vote. The
threshold question for private foundations that wish
to support voter registration and GOTV is whether the
activities are conducted in a nonpartisan manner. These
activities: 1) must be designed solely to educate the public
about the importance of voting; 2) may not show any bias
for or against any candidate or political party; and 3) must
not be coordinated with any candidate or political party.
Generally, the following guidelines apply:
The literature for the activity must either avoid any
reference to a candidate or list all candidates for a
particular office without stating or implying any
preference. No political party may be named except
to identify the party affiliation of each candidate.
Voter registration and GOTV activity should be
limited to encouraging people to register to vote and
to providing information about when and where to
register and/or vote.
Voter registration and GOTV drives need to discuss
a broad range of issues and may encourage people
to be informed voters. For instance, an organization
might appeal to individuals to register to vote in
order to have a more effective voice in government. If
the drive raises issues important to the organization,
it may not discuss how a candidate voted on these
issues and may not distribute voter guides indicating
a candidate preference.
Distribution of voter registration forms to the general
public via mail, canvassing, or in the organization’s
offices is permitted. Acceptable activities also include
maintaining booths at fairs, shopping centers, or
other locations, and media advertisements urging
people to register to vote.
Voter registration and GOTV activities may not be co-
ordinated with or targeted to assist a candidate, politi-
cal party, or political action committee (PAC). Groups
may want to provide a disclaimer such as: “This voter
education project is nonpartisan and does not reflect an
endorsement of any candidate or political party.”
Voter registration materials and activities must be made
available to all individuals without regard to politi-
cal views. For example, if an organization maintains a
booth at a college campus or local fair, those staffing the
booth may not determine a person’s party or candidate
preference before distributing the registration materials.
Federal Election Commission (FEC) regulations require
that the organization notify those receiving assistance in
writing at the time of the registration or GOTV drive
about the availability of services.
27
This notification
must provide the following information:
“Services are being made available without regard to
any voter’s political preference. Information and other
assistance regarding registering or voting, including
transportation, shall not be withheld or refused on the
basis of support for or opposition to particular candi-
dates or a particular political party.”
Voter registration and GOTV drives may, on a non-
partisan basis, target geographic areas or commonly
disenfranchised or traditionally underrepresented
groups, including minorities, women, the poor,
homeless, or unemployed. In developing literature for
Rules for Private and Public Foundations Supporting Advocacy
17
18
Investing in Change: A Funder's Guide to Supporting Advocacy
these drives, it is important to discuss why these areas
or groups have been targeted. Facts that demonstrate
historic patterns of under representation in the politi-
cal process should be highlighted.
A drive may also be targeted to register students
and other groups that have a community of interests;
however, targeting may not be based on the political
or ideological interests of any group. A 501(c)(3) orga-
nization may choose areas based on proximity. Thus, a
charity with a small budget may work in its own com-
munity. A charity also may choose to work where its
members are or where it might find those most likely
to be interested in the organization’s issues.
Voter Registration Rules for Private Foundations
The Internal Revenue Code (IRC) imposes added
restriction on private foundations that wish to support
voter registration activities.
Private foundations, and public charities devoted pri-
marily to voter registration that receive earmarked grants
from private foundations specifically for voter registra-
tion, must meet certain requirements under IRC section
4945(f). Otherwise, the private foundation providing the
grant will be taxed for all expenditures supporting the
public charity’s voter registration activity.
Section 4945(f) requires:
The sponsoring organization must be a 501(c)(3)
organization.
The registration activities of the sponsoring organiza-
tion must be nonpartisan, conducted in five or more
states, and occur over more than one election cycle.
At least 85 percent of the organization’s income must
be directly spent on activities relating to the purpose for
which it was organized and operated.
At least 85 percent of the organization’s support,
other than gross investment income, must be con-
tributed by exempt organizations, the general public,
or government units; no more than 25 percent of its
support may come from any one exempt organiza-
tion; and no more than 50 percent of its support
may come from gross investment income (interest,
dividends, or other investment-related income).
A contribution for such activities may not be subject
to conditions requiring use in a specific state (or
political subdivision) or in a specific election cycle.
28
A private foundation may earmark funds for voter
registration and a public charity may accept such fund-
ing only if the charity’s program meets the criteria and
special rules provided under IRC section 4945(f).
An organization may obtain an advance ruling from
the IRS that will determine whether the organization
qualifies for section 4945(f) status. Alternatively, a
private foundation may obtain a detailed statement from
the prospective grantee outlining the facts that demon-
strate that it meets the 4945(f) requirements. Because the
rules to qualify and conduct voter registration drives un-
der section 4945(f) are complicated, it is best for private
foundations to consult an attorney before proceeding
with any voter registration activity or support.
It is important to remember that these requirements
only apply to grants from private foundations that are
earmarked for voter registration to public charities that
engage exclusively in voter registration activities. If a
private foundation provides a general support grant to a
charity, the charity may choose to use some, or all, of the
grant for voter registration work without penalty to the
charity or to the private foundation.
Unless there is a specific oral or written understanding
that the grant is to be used for voter registration activities, a
general support grant will not be deemed “earmarked” for
voter registration. In addition, the amount of the general
support grant may not exceed the total amount the grantee
spends on non-voter registration activities. Similarly, grants
earmarked for a grantee’s other projects, other than voter
registration, are not subject to the rules under 4945(f).
Example: Funding voter engagement activities
In 2003, the Carnegie Corporation of New York, a
private foundation, granted the Youth Vote Coalition
(YVC) a two-year $300,000 general support grant.
YVC is a national nonpartisan coalition of diverse
organizations established to increase the political
involvement of 18- to 30-year olds through a variety
of activities. The Carnegie Corporation’s grant helped
YVC achieve unprecedented success in three central
categories: 1) expanding the size and diversity of the
youth civic engagement community; 2) increasing
that community’s efficiency and capacity; and 3)
directly engaging youth, political figures, and media
in YVC’s campaign strategy and message. Voter
registration, GOTV drives, and nonpartisan youth-
organized political forums are just a few ways YVC
directly engaged young adults across the ideological
spectrum into the political process.
“This cutting edge work around electoral advocacy
fits into Carnegie Corporation’s Strengthening U.S.
Democracy Program’s central goal of increasing
civic participation in the United States, including
voting. The Corporation focuses on two particular
areas: removing structural barriers that impede an
individual’s participation in the democratic system and
addressing attitudinal barriers to civic engagement.”
— Geri Mannion, program chair, Strengthening U.S.
Democracy, Carnegie Corporation of New York
General Advocacy
A private foundation may, without limitation, fund
a public charity to engage in general advocacy. Possible
examples include commenting on regulations, seeking
enforcement of a law, filing a lawsuit, or writing editorials
or letters to the editor. Please note that advocacy directed
at an agency official for the purpose of influencing the
outcome of specific legislation is considered lobbying.
Example: A grantee submits a funding proposal that
includes plans to oppose proposed legislation for a school
voucher program by communicating with the Secretary
of Education. Although the Secretary of Education is not
an elected position, if he/she has the ability to participate
in the formulation of school voucher legislation, they are
treated as a legislator when the grantee asks them to exert
their influence over the legislation. This activity is consid-
ered lobbying.
Lobbying is not the only legislative advocacy tool
available to nonprofits. Private foundations may fund
and even earmark funds for activities that are considered
exceptions to lobbying or non-lobbying advocacy. For
example, a private foundation could award a grant to a
public charity to enable it to testify in support of or oppo-
sition to legislation before federal, state, or local legislative
committees, upon request by that committee. For more
information on these lobbying exceptions, see Chapter I.
Private Foundation Support for Advocacy
by Non-Public Charities
Tax law allows non-public charities—such as
501(c)(4), 501(c)(5), and 501(c)(6) organizations—to en-
gage in unlimited lobbying activities, but also to generally
conduct 501(c)(3) permissible charitable and educational
work. Private foundations may support the educational
and charitable work of non-501(c)(3) organizations,
but must exercise what is called “expenditure responsi-
bility” when doing so.
Expenditure responsibility does not mean that the
foundation is responsible for the grantee’s every action
and expense. A private foundation making a grant to a
non-public charity must: (1) assure the grant is spent
solely for the purpose for which it was awarded; (2)
obtain full and complete reports from the grantee on
how the funds are spent; and (3) make full and detailed
reports of the grant expenditures to the IRS.
29
In many
ways, expenditure responsibility requires compliance with
the procedures many foundations have already instituted
as sound grantmaking practice.
Expenditure responsibility grants may not be used for
lobbying. This is the only grant in which a lobbying
prohibition is required.
A private foundation grant to a non-public char-
ity or a private operating foundation
30
is considered
a taxable expenditure unless the foundation exercises
Rules for Private and Public Foundations Supporting Advocacy
19
Federal Tax Law and Select Non-Public Charities
501(c)(4)
Social Welfare Groups
501(c)(5)
Labor Unions
501(c)(6)
Business Leagues
Examples
Alliance for Justice Action
Campaign
Human Rights Campaign
AFL-CIO
AFSCME
U.S. Chamber of Commerce
American Bar Association
Federal Tax
Treatment
Tax-exempt
Contributions are not tax
deductible
Tax-exempt
Contributions are not tax
deductible
Tax-exempt
Contributions are not tax
deductible
Lobbying Activity
Unlimited Unlimited Unlimited
Election-Related
Activity
Partisan electoral activity must be
secondary activity and is subject
to federal and state election laws
Partisan electoral activity must be
secondary activity and is subject
to federal and state election laws
Partisan electoral activity must be
secondary activity and is subject
to federal and state election laws
20
Investing in Change: A Funder's Guide to Supporting Advocacy
expenditure responsibility with respect to the grant.
31
Generally, the expenditure responsibility rules require
a foundation to take additional steps to ensure that
the grant is spent for its intended purpose. These steps
include: (1) conducting a pre-grant inquiry; (2) prepar-
ing a written agreement between the grantor and the
grantee; (3) receiving regular reports from the grantee;
and (4) submitting a report from the grantor to the IRS
on its annual information return, IRS Form 990-PF.
Strict compliance with each of these requirements is
mandatory to avoid an excise tax on the total or a por-
tion of the grant.
Pre-Grant Inquiry: The pre-grant inquiry require-
ment may be met with a letter to the prospective
grantee requesting sufficient information about the
organization and its proposed use of the funds. To
gain reasonable assurance that the funds will be used
for charitable purposes only, the foundation’s letter
should seek details about the identity, prior history,
activities, and experience of the grantee organization
and its managers.
The foundation may also seek information from
outside references or conduct its own research to gain
additional assurances. The scope of the inquiry will
vary depending on the size and purpose of the grant,
the period of payment, and any previous experience
the grantor has had regarding the capacity of the
grantee to use the funds appropriately.
Written Grant Agreement: A private foundation’s
grant agreement must be signed by an officer, director,
or trustee of the grantee organization. The agreement
must state in clear and specific language how the grant
will be used. It must include terms ensuring compli-
ance with the expenditure responsibility requirements,
including the following commitments by the grantee:
To repay any portion of the grant that is not used
for the specified purposes
To submit full and complete annual reports about
how the funds are spent and the progress made
toward accomplishing the grant goals
To maintain records of receipts and expenditures
and to make its books and records available to the
grantor at reasonable times
Not to use any of the funds to: 1) undertake any
activity that is not for a charitable or other 501(c)(3)
purpose; 2) carry on propaganda or otherwise
attempt to influence legislation; 3) influence the
outcome of any election; 4) conduct voter registra-
tion drives; 5) make grants to individuals or to
organizations other than public charities or a private
operating foundation unless the organization exer-
cises expenditure responsibility
If it is not a public charity, it must agree to main-
tain the grant funds in a separate fund dedicated
to charitable purposes. These funds may not be
commingled with other funds received for non-
charitable purposes
Reports from Grantee: The private foundation must
require reports on the progress of the grant and the use
of the funds. The grantee must make an annual account-
ing of the funds within a reasonable time after the end
of the grantee’s accounting period, plus a final report on
all expenditures and achievement of program goals. The
grantor is not required to verify the accuracy of these
reports independently unless there is reason to doubt
their accuracy or reliability. The foundation may rely,
therefore, on the representations of a grantee’s officer or
director and adequate records that support the report.
Failure of the grantee to supply these reports
could subject the private foundation to penalties un-
less it has complied with all expenditure responsibility
requirements, made a reasonable effort to obtain the
reports, and withholds any future payments until the
reports are received.
Reports to the IRS: In addition to the general infor-
mation required on the private foundation’s annual
information return, IRS Form 990-PF, any private
foundation making a grant subject to the expenditure
responsibility requirements must also provide the IRS
with the following information:
The name and address of the grantee
The date and amount of the grant
The purpose of the grant
The amount spent by the grantee based on the
grantee’s most recent report
Whether, to the knowledge of the grantor, the
grantee has diverted any funds from the purpose
of the grant
The dates of any reports received from the grantee
The dates and results of any verification of the
grantee’s reports undertaken by, or at the request
of, the grantor foundation
The private foundation must also make available to the
IRS at the foundation’s main office the following items:
A copy of the agreement covering each expendi-
ture responsibility grant made during the tax year
A copy of each report received during the tax year
for each grantee receiving an expenditure respon-
sibility grant
A copy of each report made by the foundation’s
personnel or by independent auditors of any
audits or investigations made during the tax year
on an expenditure responsibility grant
[Note: Although a private foundation has an obligation
to ask about the organization’s spending practices and
history, it is not responsible for the grantee’s subsequent
improper use of the funds. ]
Compliance with these rules gives private founda-
tions the freedom to make grants to non-public charities
without concern that the grant will be treated as a taxable
expenditure. What’s more, private foundations may have
greater opportunities to achieve their overall goals if they
are able to fund the work of various organizations—even
those that are not 501(c)(3) public charities.
