April 18, 2011

Nonprofits Call for Changes to 'Arcane' Lobbying Rules

Independent Sector, the coalition of charities and foundations, says it is time to explore ways to change the federal rules that restrict nonprofit lobbying.

Nonprofit and legal experts, who discussed the issue at a closed-door meeting last week, criticized existing lobbying rules as "arcane" and "vague to the point of being dysfunctional," says Diana Aviv, Independent Sector's president.

They argued that the restrictions discourage charities from exercising their legal right to speak out about legislation that affects their missions, she says.

For example, Ms. Aviv says, few charities take advantage of provisions that allow them to use a formula to determine whether they are spending too much money on lobbying. That option was introduced by a 1976 law that sought to give organizations an alternative to existing language that was considered too vague. That language, which groups can still choose to use, says that lobbying must make up only an "insubstantial" part of a charity's activities.

However, most nonprofits avoid using the newer formula, in part because the spending limits have never been raised or indexed for inflation, meaning they are too low for large organizations, especially advocacy groups, Ms. Aviv says.

The formula also sets stricter limits for "grass-roots lobbying," or urging the public to advocate for or against specific legislation, than for "direct lobbying," or asking lawmakers or government officials to take a stand on legislation. Charities can spend up to $250,000 for the former and $1-million for the latter.

"If we are about free speech and we are about citizen participation and we want people to be part of the public-square debate, and these rules limit our opportunity to do this, it's a real problem," Ms. Aviv says of the formulas.

The experts also flagged problems with the limits on private-foundation grants to charities that pursue advocacy work, saying they were prompting grant makers to attach unnecessary restrictions to their gifts.

The law bars foundations from making grants to nonprofits specifically for lobbying activities.

However, Ms. Aviv says, "more often than not, private foundations have interpreted these rules to mean no part of the money given, including general operating support, can be used for lobbying."

Because the law is confusing, giving at least four definitions of "lobbying," and charities and their boards are worried about losing their tax exemption, many organizations choose to forgo lobbying altogether, Ms. Aviv says.

While these issues have been bubbling under the surface for some time, a 2010 U.S. Supreme Court decision, which lifted restrictions on corporate campaign spending, has made these questions more pressing for many charities, Ms. Aviv says.

"It's time to update [the approach], it's time to clarify these rules, it's time to not be so nervous," Ms. Aviv said.