Private Foundation Support for Advocacy by Coalitions
Increasingly, individuals and organizations working
on common issues are collaborating to engage in lob-
bying or other advocacy. These coalitions take on many
forms and are frequently supported by private and public
foundations. Sometimes coalitions form around a lead
organization; sometimes coalition partners each conduct
activities separately, but consistent and coordinated with
the efforts of the coalition; and sometimes the coalition
is itself an entity that may or may not be incorporated or
possess tax-exempt status.
The rules for private foundations supporting advo-
cacy by coalitions are an extension of the rules outlined
in the previous sections. The structure and tax-exempt
status of the coalition and its members determines the
activities a private foundation may fund and the tax
implications for grantmaking.
Rules for Public Foundations Supporting
Advocacy
Public Foundation Support for Advocacy by Other
Public Charities
Public foundations have more flexibility than private
foundations in funding advocacy. Unlike private founda-
tions, public foundations may engage in lobbying them-
selves and, therefore, may earmark grants for lobbying.
Public foundations may also fund lobbying by non-pub-
lic charities that use the funds for charitable purposes
without assuming expenditure responsibility.
Lobbying
In contrast to private foundations, public foundations
may earmark funds for lobbying. Like other public chari-
ties, public foundations’ lobbying activity is limited by
either the “insubstantial part test” or the “501(h) expen-
diture test.” For more information on these tests, refer
back to Chapter I. Under either test, grants earmarked
to public charities for lobbying (in addition to the
foundation’s own lobbying activities) will count against
the public foundation’s lobbying limit. Such earmarked
grants will be double counted—against both the public
foundation’s and the public charity’s lobbying limits.
For public foundations that elect under the 501(h)
expenditure test, a grant to a public charity that is not
earmarked for lobbying does not count towards the pub-
lic foundation’s own lobby limits—regardless of whether
the public charity grantee spends the grant on lobbying.
For public foundations that elect under the 501(h) ex-
penditure test, a grant to a public charity earmarked for
grassroots lobbying counts as grassroots lobbying by the
foundation itself. A grant earmarked for direct lobbying
or direct and grassroots lobbying is treated as grassroots
lobbying, except to the extent that the public foundation
grantor can demonstrate that all or part of the grant was
expended for direct lobbying.
32
Election-Related Activity
All 501(c)(3) organizations, including public founda-
tions, are absolutely prohibited from engaging in activity
that directly or indirectly supports or opposes a candidate
for public office. Public foundations may, however, sup-
port each of the nonpartisan election-related activities de-
scribed in this chapter. For a more detailed look at public
foundations and election-related activity, see The Rules of
the Game: An Election Year Legal Guide for Nonprofit Orga-
nizations, available from the Alliance for Justice.
Rules for Private and Public Foundations Supporting Advocacy
21
22
Investing in Change: A Funder's Guide to Supporting Advocacy
Public foundation grant agreements funding nonpar-
tisan election-related activities should specifically state
that all funds must be used exclusively for charitable
purposes consistent with public charity status. The rules
under section 4945(f) governing private foundation
funding of voter registration activity do not apply to
public foundations.
General Advocacy
A public foundation may, without limitation, fund
public charities to comment on regulations, seek enforce-
ment of a law, or file a lawsuit. These activities are not
considered lobbying; however, note that efforts directed
at an agency official who has the ability to influence the
outcome of specific legislation would be considered lob-
bying and would count against the public foundation’s
lobbying limits.
Public Foundation Support for Advocacy
by Non-Public Charities
Public foundations are permitted to fund any work of
non-public charities that the foundation could engage in
itself. For example, a public foundation could provide a
grant to a 501(c)(4) organization to conduct nonpartisan
voter registration activity, but could not fund the same
organization to produce a partisan voter guide because
the public foundation itself is not allowed to support or
engage directly or indirectly in partisan activity.
Lobbying
In general, a public foundation grant to a non-public
charity that lobbies is treated as a lobbying expenditure,
absent any evidence to the contrary. Thus, the grant will
count against the public foundation’s lobbying limit.
33
What’s more, the public foundation must count the lob-
bying expenditure against its grassroots lobbying limit—
unless the grant was specifically earmarked for direct
lobbying. If a public foundation earmarks a grant for grass-
roots lobbying, the grant is considered grassroots lobbying.
If the grant is earmarked for direct lobbying only or direct
and grassroots lobbying, the grant is treated as a grassroots
expenditure—unless the foundation can demonstrate that
all or part of the grant was used for direct lobbying.
Example: Public Foundation Grant Used
for Lobbying
The Orange Community Foundation, a fictitious public
foundation, provides a $100,000 one-year project grant
to the Wildlife Action Fund (WAF), a fictitious 501(c)(4)
organization, for the protection of animal habitats in
Orange. Because WAF engages in some lobbying activity,
the Orange Community Foundation must determine what
portion of the grant counts against the Foundation’s own
lobbying limit. Reports provided by WAF show that WAF
spent $20,000 in direct lobbying and $5,000 in grassroots
lobbying during the grant period. Therefore, the Foundation
must report $20,000 for direct lobbying and $5,000 for
grassroots lobbying as its own lobbying expenditures.
[Note, however, that if the Orange Community Founda-
tion has not made the 501(h) expenditure test election, it
must report all $25,000 simply as lobbying.]
Alternatively, a public foundation may choose to
make a “controlled grant” in order to avoid counting the
grant amount as a lobbying expenditure. A controlled
grant requires the grantee to use the funds for a non-lob-
bying purpose.
Example: Public Foundation Controlled Grant
The Orange Community Foundation awards a
$100,000 one-year grant to WAF for the protection
of animal habitats in Orange. The Foundation’s grant
agreement states that the funds cannot be used for lob-
bying activities. No part of the $100,000 will count
against the Foundation’s lobbying limits.
Special Rules for Supporting Advocacy
on Ballot Measures for Both Public and
Private Foundations
In states that allow ballot measures, the general public
may propose and enact new laws through a process of
petition and popular vote. There are four main types of
ballot measures:
1. Ballot initiatives enable voters to propose and enact
laws directly;
2. Bond measures allow voters to decide whether a gov-
ernmental entity can issue bonds to finance govern-
ment programs;
3. Constitutional amendments allow voters to amend
the state constitution; and
4. Referenda permit voters to determine whether a bill
enacted by the legislative body should become law.
The IRS treats all activities to influence ballot measures
as lobbying.
34
Because the general public is acting in the
role of legislators, advocacy for or against a ballot measure
is considered direct, not grassroots, lobbying. Thus, public
charities and public foundations may support or oppose
ballot measures within the lobbying limits discussed earlier.
The same rules that apply to private foundation
grants for lobbying apply to ballot measure activity.
If a private foundation funds ballot measure work or
earmarks a grant for ballot measure work, it creates a
taxable expenditure for the private foundation. For more
information about funding ballot measure activity, see
Foundations and Ballot Measures: A Legal Guide, available
from the Alliance for Justice.
While federal tax law considers activities support-
ing or opposing ballot measures as lobbying, most states
separately regulate this activity as election activity and
have specific registration and reporting requirements. All
organizations must learn and follow the applicable state
rules and federal tax law.
Rules for Private and Public Foundations Supporting Advocacy
23
Chapter III: Grant Agreements
“AT THE PUBLIC WELFARE FOUNDATION, we are always trying to be user-friendly and
advocacy-friendly, so when groups we support suggested that language in our agreement letters
could be restricting their work, we checked with our lawyer and took that sentence out.”
—Larry Kressley, executive director, Public Welfare Foundation
In theory, a grant agreement is a simple document that for-
mally seals the terms and conditions between a foundation
and a grantee. For many foundations, though, determining
the contents of the agreement is not so simple.
Grant agreements are only required under certain
circumstances, such as when a private foundation makes
an expenditure responsibility grant to a non-public char-
ity. Even when a grant agreement is not required by law,
however, it makes good business sense for both public and
private foundations to use them. These agreements should
be routine practice for foundations that want to ensure
their grantees make the most out of the funds provided.
Unfortunately, such grant agreements often end up
producing the opposite effect. Many foundations mistak-
enly believe that they will create a taxable expenditure if
their grant agreements are not filled with highly restric-
tive language. For example, countless grant agreements
contain a clause that prohibits lobbying. The truth is that
there is no legal requirement for such language.
The tax code makes it clear that federal law does
not require a foundation to impose lobbying prohi-
bitions on its public charity grantees.
As John Edie, former general counsel of the Council
on Foundations, stated in a 1992 Foundation News and
Commentary article, “Foundation grant agreements that
prohibit lobbying need to be revisited.”
Of course, understanding the tax code and its regula-
tions can be challenging for even the most experienced
program officers and foundation executives. This chapter
aims to clarify what is legally required, what is permis-
sible, and what is unnecessary.
Grant Agreement Requirements
When drafting a grant agreement, remember that it is
a binding contract. Although some boilerplate language
is necessary, one size does not fit all. The agreement
should be carefully tailored to the particular circum-
stances in order to provide adequate protection for the
foundation and appropriate flexibility for the grantee.
The foundation, with the assistance of legal counsel,
must ultimately decide what is suitable for the organiza-
tions involved. Foundations should always bear in mind
that federal law usually does not pose an obstacle to effec-
tive grantmaking, including grants that support advocacy.
Any required grant agreement language will depend
on whether the foundation is public or private. If the
foundation is private, the language will also depend on
whether the grant is for general support or a specific
project. In addition, grants by private foundations to
non-public charities trigger specific expenditure responsi-
bility requirements (discussed in Chapter II).
[Note: Grants by private foundations to non-public
charities are the only type of grants that require language
in a grant agreement that forbids the use of grant funds
for lobbying.]
The overall length of the grant agreement will vary de-
pending on the nature and duration of the project, amount
of the grant, payment schedule, and reporting requirements.
In general, public foundation grant agreements
should contain at least:
Grantee’s name and address
If the grantee is a public charity, the foundation’s
basis for relying upon that status
Duration and purpose of the grant
Whether the grant is for general support or a
specific project
Foundation’s reporting requirements
A statement that the grant will be used only for chari-
table, educational, or other section 501(c)(3) purposes
A statement whether the grant, or any portion of the
grant, is earmarked for lobbying
Grant Agreements
25
26
Investing in Change: A Funder's Guide to Supporting Advocacy
Private foundation grant agreements should contain
at least:
Grantee’s name and address
If the grantee is a public charity, the foundation’s
basis for relying upon that status
Duration and purpose of the grant
Whether the grant is for general support or a
specific project
Foundation’s reporting requirements
A statement that the grant will be used only for
charitable, educational, or other section 501(c)(3)
purposes
A statement that the grant is not earmarked for
lobbying
If the grant is a specific project grant, the budget to
support that statement
A statement that:
a) the grantee will not intervene in any election
or support or oppose any political party or
candidate for public office, or engage in any
lobbying not permitted by IRC §501 (c)(3) or,
if applicable, IRC§§501(h) and 4911; and
b) the grant is not earmarked for any transmittal
to any other entity or person that is not itself a
public charity.
Both public and private foundations may also want to
include terms in the grant agreement that further clarify
the responsibilities of the foundation and the grantee.
Such terms may include:
Conditions for payment of the grant funds (such as
proof of matching funds or in-kind contributions for
a challenge grant)
Whether the foundation has permission to reproduce
or publish copyrighted material produced as a result
of the grant
Types of project modifications that require written
approval from the foundation (e.g., budget variances
exceeding 10 percent)
Whether the foundation should be acknowledged in
written materials produced as a result of funding
The foundation’s right to terminate the grant and
under what conditions
The grant proposal, as well as the project or orga-
nization’s overall budget, may be attached to the grant
agreement and incorporated into the terms of the agree-
ment. The Alliance for Justice recommends that all grant
agreement issues be discussed with legal counsel and
occasionally revisited to stay current with new develop-
ments in the law.
Grants to Public Charities
“Never, ever tell an organization it can’t lobby as a condition
of your support. It’s their legal and constitutional right to
lobby. Why would a foundation want to take that away?”
—Bill Roberts, executive director, Beldon Fund
A primary consideration for drafting grant agreement
language is the protection of the foundation’s tax-ex-
empt status. Too often, though, foundations believe this
requires provisions that forbid the use of grant funds for
“any propaganda or attempt to influence legislation.”
At first glance, it might seem that this language
is required by section 4945(d) of the tax code, which
deals with taxable expenditures for private foundations
that earmark funding for lobbying. A closer look at the
statute, however, reveals that this language is not required
for grants to public charities, only for private foundation
grants to non-public charities.
As a general rule, when a foundation wants to include
lobbying restrictions in its grant agreements, it should
first consider what the potential benefit is for the founda-
tion and what the likely cost is to the grantee. Unless the
potential benefit to the foundation will outweigh the cost
to the grantee, restrictions should not be imposed.
For sample general support and specific project grant
agreements, see Appendices A and B.
Grants to Non-Public Charities
Private foundations must provide a written agreement
when awarding a grant to a non-public charity. Public
foundations, which are not required to exercise expendi-
ture responsibility, are not required to provide such grant
agreements. Nevertheless, public foundations should
document their grants to non-public charities to establish
that no funds were used for impermissible activities.
A private foundation must exercise expenditure
responsibility over grants to non-public charities. This
is the only type of grant in which a private foundation
must prohibit grantees from using the funds for lobby-
ing, and thus makes a general support grant to a non-
public charity effectively impossible.
As grantmakers, foundations have the expertise, leader-
ship, and financial resources to help grantees strengthen
their advocacy skills. In most cases, foundation assistance
begins even before solicitation for proposals and guide-
lines are issued and continues after the grant has closed.
By using several simple strategies to build a nonprofit’s
advocacy toolbox, a foundation’s contribution can last
even longer.
Building advocacy capacity means helping grantees to
strengthen their skills, resources, and knowledge so they may
effectively recognize and act on opportunities. The Alliance
for Justice suggests six strategies to build the advocacy capac-
ity of grantees:
Define and articulate the foundation’s own advocacy
goals
Communicate the foundation’s advocacy goals when
identifying grantees
Recognize advocacy opportunities when reviewing
proposals
Encourage advocacy in grantwriting
Make advocacy resources available to grantees
Use leadership to focus on advocacy strategies and
bring diverse players together
Define and Articulate the Foundation’s Own
Advocacy Goals
Before promoting advocacy activities to current and
prospective grantees, foundations should perform some
self-analysis, including:
The foundation’s mission and how advocacy can help
accomplish that mission
The foundation’s advocacy-related grantmaking over
time, including long-term relationships with grantees
in a field or issue area
The mix of issues and activities the foundation would
like to support, as well as the types of grants (project
or general support) and the length of grant awards
(single-year or multi-year)
Once the foundation has articulated its goals for
supporting advocacy, it should spread the word inter-
nally, through strategic and program planning. The
foundation’s board of directors and staff must discuss
goals and be comfortable supporting advocacy work
before publicizing its support externally. The following
box highlights some ways that foundations have gener-
ated internal discussions and raised comfort levels with
advocacy within their organizations.
Tips for Discussing Advocacy Goals within
the Foundation
Discuss the rationale for funding advocacy with board
members and staff (use this guide’s Introduction as a
starting point)
Show how funding advocacy fits into the broader goals
and mission of the foundation
Demonstrate how funding advocacy can meet the needs
of the community
Discuss how much and what types of advocacy the foun-
dation has funded in the past
Demonstrate how funding advocacy can enhance current
grantmaking on issues of interest
Invite the foundation’s lawyer or other experts to talk
about legal ways to support, and even engage in, advo-
cacy work
Highlight past successes in funding advocacy within the
foundation or in other foundations
Address advocacy in the strategic planning process
Invite other foundations that fund advocacy to talk about
their challenges and successes
When the board and staff are ready, the foundation
should broadcast its commitment to advocacy. Something
as simple as the language included on business cards can
send a powerful message about the value an organization
places on advocacy. For example, the Kirsch Foundation,
a public foundation, includes its motto, “Effecting change
through strategic giving and advocacy,” on all employee
business cards.
Strategies for Building the Advocacy Capacity of Grantees
27
Chapter IV: Strategies for Building the Advocacy Capacity of Grantees
“FOUNDATIONS ARE UNIQUELY WELL SITUATED to help grantees strengthen their capacity for
advocacy. It’s a marvelous time to be doing just that.”
—Dorothy Ridings, president and CEO, Council on Foundations
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Investing in Change: A Funder's Guide to Supporting Advocacy
Other ways to communicate these goals include
websites, annual reports, foundation letterhead, corre-
spondence, requests for proposals, and meetings, panels,
and workshops led by program officers. Letting grant-
ees know that the foundation cares about supporting
advocacy makes grantees more comfortable including it
in their proposals. The clearer the foundation is about its
own advocacy-related goals, the more likely it is to attract
potential grantees that are equally clear.
Communicate the Foundation’s Advocacy
Goals When Identifying Grantees
From the outset of the grantmaking process, grantmak-
ers have ample opportunities to initiate a dialogue about
the type of advocacy they are willing and permitted to fund.
Solicitations for proposals and grant guidelines are ideal
vehicles to introduce advocacy into the grantmaking process
and to increase the advocacy awareness of potential grantees.
Clearly Express the Types of Advocacy the
Foundation Supports
Foundations can express their desire to fund specific
kinds of advocacy in requests for proposals. There are
two important reasons for doing this: 1) it increases the
potential for receiving proposals that include advocacy,
and 2) it helps grantees think differently about the proj-
ects they undertake.
Some foundations that are uncomfortable using
the term “advocacy” in written materials will replace or
complement the word “advocacy” with other terms, such
as “engaging in public policy work,” “nonpartisan voter
education,” “grassroots development,” “civic engagement,”
“raising public awareness,” “conducting applied or partici-
patory research,” “engaging in leadership development,”
“undertaking strategic communications campaigns,” “com-
munity organizing,” or “coalition building.”
However a foundation chooses to describe its advo-
cacy goals, the end result should be a clear message about
what types of advocacy or organizations it supports.
Some foundations broadly describe the type of organiza-
tion they seek to fund. For instance, the Beldon Fund,
a private foundation, clearly states, “[b]y supporting
effective, nonprofit advocacy organizations, the Beldon
Fund seeks to build a national consensus to achieve and
sustain a healthy planet.” The message to grant applicants
is obvious: the Beldon Fund supports advocacy organiza-
tions that work on environmental issues.
Other foundations describe the specific categories of
advocacy they support. On its website, the Schott Foun-
dation for Public Education, a public foundation, states:
“Schott advocates for increased public funding for
excellent public schools—from early childhood experi-
ences through high school. Schott seeks to build public
will and improve public policy to achieve quality
education for all students.”
Some grantmakers explicitly inform grantees that
direct services and other program activities can and should
include an advocacy component. For example, MAZON: A
Jewish Response to Hunger, a public foundation, explains
why it funds advocacy:
“MAZON believes that charitable food programs,
while important and necessary, are not substitutes
for the systemic change needed to address the prob-
lems of hunger and poverty in America. Although
applicants are not required to request MAZON
funding for anti-hunger advocacy and education, all
proposals must evidence a strong commitment to
and participation in this kind of work.”
Ask Applicants Questions that Encourage Thinking
about Advocacy Activities
A foundation can encourage applicants to explore
the role advocacy might play in their programs by asking
important questions, such as:
What are some examples of active leadership by your
organization or its constituency?
What is the long-term, systemic, or social change be-
ing sought in your project?
How will you raise public awareness of the issues?
Does your advocacy project involve partnerships with
other organizations? If so, how did you identify these
organizations? How will the project benefit from this
partnership? What are the key roles of each partner?
What relationships does your organization have with
community leaders, such as business executives and
policymakers, and how might you work with them to
achieve your mission?
What information does your organization have that
would be useful to policymakers and other decision-
makers? How will you share information about your
project or your constituency in a way that is useful to
these audiences?
Grantmakers can use the proposal process to identify
groups engaged in policy and those that are direct service
providers. They can introduce advocacy as an option to
those that are strictly direct service providers. Some founda-
tions with formal request-for-proposal (RFP) processes
conduct pre-application workshops where applicants can ask
questions and make connections with other organizations
working in the same field. If structured appropriately, these
workshops can encourage advocacy components and help
potential grantees identify alliances.
Recognize Advocacy Opportunities When
Reviewing Proposals
Some foundations ask their program officers to sug-
gest advocacy components in proposals when appropri-
ate. This is an opportunity for foundations to challenge
service providers to expand their range of activities for
sustained results. Introducing an advocacy option helps
nonprofits think strategically about how to impact sys-
temic problems. Program officers can bring this up in a
number of ways, including:
Asking what long-term, systemic, or social change
would advance the organization’s mission
Asking if and where advocacy might play a role in the
project to promote such change
Asking if the organization has thought about sharing
information about its work or the needs of its commu-
nity in a way that would be useful to policymakers and
other decisionmakers
Letting potential grantees know that their proposals
would be stronger with an advocacy component
Suggesting the kind of advocacy a grantee may want
to consider, such as coalition building, media work,
or research and analysis
Keep in mind that grantees may want to do advocacy
work, but feel afraid to mention it in their proposals. Foun-
dations should emphasize their support for advocacy in all
communications with grantees and prospective grantees.
Encourage Advocacy in Grantwriting
Here are some creative ways for foundations to build
advocacy capacity:
Provide general support grants. General support
grants can be used for any charitable purpose, includ-
ing basic organizational needs, capacity building, and
advocacy. These unrestricted grants allow grantees
to respond quickly to a policy issue. For example, in
January 2003, the Marguerite Casey Foundation,
a private foundation, announced $15.3 million in
new grants to organizations developing the advocacy
voices of families and youth. Recognizing the need
for advocacy organizations to build their organiza-
tional capacity and to be flexible in addressing public
policy issues as they arise, the foundation announced
that most of the grants were for general support.
Can Foundations Accept Proposals that Mention
Advocacy or Lobbying?
References to advocacy or lobbying in the proposal are ac-
ceptable and should not deter foundations. Under federal tax
law, both public and private foundations may legally support
public charities that lobby, although private foundations may
not earmark funds for lobbying without incurring a taxable
expenditure.
Chapter II of this guide provides a roadmap for private
foundations to avoid tax liability when funding advocacy. If a
public foundation earmarks a grant for lobbying, the expendi-
ture counts against its lobbying limits.
Write flexible grant agreements. A foundation’s grant
agreement should not include overly restrictive lan-
guage that will prevent grantees from engaging in legal
advocacy activities. For general support grants, the grant
agreement letter should not deter or prohibit an advo-
cacy component. For example, language prohibiting the
use of grant funds for lobbying is only necessary when
private foundations make grants to non-public charities.
In all other situations, grantees should be able to decide
how to spend the grant funds. For more information on
grant agreements and language, see Chapter III.
Evaluate advocacy activities thoughtfully. Provide
grantees with reporting requirements and suggestions at
the time the grant is awarded, so grantees can better doc-
ument their achievements and activities. Foundations
may ask grantees to document activities such as media
coverage, distribution of fact sheets and policy/educa-
tion alerts, communications to members of the grantee’s
network, submission of testimony, policymaker support
on a particular issue (such as “Dear Colleague” letters),
and increased funding for, or access to, services.
Foundations can also help grantees determine
how to measure their advocacy activities so they
have a basis for reporting. This is accomplished by
asking appropriate questions in proposal guidelines,
RFPs, and report formats, and by providing sample
Strategies for Building the Advocacy Capacity of Grantees
29
30
Investing in Change: A Funder's Guide to Supporting Advocacy
benchmarks for success. For details on evaluation of
advocacy, see Chapter V.
“The California Wellness Foundation grants
build the capacity of community coalitions,
community organizing groups, and grassroots
organizations to engage in policy efforts.
Some of the most effective public policy
work is done by those directly affected by the
problem that needs to be resolved: community
members, including youth, working to make
their communities healthy and safe places to
live; direct-service providers who know what
the problems are and have solutions; and
individuals who don’t have access to basic
services because of eligibility barriers or lack
of funding.”
—Ruth Holton, policy director, The California
Wellness Foundation
Maintain ongoing and open relationships with
grantees. Remember that social change takes time. Con-
sider making multi-year grants which allow grantees to
expand their expertise and build their advocacy capacity
in incremental steps. For the grantmaking experience to
be a learning process, foundations need to create a safe
environment where grantees feel comfortable commu-
nicating the challenges they face. These conversations
should not be used to evaluate the effectiveness of a
grantee’s efforts or as reasons to stop funding them.
Clearly, a funder’s input—whether expressed as
clearly communicated expectations, or in providing
advocacy skills training, or by offering policy network-
ing opportunities—can enhance a grantee’s capacity to
engage in advocacy.
One grantmaker, MAZON, has developed a model to
measure the impact of its efforts. This model is repro-
duced in Appendix H.
Make Advocacy Resources Available
to Grantees
Just as supporting advocacy requires some founda-
tions to learn new rules and strategies, grantees may need
additional information to become confident and effective
advocates for social change. Foundations can support
this learning process by alerting current and potential
grantees to resources about advocacy. Foundations can
also facilitate the education in a few ways:
Provide advocacy-related technical assistance and
resource materials to grantees. Foundations can offer
technical assistance to nonprofits directly through the
foundation’s staff or by supporting external technical
assistance providers. The assistance can cover different
aspects of advocacy, from knowing the legal rules to
mobilizing constituencies. For example, The Rhode
Island Foundation, a public foundation, hosted a
training session on the rules for lobbying and elec-
tion-related activity for its grantees and other public
charities in the state.
Educate current and prospective grantees about
the 501(h) election. Foundations have used several
methods to educate both current and prospective
grantees about the benefits of making the 501(h) elec-
tion. As described in Chapter I, this election allows
public charities to maximize their lobbying efforts and
provides clear definitions of lobbying. Alerting grantees
to the 501(h) election does more than simply educate;
it sends a clear message that the foundation believes
advocacy efforts are important.
The grant application process provides an ideal oppor-
tunity to raise the 501(h) election issue. For example,
the Ms. Foundation for Women, a public foundation:
Asks applicants if they have made the 501(h) election
Tells grantees that filing a 501(h) election means they
can allocate up to 20 percent of their expenses to lob-
bying without losing their 501(c)(3) status
Advises groups to order publications on lobbying
from the Alliance for Justice (and other sources)
Give a grant for legal assistance. Foundations can
make grants to pay legal fees for grantees that want to
engage in more sophisticated activities.
Use Leadership to Focus on Advocacy
Strategies and Bring Diverse Players
Together
In addition to the strategies outlined above, founda-
tions can use their leadership roles and other creative
tools to build the advocacy capacity of nonprofits. Here
are some suggestions:
Take a leadership role on issues important to
the foundation. Funders are powerful and credible
spokespersons, particularly with their peers. The
foundation provides a role model for both prospective
grantees and other grantmakers. As Gayle Williams,
executive director of the Mary Reynolds Babcock
Foundation, a private foundation, states: “Funding
from mid-sized to large foundations like the Mary
Reynolds Babcock Foundation—and the ensuing
patience, flexibility, and commitment of the Foun-
dation’s staff and board—gives credibility, focus, and
inspiration to the efforts of state and local groups.”
Foundation leadership lets current and prospective
grantees, fellow grantmakers, and other allies know
that they are all part of a larger movement.
Link grantees to key players. Foundations often
have connections or the potential to make connec-
tions with policymakers and other decisionmakers.
Public charities can benefit from those relationships.
Convene diverse players around an issue. Many
foundations bring together grantees and other public
charities to discuss particular subjects. Some foundations
facilitate dialogues between funders with similar grant-
making priorities, often drawing in researchers, policy-
makers, media, and grantees. This allows all parties to
learn from one another, analyze key issues, and develop
advocacy strategies. Foundations can also sponsor work-
shops on best practices, new legislative developments or
challenges, and specific advocacy skills.
Engage in collaborative funding. Many foundations
find it helpful to pool resources with other grantmak-
ers—a particularly good model because advocacy
efforts benefit from collaboration. Reflecting on 10
years of experience hosting collaborative funds, the Ms.
Foundation for Women notes: “Collaborative funds
can harness the collective power of a group of commit-
ted funders and practitioners to impact public policy
in a field. The size and reputation of a fund gives the
host organization added legitimacy with policymakers
and enables staff to bring best practice lessons to bear
on national policy.”
Feature advocacy grantees in promotional materials.
Press conferences, coordinated media campaigns,
websites, newsletters, and annual reports are great
venues to highlight grantee advocacy achievements.
Such exposure helps grantees to build credibility
with leaders in the public and private sectors, which
increases their influence and the ultimate effective-
ness of their advocacy efforts. It also helps them raise
money, build coalitions and partnerships, and ensures
that they are viewed as important participants in for-
mal and informal consultations on policy issues. The
Joyce Foundation, a private foundation, features news
about its grants for gun violence prevention, the envi-
ronment, and campaign finance reform on its website
and highlights the advocacy work of its grantees in its
print and electronic newsletter, “Work in Progress.”
Foundations can play an important role in building the
capacity of grantees to engage in advocacy throughout the
entire grantmaking process. By pairing the strategies dis-
cussed in this chapter with an understanding of the rules
for supporting advocacy, foundations can help grantees
meet their advocacy goals and achieve their missions.
Strategies for Building the Advocacy Capacity of Grantees
31
In recent years, the philanthropic community has increas-
ingly focused on effectiveness and accountability. Funders
want to make sure their funding has the greatest possible
impact. Yet for many foundations, evaluating advocacy
is uncharted territory. How does one go about evaluat-
ing the often subtle steps that eventually result in societal
change? Without a clear and measurable bottom line, how
does a foundation know that its investment in a grantee’s
advocacy campaign is paying off? In a 2001 survey by the
Women’s Fund of the Greater Milwaukee Foundation, a
public foundation, most of the participating foundations
that supported public policy said they were “unclear about
the most effective methods of measuring the impact of
their investments.”
The nature of advocacy work makes it especially dif-
ficult to determine which approaches work and which do
not. For example:
Advocacy goals are often long-term and system-wide
Successes are incremental and frequently uneven
External factors, such as the political or economic envi-
ronment, are hard to predict and impossible to control
Policymaking processes have unique, often complex
rules with varying points of potential impact. The pro-
cesses themselves may be fluid and subject to change;
therefore, any measurements of success must be flexible
Building relationships with decisionmakers and edu-
cating and/or influencing them are critical to success
but challenging to measure
Determining which players’ efforts are individually
responsible for an advocacy outcome may be difficult
Despite these challenges, there are many successful
ways to measure advocacy work. This chapter sets out a
workable approach to evaluating grantees’ performance
in a variety of advocacy efforts. It also provides guidance
to foundations in evaluating their own activities.
Guidelines for Working with Grantees
Effective evaluation starts with an understanding of what
it takes to influence policy and be a successful advocate. For
example, measuring the number of clients served is a useful
way of viewing outcomes when delivering services, but advo-
cacy often has no comparable measure. By contrast, a grantee’s
labor-intensive effort to gain access to key public officials on
an important environmental issue may be time-consuming
but ultimately very helpful to the grantee’s ultimate objectives.
To someone unfamiliar with the public policy process, how-
ever, this might not appear to be a useful investment of time.
Foundations can use a number of barometers to
measure success, as few organizations are likely to show
achievements in every area. Foundations should also
consider the size, experience, and skill level of each
grantee. Here are some helpful guidelines to determine
the effectiveness of advocacy work:
Talk about advocacy expectations from the start. A
clear understanding about what a campaign is expected
to achieve makes for a smoother evaluation process. This
might mean identifying the desired regulatory or policy
changes or simply the steps that are likely to lead to those
changes. It might also involve a demonstrated increase
in public understanding about candidates for office and
involvement in the policymaking process.
Chapter V: Evaluating and Reporting Advocacy
“MEASURING ADVOCACY IS MESSY AND DIFFICULT. I could make the same case regarding mentor-
ing a child. We know it works, but not exactly how. It depends on the kids, the mentors, and
circumstances. We must ask what are our missions and values. What are the best measures we
can find? If we avoid what is difficult to measure, we will only do the simplest things in our
communities that can be counted and not do all that we can do. Racial harmony cannot be
easily measured, but we know what happens if we don’t have it. Cancer research is not close
to finding a cure, but we still support it. People are too often driven by measurements—if we
can’t measure, let’s not do it. That is uninspired grantmaking.
—Emmett D. Carson, president and CEO, The Minneapolis Foundation
Reporting and Evaluating Advocacy
33
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Investing in Change: A Funder's Guide to Supporting Advocacy
Moreover, foundations should let grantees know up-
front the types of documentation necessary to conduct a fair
and effective evaluation. These might include constituent
updates on current policy issues or records showing that
other organizations endorsed the grantee’s advocacy efforts.
Encourage grantees to develop both long-term and
incremental measures of success and progress. Funders
and grantees need to acknowledge that they may not
accomplish every intended goal and that small steps are
often essential to any advocacy effort. Even if advocates
cannot identify major policy changes likely to be made in
the short term, they can develop realistic interim objec-
tives that show progress in creating social, regulatory,
statutory, or legal policy change.
For their part, grantmakers should openly articulate
that interim success over a period of one or several years
is acceptable, as long as the interim measures are plainly
defined. Grantees should be free to refine these measures
to reflect any changes in outside factors, such as the
political, social, and economic environment.
In proposal guidelines, funders should ask grantees
to identify both long-term advocacy goals and what can
reasonably be accomplished during the grant period.
Grantmakers can also ask grantees to set incremental
benchmarks of progress and explain how they plan to
document and measure that progress. Sample bench-
marks are discussed later in this chapter and are included
in Appendix F.
Example: The Alliance for Research and Education
(ARE) wants to convince parents, state legislators, and
the governor that public school should start at age four
rather than five. ARE’s proposal should identify the fol-
lowing interim and long-term goals and objectives:
Produce and distribute a report on the need for
mandatory public education at age four
Make 20 percent of the public aware of the benefits
of offering public education to four-year-olds
Achieve a five percent increase in the level of media
coverage addressing this issue
Establish the grantee’s credibility as an expert on this
topic, as documented by a defined increase in the num-
ber of calls received from policymakers and the media
Receive survey responses from candidates for the
state legislature
Facilitate contact between 300 members of the grantee’s
network and their state legislative representatives
Instigate the state legislature’s first-ever oversight
hearing on the value of beginning mandatory public
education at age four
Motivate the state medical association to endorse
mandatory public education at age four
Pass a state law requiring public education to begin
at age four
Ask grantees to include advocacy capacity building
in their expectations and evaluations. Capacity build-
ing strengthens the organization’s ability to anticipate,
respond to, and advance policy issues. In the broadest
sense, building advocacy capacity means developing an
internal support structure, from staff to board members
to organization members. All should be able to effectively
communicate the organization’s goals. The objectives of an
effective capacity building effort may include:
Being publicly viewed as a trusted source of credible
information on specific issues
Increasing board and staff members’ knowledge of
advocacy processes, such as how the local city council
makes policy
Developing key constituencies’ familiarity with and
motivation to participate in the democratic process
Increasing grassroots leadership skills
Building relationships with policymakers
We all know that a grantee may not always accomplish
all of its advocacy objectives. But, if it has successfully built
its organizational capacity then it is better positioned to
meet long-term goals. “In supporting advocacy, founda-
tions need to understand that process can be as important
as the outcome,” notes Anna Wadia, director of program,
Economic Security, of the Ms. Foundation for Women, a
public foundation. “A grant for a ballot measure that fails
might be seen negatively, but you need to take into ac-
count how the work increased the nonprofit’s understand-
ing of the political process, the awareness that was created
around a particular issue, and the leadership development
that it might have provided in communities.”
Help grantees establish reasonable expectations that
reflect the environment in which they operate. Many
external factors influence what constitutes success and what
level of success is realistic. Sometimes maintaining current
policy is in itself a victory. Ask grantees to explicitly address
external factors when drafting their proposals and expecta-
tions. Factors may include the policy making climate, the
views of key current and prospective public officials, the
number and character of media outlets, and the state of the
economy. Grantee interim and final reports should analyze
how such factors affected their progress.
For example, suppose a grantee designs an advocacy
effort to increase access to state human services programs
for non-citizen immigrants. Such an effort is more likely to
succeed in a state with a strong track record of supporting
similar policies than in a state that has never allocated funds
for such purposes. In the latter state, success might involve
stopping “bad policies” from being implemented rather than
encouraging proactive policy changes.
Similarly, the level of anticipated success often
depends on the economic environment. In a year when
most states are grappling with budget deficits, it may be
unrealistic to expect large increases in budget allocations
for health care or education. In a year of surpluses, how-
ever, increased appropriations may be a realistic objective.
Fit the method of evaluation to the type of advo-
cacy. Grantees often engage in many forms of advocacy,
depending on the issue, their organizational capacity, and
the external environment. Grantees adept at several types
of advocacy are often the most successful. The challenge
for funders is to recognize that methods of evaluation
need to be customized to diverse methods.
Consider the following two very different approaches:
A broad coalition of organizations serving children,
youth, and families conducts a public education and
media campaign. The coalition’s goal is to educate
the public and policymakers of a large state about the
importance of quality child care for children age three
and under.
A single individual works behind-the-scenes to convince
an administrative agency to implement a technical regu-
latory change in calculating levels of carbon monoxide
emissions from automobiles.
These two efforts require varying skills, activities, and
measures of success. Documenting a change in public
attitudes (as in the first example) is more labor-intensive
and expensive than documenting a regulatory change
(the second example). Consequently, each approach calls
for different methods of assessment.
Allow for changes in objectives, as well as the pos-
sibility of failure. Given external realities, grantees may
frequently need to alter the course of their campaigns or
rethink their goals entirely. Grantees should be assured
that such changes may be viewed by the foundation as a
sign of success, rather than of failure. As an example of a
mid-course shift, health care advocates seeking changes in
state Medicaid policies may become frustrated by opposi-
tion to strengthening laws against Medicaid fraud. There-
fore, they may need to change their focus to reforming
executive branch enforcement policies or pursuing civil
lawsuits in order to have a real impact.
According to Luz Vega-Marquis, president and CEO
of the Marguerite Casey Foundation, a private founda-
tion, “[b]ecause advocacy is not a linear process, evaluation
models must be designed to be flexible enough to reflect the
complexity of the environment in which advocates operate.”
Keep in mind that persistence is often an essential
part of advocacy work. A grantee that fails to win an
advocacy campaign did not necessarily do a poor job. Al-
though it may have failed to accomplish policy change or
even policy maintenance during the grant period, it may
have laid valuable groundwork for future victories.
Acknowledge that grantees may not be able to
prove cause and effect relationships between their
efforts and eventual outcomes. When several different
advocacy efforts occur simultaneously, it can be difficult
to determine which approaches have the greatest impact.
Suppose, for example, that the city council appropriates
a significant increase in local funds for early childhood
development programs. The grantee may then develop
strong relationships with the media and organize a meet-
ing with editors from local newspapers to discuss cover-
age of early childhood education issues. This work results
in one paper running an editorial favoring increased
funding. The grantee’s advocacy efforts may, in fact, have
contributed significantly to the increased appropriation,
but it was probably one of several advocacy strategies
used by different groups. Another coalition may have
mobilized young parents to visit their public officials and
urge support of this program; and yet another advocacy
group prepared a convincing cost-benefit analysis to
which the policymakers responded.
Given all the groups involved in the effort, it may be
impossible for the grantee to prove that its work was instru-
mental in obtaining the increased appropriation. In such
situations, the best option may be to evaluate the grantee’s
achievements based on incremental results, such as the local
newspaper’s editorial. If additional foundation or grantee
resources were available, the project’s impact could be mea-
sured through interviews with policymakers or others to see
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Investing in Change: A Funder's Guide to Supporting Advocacy
if they read the editorial and if it changed their position.
In the end, informed judgment is important to deter-
mine a grantee’s effectiveness. “We need to be clear about
what evaluations and data can and cannot do,” notes
Gayle Williams, executive director of the Mary Reynolds
Babcock Foundation, a private foundation. “They can
give helpful information, but ultimately foundation board,
staff, and grantees have to use our collective, informed
judgment to decide how effective the program is.”
Permit grantees to determine the appropriate
evidence of success. Once reasonable measures of suc-
cess have been identified, let grantees decide how best to
collect and analyze their own results.
Don’t forget: evaluation costs money.
Remind grantees to budget resources for
their proposed evaluations.
If a foundation prefers that its grantees use outside
evaluators, it should ask applicants to allocate a portion
of their grant funds for that evaluation. Whether grantees
do their own evaluation or use outside evaluators, funds
should be sufficient to support these efforts.
Program evaluation does not always require a formal
study or outside experts. Much information can be ob-
tained through consistent use of a documentation system
that records information about:
Conditions at the beginning of the project (baseline
data)
Major activities related to interim and long-term
advocacy objectives and progress made on specific
measures of success
External factors and their impact on advocacy strategies
The James Irvine Foundation, a private foundation,
uses a simple three-step approach in evaluating advocacy
grants that focus on program implementation rather than
outcomes. The approach allows grantees to use only the cri-
teria appropriate to their work, and grantees conduct their
own evaluations. The James Irvine Foundation believes
that evaluation should be integrated into advocacy work it-
self and linked to program planning and decision-making.
They find this more helpful and meaningful than conduct-
ing retrospective evaluations. The three steps are:
1. Assess the scope and reach of the grantee’s deliverables,
such as policy-related research papers or town hall
meetings, by tracking the number produced and their
distribution to constituents and policymakers.
2. Look at the target population and its level of engage-
ment with grantees, such as participation in meetings
and other events. Determine if the program is reaching
the intended target population (examples of the target
population might be the staff of a state’s human services
agency, the media, or members of a school board).
3. Obtain “customer” feedback that goes beyond “customer
satisfaction” to determine the effects of the advocacy-related
information or services on the target populations (e.g. how
the policymakers used the grantee’s deliverables).
Note that there is one exception to the data collec-
tion and evaluation practices. Grantees doing advocacy
work should not interview or survey those being targeted
by their efforts. This includes policymakers, media, or
constituent groups. Such contact may skew otherwise
objective responses or interfere with relationships formed
during the effort.
When a project has multiple funders, grantmakers
may need to be flexible about how the evaluation results
are presented. Foundations should think twice before re-
quiring grantees to engage in multiple evaluation efforts
of a single project.
Remember that evaluations will be more work-
able and effective under multi-year grants. Successful
advocacy efforts take time. It may take several years for
organizations to engage constituents, negotiate within a
complicated bureaucracy, build coalitions with allies, gain
credibility as experts in the field, develop relationships with
policymakers and the media, and accomplish significant
policy changes. Documenting results is also time-consum-
ing. Multi-year grants make it easier to plan, implement,
and evaluate solid advocacy efforts.
Include an evaluation of the foundation’s non-
grantmaking assistance to the grantee. In addition
to providing money, foundations play many important
roles in helping grantees accomplish their objectives. For
example, they might introduce grantees to policymakers
or bring together organizations working on the same issue.
Evaluating your own organization’s strategies and tech-
niques can yield important information for future efforts.
For instance, MAZON: A Jewish Response to Hunger, a
public foundation, commissioned an evaluation of the first
four years of its five-year California Nutrition Initiative.
The Initiative sought to improve “the nutritional health and
well-being of low-income Californians by strengthening the
capacity of the state’s nonprofits and anti-hunger network.”
The evaluation of the advocacy project focused on five areas,
two of which were aimed at assessing the funder’s own work.
MAZON was able to determine the strategies in its grantmak-
ing model that enabled its grantees to become more effective.
MAZON’s evaluation also assessed whether it added value to
its grantees, such as by bringing the grantees together for advo-
cacy training and introducing grantees to community leaders.
Information about MAZON’s report is located in Appendix H.
Sample Benchmarks
Executive Branch: grantee comments on two sets of
regulations related to its project objectives
Judicial Branch: grantee recruits six other organizations
to participate in a legal case challenging a state law
Electoral Process: grantee’s Voting Record is widely
published and referenced
Cross-cutting: members of grantee’s organization
overwhelmingly respond to advocacy alerts
Public Foundations and Public Charities Can Also
Use a Lobbying Benchmark: grantee works with two
key legislative committee members and obtains their sup-
port for its position
Benchmarks
Benchmarks are tools used by grantees and foundations
to document and evaluate advocacy efforts. They measure
the effectiveness of advocacy campaigns in terms of out-
comes, progress toward achieving goals, and building the
advocacy capacity of organizations. Benchmarks can also
be grouped by target audiences to document the impact of
the advocacy work on public officials, constituents, other
grantees, and the board and staff of the grantee or founda-
tion. Benchmarks must be prepared in a manner consistent
with the legal restrictions discussed in Chapter II.
Benchmarks can be grouped by outcomes, progress
towards goals, and capacity-building efforts
Outcome benchmarks demonstrate success in obtain-
ing results related to one or more of the organization’s
goals and objectives. Outcome benchmarks can take years
to achieve and then still be incomplete. They usually build
upon progress and capacity building efforts. Examples of
outcome benchmarks include a court striking down weak
state laws on water pollution which the organization had
challenged through litigation, or final adoption of strong
regulations that enforce new anti-pollution laws.
A particularly powerful benchmark is successful lever-
aging of public dollars. As Marcia Egbert, senior program
officer of the George Gund Foundation, a private founda-
tion, described,
“In 2002, the Gund Foundation provided modest
grants totaling $120,000 to help local transitional hous-
ing programs put roofs over several hundred people’s
heads in Cleveland. In the same year, we provided
$25,000 for advocacy support to the Coalition on
Housing and Homelessness in Ohio. That grant culmi-
nated a decade-long effort and resulted in the Coalition’s
securing a permanent public revenue source for the
Ohio Housing Trust Fund. That Fund now generates
$50 million per year to support low-income housing for
tens of thousands of Ohio residents. Both types of grants
are important yet there’s no comparison in terms of the
level of the impact of our investments.”
Progress benchmarks track the steps taken toward
achievement of the grantee’s advocacy goals and objectives.
There are two types of progress benchmarks: key activities
accomplished and incremental results obtained. Togeth-
er, they form the bulk of successes for many organizations.
An activity benchmark could include the submission of
comments to a state agency on proposed new anti-pollution
regulations; another might be holding a series of meetings
with staff from the state agency and the governor’s office.
An incremental results benchmark could include a
request by state agency officials for more research or for
further discussions of the organization’s suggestions. Or,
it might involve a governor’s decision to form a panel to
investigate causes of pollution in local lakes and rivers
and develop future preventative measures.
Capacity building benchmarks demonstrate the
strengthening of a grantee’s capacity to achieve advocacy
success. Examples include developing relationships with
key regulators, as well as motivating members of the
organization’s network to contact administrative officials
in support of the grantee’s position on certain regula-
tions. Even if the proposed regulations did not pass,
the organization increased its ability to carry out future
policy work because it established relationships with
policymakers and a network ready to act.
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Investing in Change: A Funder's Guide to Supporting Advocacy
Benchmarks can be grouped by their impact on
target audiences
Benchmarks can measure an effort’s success by the impact
it had on policymakers, constituents, other organizations, and
the grantee’s own organization. Following are examples of
how these benchmarks might be used in a campaign aimed at
strengthening anti-water pollution regulations.
Example: Sample benchmarks for anti-water pollution
regulations
Public Officials
Twenty key decisionmakers received the organiza-
tion’s report and proposal for strengthening the state
anti-water pollution regulations
Several key public officials endorsed the proposal
The organization submitted comments on proposed
pollution regulations
The state agency changed the regulations to reflect
concerns expressed in the organization’s comments
Constituents and the Public
The organization’s water pollution policy position was
included in a flyer sent to its entire membership
Polls showed a 10 percent increase in general population
support for the organization’s recommended changes in
water pollution laws
Four hundred people attended meetings to organize
support for new state water pollution regulations
Other Organizations
The organization distributed materials to 50 other
groups interested in the environment
Thirteen other organizations endorsed the grantee’s
proposal
The state coalition on water pollution concerns
added 10 new member organizations
Own Organization
The organization’s board and staff gained expertise
on water pollution policy as well as a familiarity with
state legislative and administrative processes
The board and staff committed to a multi-year advocacy
campaign against water pollution
One hundred people concerned with water pollution
signed on for membership in the organization
Case Study: Foundation Evaluation of Advocacy
The Washington AIDS Partnership is a grantmaking collaborative established to engage the philanthropic community in the fight against
HIV/AIDS and help ensure a continuing and coordinated philanthropic response to the AIDS epidemic in the Washington metropolitan area.
It developed the following procedures for evaluating its advocacy grants and grantmaking:
1. The collaborative requires all applicants to include in their grant proposals:
a. Both long-term policy goals and shorter-term objectives the applicant believes can be reached during the grant period; and
b. An evaluation plan that specifies methods for ongoing documentation and assessment of progress towards these objectives.
2. Th� -
sure p�
the funding period. Examples include:
Increased media coverage of policy issues—
progress benchmark
Documentation of media coverage and/or editorial support of particular policy issues;
increased requests from the media for comments on grantee’s priority policy issues
Increased public awareness of policy
issues—progress benchmark; capacity building
benchmark
Development of e-mail network or other group that supports specified policies; dem-
onstrated ability to mobilize public to respond to policy issues (e.g., participating in
advocacy efforts, signing letters or e-mails)
Increased policymaker awareness of policy
issues—progress benchmark
Documentation of testimony delivered at City Council, State legislature, or other legisla-
tive hearings; meetings with key policymakers
Increased policymaker support for policy action
—progress benchmark
Documentation of policymaker support for a proposed policy change, sponsorship, or
support of proposed legislation to address a policy need
Changes in public policy—outcome benchmark Documentation of new or changed legislation, regulations, or procedures used to imple-
ment legislation or regulations
Improvements in programs or services due to
policy changes—outcome benchmark
Documentation of improvements in the program planning process, contracting, or contract
management; increased funding of services; increased access to services by vulnerable
populations
The case study below shows how one grantmaker, the
Washington AIDS Partnership (with the help of Mosaica,
The Center for Nonprofit Development), developed evalu-
ation procedures that incorporated various benchmarks.
Legal Considerations for Grantee Reporting
Even foundations that recognize the value of sup-
porting advocacy work may be nervous about receiving
reports that mention the “A” word from grantees. Their
questions and concerns include:
What are our legal ramifications if a grantee reports
that it used foundation money to lobby?
What if a grantee reports that a major accomplishment
of a funded project was the passage of legislation?
What if a grantee reports that it produced a voting
record or engaged in other nonpartisan electoral
activities?
The short answer is, don’t worry. Grantees can
generally engage in advocacy activities and freely report
their activities—even lobbying or nonpartisan voter
registration activity—without negative consequences
for the foundation. As discussed throughout this guide,
however, legal obligations vary by type of foundation,
type of grantee, and type of advocacy funded. As a result,
limitations on use of grant funds, and the procedures for
requesting and receiving evaluation reports, will differ.
Also, the foundation itself may have imposed certain ad-
ditional obligations in the grant agreement that must be
considered during the evaluation process.
Reports from Public Charities
Public charities are permitted to engage in a wide
range of advocacy activities, as discussed in Chapter I.
Reports on those activities inform the foundation about
how the grantee is allocating grant funds and whether
the funds are being used strictly for charitable purposes.
Funders should not fear reports that mention permis-
sible advocacy activity; this information will not place a
foundation at risk for paying additional taxes or losing its
tax-exempt status.
For further assurance, a foundation may request
a written certification from the grantee, as part of its
evaluation and reporting forms, stating that the grantee’s
activities are permissible within its tax-exempt status as a
public charity.
Reports on Lobbying
Tax law does not prohibit public charities from using grant
funds for lobbying. Therefore, charities may report their
lobbying activities to a foundation, whether public or private,
without legal ramification to either grantees or funders.
Private foundations: A public charity grantee’s
report that describes its lobbying activities will gener-
ally not create a tax liability for the private foundation,
so long as the foundation properly awarded the grant.
The applicable rules, discussed in Chapter II, prohibit
earmarking the grant for lobbying—regardless of whether
the grant is for general support or a specific project. Be
careful to follow the additional rules applicable to specific
project grants as well.
As an example, the following language in a grant
report to a private foundation would generally not create
a taxable expenditure for the foundation or adversely
impact the foundation’s ability to fund the charity in
future years:
The support you and others provided allowed our organiza-
tion to engage in a successful campaign on contraceptives.
We distributed 100,000 fact sheets educating the public
about reproductive choice and served over 250 clients. In
addition, our efforts resulted in the passage of H.R. 32, a
bill to provide medical coverage for contraceptives.
Public foundations: In general, public founda-
tions may receive reports that discuss lobbying from
public charity grantees. If the grant were not earmarked
for lobbying (grassroots or direct), the public founda-
tion generally does not even have to count the reported
lobbying against its own lobbying limits. If the grant
were earmarked for lobbying, then the earmarked funds
are reportable against the public foundation’s lobbying
limits. The grantee must count the money spent against
its lobbying limit as well. For more information about
public foundation grants, see Chapter II.
Sample Certification Language
All activities by the grantee preparing this report were and
are consistent with its status under IRC §§ 501(c)(3) and
509(a), which has not changed since grantee’s last applica-
tion to the foundation. If any lobbying was conducted by
the grantee (whether or not discussed in this report), the
grantee complied with the applicable limits of §§ 501(c)(3)
and/or 501(h) and 4911. The grantee warrants that it is in full
compliance with its grant agreement with the foundation and
that, if the foundation’s grant was subject to any restrictions,
all such restrictions were observed.
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Investing in Change: A Funder's Guide to Supporting Advocacy
What if the foundation grant agreement prohibited
the use of funds for lobbying?
Although such restrictions are only required for private
foundation grants to non-public charities (i.e., expen-
diture responsibility grants), some foundations choose
to impose them on other grantees as well. If a public or
private foundation’s grant agreement prohibits using funds
for lobbying, any violation of that agreement is gener-
ally a contractual matter between the foundation and the
grantee. The foundation may, at its discretion, require the
grantee to return grant funds spent on lobbying and may
choose not to fund the organization in the future.
What if the grantee’s report reveals that the grantee
exceeded its lobbying limits?
If the grantee reports lobbying that exceeded its legal
lobbying limit, neither private nor public foundations have
a legal obligation to rescind the grant or take other action.
If a private foundation provided a general support grant
to a public charity under the rules discussed in Chapter
II and the charity subsequently lost its tax-exempt status
for excessive lobbying, the private foundation will not be
found to have made a taxable expenditure, as long as:
1. the grantee had an advance or final determination of
501(c)(3) status when the grant was made
2. there was no public notice that the tax-exempt status
was revoked before the foundation made the grant
3. the foundation did not learn that the grantee received
notice that it would be removed from charitable status
4. the grantee is not controlled directly or indirectly by
the private foundation
35
Reports of Election-Related Activity
As we have already explored, all public charities are
prohibited from engaging in partisan electoral activity,
meaning any activity that directly or indirectly supports
or opposes candidates for public office. Therefore, if
a public charity reported using grant funds to engage
in partisan electoral activity, both a public or private
foundation could take action (under the rights stipulated
in the grant agreement) to request a refund of the grant
amount. Under tax law, if the foundation does not plan
to fund the grantee again and the charity does not have
any grant funds remaining, the foundation may not have
any legal obligations to rescind the grant. A foundation
facing this situation should consult with legal counsel.
Finally, grantee reports about nonpartisan electoral
activity should not worry either public or private founda-
tions. There is one exception: Special rules apply for
private foundation support of nonpartisan voter registra-
tion activity. If the private foundation provided a general
support grant and the grantee engaged in some voter reg-
istration activity or a project that included it, the report
should clearly state that the voter registration activity was
not the organization’s sole or primary activity. Grantee
reports to private foundations for a project grant should
demonstrate that the voter registration took place under
the section 4945(f) rules, in five or more states, and dur-
ing more than one election period.
A report to a public foundation grantor may describe
nonpartisan voter registration activities.
To worry or not to worry?
Example 1: “This year your foundation’s grant funds allowed
our organization to host a nonpartisan candidate forum. Dur-
ing this forum all the mayoral candidates had the opportunity
to share their views on a range of issues including education,
economic development, and crime.”
A foundation receiving this report should have no concerns.
The activity described is permissible nonpartisan election-
related activity.
Example 2: “This year your grant funds allowed our orga-
nization to invite Mayor Hernandez to discuss her reelec-
tion campaign. The event was very effective with over 30
attendees committing to help with her campaign.”
This report clearly indicates that the public charity was
involved in partisan electoral activity. A foundation receiving
this report should consult with legal counsel.
What if the foundation wants to make future grants
to a public charity that reports partisan activity?
If the public or private foundation wants to fund the
public charity again, the foundation should seek writ-
ten assurances from the grantee that it understands the
rules. The grantee must certify that it will not conduct
partisan political activities in the future. These assurances
from the public charity generally protect the foundation
against questions that it sought to intervene in an elec-
tion by funding the grantee again.
Reports from Non-Public Charities
Reports to Private Foundations
As described in Chapter II, a private foundation has
more oversight responsibilities (expenditure responsibility)
when making grants to organizations that are not public
charities than it does for grants to public charities. If a
non-public charity grantee reports that the private foun-
dation’s funds were used for lobbying, partisan electioneer-
ing, voter registration drives, or other prohibited purposes,
the private foundation will be treated as having made a
taxable expenditure unless it takes reasonable steps to:
1. Recover the grants funds or have the grantee restore
the diverted funds for the original purpose of the grant
2. Withhold further payments to the grantee until it
has received assurances that future diversion of grant
funds will not occur and require the grantee to take
precautions to prevent future diversions
36
Non-public charities may freely report to private
foundations all permissible forms of general advocacy,
including sending press releases, filing comments with an
executive branch agency, or litigation. The grantee may
even discuss its lobbying activity, so long as it is clear in
the report that the private foundation’s grant funds did not
finance the lobbying.
Reports to Public Foundations
While public foundations are not required to exercise
expenditure responsibility, they must still review reports to
ensure appropriate use of grant funds. Many non-public
charities such as 501(c)(4)s are permitted to engage in
partisan electoral activity, but the public foundation’s grant
funds cannot be used for those efforts. If a report indicates
that the funds were used for partisan electoral activity, the
public foundation should consider rescinding the grant
and requesting a refund.
Typically, a public foundation grant to a non-pub-
lic charity that engages in lobbying will automatically
count against the foundation’s lobbying limit, as men-
tioned in Chapter II. Public foundations should expect
to receive reports indicating that grant funds were
expended on lobbying.
If the public foundation awarded a controlled grant
that prohibited or restricted the use of grant funds for
lobbying, the grant will not count against the founda-
tion’s lobbying limit. But, if a report indicates that grant
funds were used for lobbying in violation of the grant
agreement, the public foundation should either seek to
recover the grant funds used in violation of the agree-
ment or increase the portion of the grant counted against
the public foundation’s lobbying limits.
In sum, when grantee reports discuss advocacy work,
foundations can more accurately assess the impact of
the programs they support. Everyone wins. Grantees are
permitted to report the full range of their activities and
successes—including advocacy—without foundations fear-
ing negative legal consequences. So long as grant money is
used in the many permissible ways described above, report-
ing should not present adverse legal consequences.
Reporting and Evaluating Advocacy
41
In addition to supporting the advocacy work of grant-
ees, foundations can themselves engage in advocacy. A
foundation’s reputation and influence within a commu-
nity can be an especially powerful advocacy tool—one
that can persuade other foundation and nonprofit leaders
to support and engage in advocacy. Foundations can
also produce research pertinent to legislative issues, offer
technical assistance, or bring lawsuits that challenge the
status quo. As Karen Bryne of the McKay Foundation, a
private foundation, notes, “Funders have to be advocates
themselves and recognize the whole breadth of work they
can be doing around advocacy by framing and engaging
in the issues.”
This chapter explains the rules for foundations that
engage in lobbying, nonpartisan election-related activ-
ity, and general advocacy. In addition, it describes how
foundation officers, trustees, and employees, acting in an
individual capacity, can participate in advocacy activities.
Lobbying
Private Foundations
Private foundations may not lobby, nor can they
earmark a grant for lobbying, without incurring a taxable
expenditure. Since the exceptions to lobbying discussed
in Chapter I apply to private foundations, however, they
may engage in those activities without tax consequences.
Public Foundations
As public charities, public foundations may engage
in a limited amount of lobbying and may earmark grants
for lobbying; however, earmarked grants count toward
the public foundation’s lobbying limits. For details on
public charity lobbying activities, see Chapter II.
Election-Related Activity
Both public and private foundations must abide by
the same absolute prohibition against partisan electoral
activity as their grantees. They may not participate in
any activity that supports or opposes a candidate or
party for public office. Like their grantees, however,
private and public foundations can participate in the
nonpartisan election-related activities including:
Conducting candidate debates and forums
Compiling and distributing voting records and candi-
date questionnaires
Operating Get-Out-The-Vote (GOTV) drives
Voter registration campaigns (remember that private
foundations have special rules for conducting voter
registration activities.
For more details on nonpartisan voter education ac-
tivities and the special voter registration rules for private
foundations, see Chapter II.
The following fictional examples highlight permis-
sible election-related activities for both public and private
foundations:
Example: Candidate Questionnaire and
Voter Guide
Blue Community Fund, a fictitious public foundation,
sends a questionnaire to all candidates for governor in
North Carolina. The questionnaire solicits a brief posi-
tion statement from each candidate on a wide variety of
issues. All responses are published, unedited, in a voter’s
guide that the Fund makes available to the general
public. The Fund selects the issues solely on the basis
of their importance and interest to the electorate as a
whole. Neither the questionnaire nor the voter’s guide,
in content or structure, demonstrates a bias or preference
about the views of any candidate or group of candidates.
Based on the facts and circumstances described here, this
is a permissible nonpartisan voter education activity.
37
Chapter VI: Rules for Foundations Engaging in Advocacy
“FOUNDATIONS HAVE MUCH MORE THAN MONEY, even small foundations. They have facilities, employ-
ees, board members, collective memory, experience, opinions, and access to many places of influence. ...
Our individual voices, on behalf of the people we support, are seriously underused resources.”
—from an article in The Chronicle of Philanthropy by
Madeline Lee, former president, New York Foundation
Rules for Foundations Engaging in Advocacy
43
44
Investing in Change: A Funder's Guide to Supporting Advocacy
Example: Candidate Debate and Forum Example
The Gray Family Foundation, a fictitious private founda-
tion, invites all viable congressional candidates to partici-
pate in a candidate forum. A nonpartisan, independent
panel prepares and presents the questions. The topics cover
a broad range of issues of interest to the public, includ-
ing those that may be of particular importance to the
foundation’s grantees. Each candidate is given an equal
opportunity to present views on the issues discussed. In ad-
dition, the moderator does not comment on the questions
or make statements that imply approval or disapproval of
any of the candidates. Based on the facts and circumstanc-
es described here, this is a permissible candidate forum.
38
General Advocacy
As discussed throughout this guide, general advo-
cacy—advocacy that does not meet the legal definition of
lobbying—is unlimited for all tax-exempt organizations,
including foundations. Private and public foundations
may engage in non-lobbying advocacy, including:
Conducting public education campaigns
Convening public or private meetings
Requesting enforcement of a law
Advocating for or against an executive order
Commenting on regulations
Influencing non-legislative actions of administrative
bodies
Participating in litigation
Engaging in activity that falls under one of the lobby-
ing exceptions or does not otherwise meet the defini-
tion of lobbying
Using these approaches, many foundations have
found effective ways to draw attention to issues of impor-
tance. For example:
Public Education. The Minneapolis Foundation’s
“Let’s Fix This” advertising campaign raised awareness of
homelessness among Minnesota’s children.
Convening Meetings. The California Endowment and
the California Wellness Foundation sponsored meetings of
key stakeholders to discuss state budget issues.
Commenting on Regulations. Several foundations
signed on to comments submitted to the Federal Election
Commission opposing a proposed rulemaking that would
redefine 501(c) organizations as “political committees”
subject to FEC regulation.
Litigation. Several foundations filed friend of the court
(amicus curiae) briefs in Dobbins v. Legal Services
Corporation, a case seeking to overturn congressionally
mandated limits on how private legal organizations that
receive any funding from the Legal Services Corporation
can use their non-federal funds. The New York Founda-
tion, a public foundation, was a plaintiff in the case.
Nonpartisan Analysis, Study, or Research. The W.K.
Kellogg Foundation, a private foundation, issued a re-
port entitled “Federal Investment in Rural America Falls
Behind,” to look at current policy toward rural commu-
nities and rural development. The foundation recognized
that the ongoing debate about the government’s policy
lacked any real analytical data. It undertook this study
to provide needed facts about the government’s spending
priorities towards rural areas.
Request for Technical Advice or Assistance. Assume
the Senate Finance Committee holds a hearing to deter-
mine whether the self-dealing rules that already apply to
private foundations should also apply to public charities.
If the Committee’s Chair sends a letter to the president of
the Markham Foundation, a fictitious private founda-
tion, asking her to testify about how the Foundation
monitors and applies the self-dealing rules, her time and
expense of preparing testimony, traveling to and from
Washington, D.C., and testifying would not be consid-
ered lobbying.
Examinations and Discussions of Broad Social,
Economic, and Similar Problems. The Robert Wood
Johnson Foundation, a private foundation, together with
several other foundations, annually sponsors “Cover the
Uninsured Week” to raise public awareness about the
millions of Americans who lack health coverage. The
goal of the program is to bring the plight of the unin-
sured to the national agenda.
Self-Defense Communications. Officials from several
private foundations spoke to members of Congress about
proposals to increase the mandatory annual payout
required for private foundations. The foundations even
hired a lobbyist to act on their behalf. Likewise, a public
foundation could urge legislators to oppose a bill that
would remove property tax exemptions for 501(c)(3) or-
ganizations. Neither of these actions constitute lobbying.
In addition to reacting to legislation, private foundations
can use the self-defense exception proactively. For exam-
ple, a private foundation could propose that Congress
lower the tax on foundation investment income. Since
this proposal affects the existence of private foundations,
it would fall under the self-defense exception.
[Note: The self-defense exception applies in rare cir-
cumstances, and foundations should seek legal advice
before relying on it.]
Individual Activity
Individuals who work for or sit on the board of any
foundation or public charity are allowed to participate in
legislative or partisan electoral activity as private individu-
als—on their “own” time. Individuals may make contribu-
tions to candidates, volunteer for a candidate’s campaign,
raise money for a candidate or political party, and even run
for public office. Of course, no foundation resources may be
used to support such activities since the use of foundation
money for partisan political activity is strictly prohibited.
Foundations should take steps to ensure that the
individual’s actions are not imputed to the foundation by
instituting the following rules:
Individuals must not use the foundation’s facilities
or equipment to engage in political activity (e.g., no
use of the foundation’s telephones, copiers, or post-
age machines)
Individuals should take vacation days, a leave of
absence as provided under standard personnel poli-
cies, or confine their personal legislative or political
involvement to outside the normal business day
An individual should always make clear that he/she is
representing himself/herself only and not the foundation
Foundation trustees, officers, and employees can take
additional steps to ensure their actions are not attributed
to the foundation by:
Avoiding statements supporting or opposing candi-
dates for public office during an event sponsored by
the foundation or in any of its publications
Not wearing political buttons at public events or
functions when acting on behalf of the foundation
Not providing the foundation’s mailing list or any
other asset to a candidate
Not thanking or acknowledging trustees, officers, or
employees of a foundation for their work on behalf of
a candidate
A foundation can further protect itself by:
Requiring trustees, officers, or employees who engage
in partisan political activity to clearly state that they are
acting in their individual capacity, not on behalf of the
foundation, and that any reference to their work for
the foundation is made for identification purposes only
Notifying employees of the prohibition on the use
of foundation time and resources, and ensuring that
leave records reflect when employees are taking leave
to participate in outside personal activities
Timely disavowing, in writing, any partisan actions
of trustees, officers, or employees that appear to be
authorized by the foundation, and taking steps to
ensure that such actions are not repeated
Final Note
As you have seen in the preceding pages, there are
many rules and guidelines surrounding foundation and
grantee advocacy, but the overriding message is clear: we
work in this field to make a difference and advocacy can
play a major part in making our world a better place.
Rules for Foundations Engaging in Advocacy
45
46
Investing in Change: A Funder's Guide to Supporting Advocacy
1
In this guide, the word “nonprofit” is specifically used when
referring to all tax-exempt organizations collectively, including
public and private foundations and public charities.
2
Sometimes these activities may trigger registration and
reporting requirements under federal, state, or local lobbying
disclosure laws.
3
26 CFR § 56.4911-2 (d)(4)
4
26 USC § 501(c)(3); 26 CFR § 1.501(h)-1(a)(1)
5
26 USC § 501(h); 26 CFR § 1.501(h)-1 through 26 CFR
§ 1.501(h)-3
6
26 CFR § 4911-2(b)(1)
7
26 CFR § 4911-2(b)(2)
8
26 USC § 4911(d)(2); 26 CFR § 56-4911-2(c)(1)-(4)
9
Treas. Reg. 53.4945-2(a)(3)
10
A searchable online version of the publication is available
on the IRS website at http://www.irs.gov/charities/page/
0,,id=15053,00.html.
11
26 CFR. § 56.4911-2(b) for 501(h) electors only
12
For a more detailed analysis of the lobbying rules, refer to the
Alliance for Justice publication, Being a Player: A Guide to the
IRS Lobbying Regulations for Advocacy Charities.
13
26 USC § 501(c)(3) and 26 CFR § 1.501(c)(3)-1(c)(3)(iii)
14
26 USC § 509(a)
15
26 USC § 4945; 26 CFR § 53.4945-2
16
26 CFR § 53.4945-2(a)(6)
17
26 USC § 4945(e); 26 CFR § 53.4945-2(d)
18
26 CFR § 53.4945-2(a)(6)
19
26 CFR § 53.4945-2(a)(6)(i)
20
26 CFR § 53.4945-2(a)(6)(ii)
21
26 CFR § 53.4945-2(a)(6)(iii)
22
26 CFR § 4945-2(a)(6)(ii)(B)
23
26 USC § 501(c)(3); 26 CFR § 1.501(c)(3)-1(c)(3)(iii)
24
Rev. Ruls. 78-248 and 80-282
25
Rev. Rul. 86-95; TAM 96-35-003 (April 19, 1996)
26
Id.
27
11 CFR § 114.4(d)(6)
28
26 USC § 4945(f); 26 CFR § 53.4945-3
29
26 USC § 4945(h)
30
Private operating foundations are private foundations that
use the bulk of their resources to provide charitable services or
run charitable programs of their own. They make few, if any,
grants to outside organizations and, like private independent
and private family foundations, they generally do not raise
funds from the public.
31
26 CFR § 53.4945-5(a)(1)
32
There are no parallel rules for public foundations and public
charities that do not elect under the 501(h) expenditure test.
The 501(h) regulatory regime is much more detailed and the
IRS has agreed that in certain situations it is appropriate for
non-electors to look to the 501(h) regulations for guidance. See
GCM 39694 (Jan. 21, 1988). It is unclear whether this is such
a situation.
33
26 CFR § 53.4911-3(c)(3)
34
26 CFR § 56.4911-2(b)(1)(iii)
35
26 CFR § 53.4945-2(a)(7)(i)
36
26 CFR § 53.4945-5(e)(1)(iii)
37
Rev. Rul. 78-248
38
Rev. Rul. 86-95; TAM 96-35-003 (April 19, 1996)
Notes
The Markham Foundation (“Grantor”) is pleased to notify Alliance for Research and Education (“Grantee”), located at
(address), that it has been selected to receive a $10,000 general support grant. The award cycle is September 1, 2004 through
September 1, 2005. We look forward to working with you in what we hope to be an exciting year of organizing, advocacy,
education, and progress.
This grant is made by the Grantor subject to the following terms and conditions:
(a) Grantee, or its fiscal agent, is an organization that is both exempt from tax under section 501 (c)(3) of the Inter-
nal Revenue Code (IRC) and an organization described in IRC §509(a)(l), (2), or (3) whose status has been duly
confirmed by one or more operative IRS rulings or determination letters, a copy of which Grantee has filed with
Grantor.
(b) Grantee will utilize the grant’s proceeds only for charitable and educational activities consistent with its tax-ex-
empt status described above. Without limiting the generality of the preceding sentence, Grantee will not intervene
in any election or support or oppose any political party or candidate for public office, or engage in any lobbying
not permitted by section 501(c)(3) of the IRC, or, if applicable, IRC§§501(h) and 4911.
(c) Grantee will inform Grantor immediately of any change in its IRS tax-exempt status, proposed or actual as
described in paragraph b.
(d) This is a general support grant. It is not earmarked for any project or for transmittal to any other entity or person, even if
Grantee’s proposal or other correspondence expresses expenditure intentions. Rather, Grantee accepts and will discharge full
control of the grant and its disposition and responsibility for complying with this agreement’s terms and conditions.
(e) This grant is not in any way earmarked to support or carry on any lobbying or voter registration activity.
(f) Grantee will submit a six-month report to Grantor by March 1, 2005, and a final report by September 1, 2005, that
details any work that Grantee has completed using these grant funds. The report should include information on how
the grant funds were used. Grantor awards the grants in two installments. The second installment will be mailed upon
the completion and return of a six-month report. All grant requirements for the initial six-month grant period must be
met in order for Grantee to receive the full grant sum.
Grantee’s deposit, negotiation, or endorsement of the first installment check will constitute its agreement to the terms
and conditions set forth above. However, please have the enclosed copy of this letter reviewed and signed where indicated
by an authorized officer of Grantee and then returned to us at your earliest convenience so that we may have a copy for
our files.
Sincerely,
Appendix A: Sample General Support Grant Agreement Language
On behalf of Grantee, I understand and agree to the foregoing terms and conditions of this grant and hereby certify
my authority to execute this agreement on Grantee’s behalf.
Signature: _______________________ Name: _________________________
Title: ___________________________ Date: __________________________
Appendix A: Sample Support Grant Agreement Language
47
48
Investing in Change: A Funder's Guide to Supporting Advocacy
This grant agreement details a one-year specific project grant from the Markham Foundation (Grantor) to the
Alliance for Research and Education (Grantee), located at (address) to support Grantee’s Preservation of Wildlife
Habitats project.
Project Term:
The term of the project is one year beginning on January 1, 2005.
Project Description:
This project will seek to identify and preserve wildlife habitats in Upstate New York through the promotion of ecosys-
tem conservation, sound management, and the preservation of sustainable natural landscapes through a combination of
education, litigation, and advocacy.
The Grantor makes this grant subject to the following terms and conditions:
(a) Grantee must repay to grantor any portion of this grant not used for the stated purpose.
(b) Grantee is an organization both exempt from tax under section 501(c)(3) of the Internal Revenue Code (IRC)
and an organization described in IRC section 509(a)(1), (2), or (3), which statuses have been duly confirmed by
one or more operative IRS rulings or determination letters, copies of which Grantee has filed with Grantor.
(c) Grantee will utilize the grant’s proceeds only for charitable and educational activities consistent with its tax-exempt
status described above. Without limiting the generality of the preceding sentence, Grantee will not intervene in any
election or support or oppose any political party or candidate for public office, or engage in any lobbying not permit-
ted by section 501(c)(3) of the IRC or, if applicable, IRC sections 501(h) and 4911.
(d) Grantee will inform Grantor immediately of any change in its IRS tax-exempt status, proposed or actual, described in
paragraph (b).
(e) Grantee will submit quarterly written reports to the grantor on the disposition of the grant proceeds. The report
should describe:
The goals set for the project during the grant period
Any progress or setbacks relative to these goals
Other funding received for this project and how it was used
The impact of project activities on the target issue(s)
Any modification of strategies in light of changing issues
Significant challenges and how they were dealt with
Major staff and programmatic changes
(e) Grantee agrees to show these grant funds separately on its books; however, Grantee is not required to segregate
these funds in separate bank accounts. All expenditures made for the purposes of the grant shall appear on Grantee’s
books. Grantee agrees to make such books and records available to Grantor at reasonable times upon request and to
keep copies of all books, records, and reports to Grantor for at least four years after the grant term has ended.
(f) This grant is earmarked for the project identified in this grant agreement. The grant is not earmarked for trans-
mittal to any other entity or person, even if the proposal or other correspondence expresses expenditure inten-
tions. Rather, Grantee agrees to accept complete control of the grant and its disposition and responsibility for
complying with the terms and conditions of this agreement.
(g) This grant is not in anyway earmarked to support or carry on any lobbying or voter registration drive. Grantee
hereby reaffirms that the project’s current budget, attached to this grant agreement, accurately reflects Grantee’s
present intention to expend at least the amount of this grant on project non-lobbying and non-voter registration
activities in Grantee’s current fiscal year.
Appendix B: Sample Specific Project Grant Agreement Language
By signing below, Grantee accepts and agrees to all terms and conditions set forth in this letter. Please retain a copy
of this grant agreement and return a signed copy to Grantor by January 1. Upon receipt of a signed agreement, Grantor
shall disburse the grant.
Signature: _______________________ Name: _________________________
Title: ___________________________ Date: __________________________
Appendix C: Rules for Foundation Support of Advocacy by Public Charities
This chart provides general information and should not be relied on without consulting specific guidance
contained in this guide.
Private Foundations
(including family and
corporate-sponsored foundations)
Public Foundations
(including community foundations)
Fund
Earmark
Funds* Notes Fund
Earmark
Funds† Notes
Administrative Advocacy
Regulatory advocacy Yes Yes Yes Yes
Enforcement of enacted
laws
Yes Yes Yes Yes
Executive orders Yes Yes Yes Yes
Judicial Advocacy
Litigation Yes Yes Yes Yes
Legislative Advocacy
Lobbying No No May provide general support
and specific project grants to
charities that lobby
Yes,
limited
Yes,
limited
Count earmarked grants
against the foundation’s
lobbying limit
Nonpartisan analysis, study,
or research
Yes Yes Yes Yes
Requests for technical
advice or assistance
Yes Yes Yes Yes
Self-defense communica-
tions
Yes Yes Yes Yes
Examinations & discussions
of broad social, economic,
and similar problems
Yes Yes Yes Yes
Electoral Advocacy
Partisan No No No No
Nonpartisan Yes Yes Special rules for funding voter
registration activity
Yes Yes
* According to �
for specific purposes.” 26 CFR 53.4945-2(a)(5)(i). .
† According to regulations, a transfer, including a grant, is earmarked “(i) to the extent that the transferor directs the transferee to add the
amount transferred to a fund established to accomplish the purpose, or (ii) to the extent of the amount transferred or, if less, the amount
agreed upo�
transfer�
26 CFR 56.49�
public charities.
Appendix C: Rules for Foundation Support of Advocacy by Public Charities
49
50
Investing in Change: A Funder's Guide to Supporting Advocacy
Appendix D: Rules for Foundations Engaging in Advocacy
This chart provides general information and should not be relied on without consulting specific guidance
contained in this guide.
Private Foundations
(including family and corporate-sponsored
foundations)
Public Foundations
(including community foundations)
Permissible Notes Permissible Notes
Administrative Advocacy
Regulatory advocacy Yes Yes
Enforcement of enacted laws Yes Yes
Executive orders Yes Yes
Judicial Advocacy
Litigation Yes Yes
Legislative Advocacy
Lobbying No, lobbying
is a taxable
expenditure
Yes, limited Count any money spent
on lobbying against the
foundation’s lobbying
limit
Nonpartisan analysis, study, or research Yes Yes
Requests for technical advice or
assistance
Yes Yes
Self-defense communications Yes Yes
Examinations & discussions of broad
social, economic, and similar problems
Yes Yes
Electoral Advocacy
Partisan No No
Nonpartisan Yes Special rules for engag-
ing in or funding voter
registration
Yes
National Supporting Organizations
Alliance for Justice
11 Dupont Circle, NW
2nd Floor
Washington, DC 20036
Phone 202.822.6070
Fax 202.822.6068
www.afj.org
Association of Small Foundations
4905 Del Ray Ave., Suite 308
Bethesda, MD 20814
Phone 301.907.3337 or 888.212.9922
Fax 301.907.0980
www.smallfoundations.org
www.foundationinabox.org
Charity Lobbying in the Public Interest
2040 S Street NW
Washington DC 20009
202.387.5048
Fax 202.387.5149
www.clpi.org
Chronicle of Philanthropy
1255 23rd St. NW, Suite 700
Washington, D.C. 20037
Phone 202.466.1200
help@philanthropy.com
philanthropy.com
Council on Foundations
1828 L Street, NW
Washington, DC 20036
Phone 202.466.6512
Fax 202.785.3926
www.cof.org
Forum of Regional Association of Grantmakers
1111 19th St., NW, Suite 650
Washington, DC 20036
Phone 202.467.1120
Fax 202.467.0055
www.GivingForum.org
Foundation Center
79 Fifth Avenue/16th Street
New York, NY 10003-3076
Phone 212.620.4230 or 800.424.9836
Fax 212.691.1828
http://fdncenter.org
Philanthropy News Digest:
http://fdncenter.orgpnd
GuideStar
4801 Courthouse Street, Suite 220
Williamsburg, VA 23188
Phone 757.229.4631
www.guidestar.org
Independent Sector
1200 18th St., NW, Suite 200
Washington, DC 20036
Phone 202.467.6100
Fax 202-467.6101
http://www.independentsector.org/
National Committee for Responsive Philanthropy
2001 S Street, NW, Suite 620
Washington, DC 20009
Phone 202.387.9177
Fax 202.332.5084
www.ncrp.org
National Council of Nonprofit Associations
1030 15th Street, NW, Suite 870
Washington DC 20005
Phone 202.962.0322
Fax 202.962.0321
www.ncna.org
OMB Watch
1742 Connecticut Ave NW
Washington DC 20009
Phone 202.234.8494
Fax 202.234.8584
www.ombwatch.org
Administrative Agencies
Federal Election Commission
999 E Street, NW
Washington, DC 20463
Phone 202.694.1100 or 800.424.9530
TTY 202.219.3336
www.fec.gov
Internal Revenue Service
TE/GE Customer Account Services
P.O. Box 2508
Cincinnati OH 45201
Phone 513.263.3333
Or toll free at 877.829.5500
www.irs.gov
Appendix E: Resources
Appendix E: Resources
51
52
Investing in Change: A Funder's Guide to Supporting Advocacy
Below are sample benchmarks, or indicators, for each
type of advocacy defined in Chapter I. Grantmakers may
wish to share these with grantees, or applicants for advocacy
funding, so they can use such benchmarks in developing
concrete objectives and evaluation plans in their proposals
and their work. Please note that these are only examples;
grantees should be encouraged to develop their own bench-
marks in line with advocacy goals and objectives.
Some of these benchmarks point toward a level of
activity or accomplishment that is considered desirable for
any organization evaluating its advocacy work. Others are
more demanding and indicate what an advocacy organi-
zation would do in an ideal situation, with sufficient re-
sources. As always, each organization’s capacity, resources,
history, and current situation must be taken into account.
Many of these benchmarks, such as building relation-
ships with policymakers, building an active constitu-
ent network, and learning the legislative or regulatory
process, develop the organization’s capacity for effective
future advocacy work; others reflect progress towards
objectives, or both. Still others, such as showing increased
voter turnout, show that the organization reached a goal
or objective as an outcome of its work.
Remember: Be as definitive as possible and quantify
as much as possible. For example:
“Reached public with voter education materials”
could be reported as: “Reached 50% of Casper
County with two voter education brochures.”
“Building relationships with legislators and staff on
key issues” might be reported as: “Developed close
relationship with two environmental committee chairs
that included weekly meetings with their staff on the
upcoming water pollution bill.”
There are many additional examples of effective
benchmarking related to specific areas of advocacy work.
Think about your organization and which of these
benchmarks might apply:
Executive Branch
The organization:
can identify and has contacts in agencies that implement
policies and programs related to its issue priorities
understands relevant agencies’ deliberation and rule-
making processes
monitors the implementation of legislation related to
key priorities at the administrative/executive level by
tracking rules and regulations
has an ongoing relationship with the cabinet-level
secretaries and/or key department administrators of
the government agencies overseeing public policy
identifies gaps in data of government agencies and
develops and advocates for strategies for filling the gaps
files comments on governmental actions and pro-
posed regulations
directs public attention to proposed regulations, and
challenges policies or regulations in court when they
are inconsistent with the law
negotiates with department administrators and provides
input on initial and ongoing implementation of policies
meets with chief administration officials of target
jurisdiction, prior to official submission of legislative
agenda and budgets
has its comments on proposed regulations cited by
the targeted administrative agency in final regulations
generates numerous comments on proposed regula-
tions from members of the public
demonstrates that its concerns are reflected in
stepped-up implementation or enforcement of legisla-
tion or regulations by an administrative agency
Judicial Branch
The organization:
has a working knowledge of the litigation process and
develops annual, proactive plans for engaging in litigation
develops ongoing relationships with lawyers, judges,
and other key stakeholders
works collaboratively with other organizations en-
gaged in judicial advocacy
participates in legal challenges to legislation
has clear criteria for selecting prospective cases, in-
cluding their potential for setting legal precedents
regularly prepares amicus briefs in support of cases
relevant to its issues
has language from its legal pleadings or amicus brief
used by a judge in his or her opinion
shows favorable rulings related to its interests
Appendix F: Sample Benchmarks of Advocacy Effectiveness
Legislative Branch
The organization:
Possesses a clear working knowledge of the rules
regarding lobbying by a nonprofit organization.
This is reflected in the organization’s board policies
and personnel policies and in the orientation of new
board members and employees
Understands federal, state, county, and local legisla-
tive process, including annual schedules for develop-
ment of legislative and budgetary priorities
Understands and complies with federal and state rules
governing direct and grassroots lobbying and report-
ing of lobbying
Identifies, builds, and maintains working relation-
ships with appropriate legislators and their staff who
make or influence policy decisions related to the
organization’s objectives or its core constituency
Maintains a consistent presence in federal, state,
county, and local legislative bodies
Invites lawmakers to meet and observe the people and
places for which it is advocating
Develops relationships across all political parties
Identifies and tracks bills directly related to its issue
priorities
Analyzes proposed legislation and develops proposed
changes, when needed, to significant bills that it tracks
Provides all legislators with written copies of its an-
nual legislative agenda and data-driven information
on the status of its constituents
Generates jurisdiction-specific information and data
for legislators throughout the year
Is called upon by policymakers for information and
opinions on key issues
Maintains records for tracking lobbying expenses that are
adequate to meet federal, state, and local requirements
Has a working knowledge of public programs related
to its key issues, as well as their revenue structure and
sources
Tracks and monitors the annual budget and/or ex-
penditures (federal, state, or local) in areas related to
its issue priorities
Analyzes the nature and adequacy of revenues as well
as the impact of tax policies on its constituents
Makes recommendations to key legislative committees
about strategies effectively using additional public funds
Articulates the needs of its constituents during issue
debates by providing timely information on the
potential impact of legislative proposals
Strategically publicizes information on spending
trends on issues affecting its constituents
Understands the judicial nominations process
Monitors judicial appointments, obtains information
on prospective appointees’ backgrounds related to its
issues, and disseminates this information to its network
Proves that a legislative committee holds a hearing on
issues for which the organization seeks the legislature’s
attention
Is asked to testify at hearings
Sees its stance reflected in ballot measure outcomes
Shows that policymakers champion its issue in com-
mittee or with other legislators
Demonstrates that policymakers give informal or formal
(written) support to its recommendations
Shows that policymakers introduce bills which reflect
some or all of its interests
Establishes that legislation representing its interests
proceeds through different steps of approval in the
legislative process
Confirms that legislation representing its interests is
signed into law
Electoral Process
The organization:
Clearly understands the rules regarding what a
nonprofit organization can and cannot do during
election season. This is reflected in its board policies
and personnel policies and in the orientation of new
board members and employees
Engages in nonpartisan voter registration campaigns
Regularly engages with its constituents in get-out-the-
vote campaigns
Requests candidates’ positions through candidate
forums, questionnaires, or other strategies
Has a process for briefing all candidates or newly
elected officials on key issues facing its constituents
Reaches the public with voter education activities
Shows increased voter registration
Shows increased voter turnout
Appendix F: Sample Benchmarks of Advocacy Effectiveness
53
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Investing in Change: A Funder's Guide to Supporting Advocacy
Cross-cutting Advocacy
Note: Cross-cutting advocacy can be applied to all
types of advocacy
Constituency Involvement:
The organization:
Has a clearly defined core constituency (i.e., a
group of individuals and/or organizations that it
feels accountable for its actions)
Involves its constituency in the development of its
issue priorities and advocacy objectives
Obtains input from its constituents on its mobiliza-
tion activities through strategies such as convening
planning meetings, conducting surveys, and using
action committees
Has procedures through which its constituency
holds it accountable
Increases the involvement of its core constituency,
particularly those people affected by the issues,
across a number of policy issue priorities
Network Building:
The organization:
Has a network of individuals and organizations
interested in and willing to take coordinated ac-
tion to address issues affecting its constituents
Communicates regularly with its network to share
information on progress and key issues
Periodically engages in activities to reach out to
and expand its network. This builds the network
to include a range of individuals and organiza-
tions with a shared commitment to its constitu-
ency or core issue
Conducts one or more formal activities each year
to educate and engage its network about issues
affecting its constituency
Strategically builds its network to engage those
likely to have an impact on policies affecting its
constituency
Regularly communicates with its network through
e-mail, newsletters, meetings, or other means
Uses mobilization activities to promote diversity,
tolerance, and understanding
Monitors actions taken by network members in
response to its requests for action
Periodically asks its network to take specific action in
support of its issue priorities and advocacy objectives
Regularly provides formal activities to educate and
build the advocacy capacity of its network, using
approaches such as skills training and/or leader-
ship development, and provides training based on
needs articulated by its network
Successfully mobilizes its network and other
interested individuals and organizations to take
advantage of unexpected events bringing attention
to its core public policy issues
Coalition Building:
The organization:
Understands the definition of, types of, and strat-
egies for building coalitions
Regularly identifies other organizations working
toward the same goals and meets with them to
share information and avoid duplication of effort
Conducts a strategic assessment of whether, when,
and with whom it should collaborate in order to
advance its goals, before becoming part of a coali-
tion or alliance
Participates in coalitions that can help advance its goals
Has a clear understanding about which coalitions
and issues it will choose to lead and in which coali-
tions it will play a supporting role
Plays a lead role in starting and building coali-
tions that can help advance strategic objectives
Reaches out to a broad array of groups and sectors
by building alliances and coalitions
Mobilization:
The organization:
Has established communication procedures and
infrastructure necessary to mobilize its network in
a timely and strategic fashion
Uses multiple strategies for alerting and mobiliz-
ing its network
Has a mobilization plan with objectives, targeted
groups, timelines, and strategies for reaching diverse
individuals and organizations
Uses mobilization activities to promote diversity,
tolerance, and understanding
Provides constituents with resources and ready-made
materials to take action on specific bills or proposals
Media Advocacy:
The organization:
Has identified media spokespersons
Provides media training for staff and board mem-
bers who are involved in its media activities
Has written policies and procedures that guide its
media work
Monitors media coverage of issues affecting its
major issue areas and identifies trends in coverage
Identifies opportunities for placement of stories
about key issues and the impact of policy deci-
sions on those issues
Maintains strong relationships with key person-
nel in both print and broadcast media and works
to become familiar with reporters, editors, and
producers
Is respected as a credible source by the media and
is regularly contacted for information about its
important issues
Disseminates news releases for major events and
reports, and consistently follows up with phone
calls and e-mail messages
Uses a variety of methods and vehicles to attract
electronic and print media coverage of its issues
Facilitates media use of its information and ma-
terials by adapting them for easy use and dissemi-
nation (e.g., adapting material to the Associated
Press style guide)
Frames its media messages to take advantage of
breaking news stories, supportive data, and timely
information on public opinion
Provides a “local angle” to data and a “human
story” enmeshed in a policy framework for the
media
Influences regular press coverage on its key issue
priorities, demonstrated through quotes and issue
stances reflecting its view
Appendix F: Sample Benchmarks of Advocacy Effectiveness
55
56
Investing in Change: A Funder's Guide to Supporting Advocacy
Being A Player: A Guide to the IRS Lobbying Regulations for Advocacy Charities (1995)
E-Advocacy for Nonprofits: The Law of Lobbying and Election-Related Activity on the Net (2000)
Foundations and Ballot Measures: A Legal Guide (1998)
Give Me Your 990! Public Disclosure Requirement for Tax-Exempt Organizations (2002)
Lobby Government Officials, Advocate for Legislation, and You Know What Will Happen? (2002)
Myth v. Fact: Foundation Support of Advocacy (1995)
Seize the Initiative (1996)
Support Grantees that Lobby, and You Know What Will Happen? (2002)
The Connection: Strategies for Creating and Operating 501(c)(3)s, 501(c)(4)s, and PACs (1998)
The Rules of the Game: An Election Year Legal Guide for Nonprofit Organizations (1996)
Worry-Free Lobbying for Nonprofits: How to Use the 501(h) Election to Maximize Effectiveness (1999)
Appendix G: Alliance for Justice Publications
The following model diagrams opportunities for funder
inputs that are needed to support advocacy at differ-
ent stages in the agency action continuum of advocacy
activity. Through this study, several key choice-points
were discovered where, with stimulation and support
by funders, agencies advance toward greater advocacy
activity.
The first is IMPETUS. Many grantees cited MA-
ZON’s clear expectation of advocacy as key in stimulat-
ing them to take action. In agencies where advocacy was
an established part of their operations, it was often either
a person who was committed to advocacy who pushed
the effort or an issue that galvanized staff and board.
Funder inputs at this point include the expectation of
advocacy activity, setting an example by being involved in
advocacy, and providing funding for general support or
for specific advocacy activity.
PERMISSION is often where agencies experience
barriers. Many organizations believe that they are not
“allowed” to engage in advocacy or lobbying, either
because of funders’ restrictions or simply by virtue of their
nonprofit status. Some organizations face an inhospitable
political climate in their local communities, sometimes
simply because they serve the poor, minorities, immi-
grants, and welfare recipients. Funder inputs to support
education about the legal issues of nonprofit advocacy,
educating other funders to remove restrictions about “lob-
bying” on their grant documents, and training of agency
boards can help establish permission to move forward.
ENGAGEMENT was cited by many grantees as the
most effective strategy for building capacity for advocacy.
Creation and support of community coalitions, confer-
ences, networks, and communication tools are essential in
increasing the quantity and quality of advocacy involve-
ment. Support for regional and statewide networks, like
the California Association of Food Banks (CFPA), helps to
build ongoing engagement, connection and relationships.
Support for coalition building is one of the most effective
things that a funder can do to build capacity for advocacy.
EDUCATION to build skills and confidence in
media relations, letter writing, visiting legislators and
other advocacy actions is essential. Funders can support
regional workshops, development and dissemination of
toolkits, technical assistance, and specialists to work with
groups of organizations.
STRATEGY increases agencies’ effectiveness and
empowerment. It is important to match the issues and
targets with the appropriate actions and to mobilize
the right constituents to join in larger efforts. Policy
development and advocacy groups, like CFPA and
Food Research and Action Center (FRAC), are es-
sential to the infrastructure of support and provide a
depth of knowledge, analysis, strategy development,
and tracking that the individual agencies are unable
to do by themselves. Support for these types of groups
should be part of every advocacy funder’s portfolio.
ACTION occurs on both the individual and
systemic level. Advocacy on the individual level is
representing a specific client or group of clients to
obtain rights or benefits and usually happens at the
local level. Systemic advocacy addresses larger legisla-
tive issues, whether county, state or national, or other
broad-based media campaigns aimed at bringing about
social change. While it is important to do both, mov-
ing agencies toward more systemic advocacy requires
the impetus and support outlined in this model. At
this point, funders’ support for media and messaging
is important as well as funding data gathering so that
evaluation can occur.
EVALUATION OF EFFECTIVENESS is essential
both for feedback into the system to fine-tune actions
and to encourage participants to keep going. Assess-
ment of the effectiveness of advocacy activities is often
difficult to measure and it is easy to become discour-
aged when progress appears to be slow. Funders should
support the development of easily implemented evalu-
ation tools to measure advocacy activity and success
indicators.
From Strengthening Anti-Hunger Advocacy In California: Evaluation of the California Nutrition
Initiative 1998-2001, Mazon: A Jewish Response to Hunger, by LKM Foundation Services, 2003.
Appendix H: A Model for Funder Intervention to Support Advocacy
Appendix H: A Model for Funder Intervention to Support Advocacy
57
58
Investing in Change: A Funder's Guide to Supporting Advocacy
Appendix H: (continued)
From Strengthening Anti-Hunger Advocacy In California: Evaluation of the California Nutrition Initiative 1998-2001, Mazon: A Jewish Response to Hunger, by LKM Foundation Services, 2003.
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