Since the 2016 election and the rise of the far right, progressives have looked anew at how they can use philanthropy to champion their values and protect our democracy. The response has been a re-evaluation of how best to invest in “movement-building.”
That rethink is overdue: Movement-building has long been reduced to a short list of activities that charities can “legally” engage in, but to build a movement that can win, foundations, nonprofits, and other key players must be open-minded about what charitable organizations can do — and consider other types of legal entities to turn progressive ideals into law.
While organizations classified under Section 501(c)(3) of the Internal Revenue Code face limits on advocacy and are banned from politicking, they can do far more under the law than most people realize.
But many innovative organizations believe they need to lobby elected officials and hold them accountable at the ballot box to make real change. They are opting to establish 501(c)(4)s, PACs, or nonprofit corporations, which allow for more legal freedom but do not grant donors a tax deduction.
Conservatives have long grasped this, making long-term investments in whatever legal vehicles are necessary — including advocacy groups and corporate entities — to effect change.
Now bold progressive grant makers are exploring how charities can engage in the full range of sanctioned activities, including lobbying. And innovative leaders are thinking beyond 501(c)(3)s and establishing a variety of organizations — including advocacy groups, political-action committees, and other entities — to accomplish their mission and win key battles.
Building a movement that uses myriad legal structures and strategies is not easy, but it is doable, and philanthropy is uniquely suited to help. Pioneers such as the Groundswell Action Fund, the Open Society Foundations, Grove Action Fund, and the Civic Participation Action Fund have helped to strengthen 501(c)(4)s. Innovative investors like New Media Ventures fund various legal entities to maximize impact. For many in philanthropy, this is uncharted territory. But as policies on climate change, reproductive health, racial justice, health care, immigrants’ rights, digital privacy, and more hang in the balance, we must be bold.
Through providing legal, management, and other advice to more than 60 emerging progressive groups and conducting interviews with nonprofit leaders, grant makers, and others, New Left Accelerator has seen up close the huge ostacles organizations face when seeking to form new legal entities and adopt bold strategies. The themes that emerged can inform how we go forward as a movement.
A big-picture mind-set is fundamental to democracy.
Throughout our interviews, a prevailing mind-set emerged. Movement-building was largely defined as a list of 501(c)(3)-eligible activities, while legal lobbying and non-501(c)(3) work were seen as separate and unrelated. We heard almost no discussion of whether entities such as 501(c)(4)s, PACs, and nonprofit corporations might increase impact or effectiveness and, likewise, little discussion about how to support leaders to start related entities to achieve their mission.
A shift to a big-picture mind-set could help unleash our movement’s potential. Our leaders should be free to decide which tactics and legal entities can secure policy wins, and they should have access to resources to realize that vision and exercise their true strength.
Philanthropy can play a critical role in supporting a mind-set shift. Bolder Advocacy, a leading advocacy resource for bold foundation and nonprofit work, and a partner in our work, explains: “When a foundation invests in advocacy, either by supporting nonprofits or engaging in advocacy itself, the value of its overall giving is multiplied exponentially. Foundation support for nonprofits that engage in advocacy, including lobbying and election-related activities, isn’t just legal — it’s important, powerful, and fundamental to democracy.”
Grant makers can encourage a big-picture mind-set by letting grantees know they have an appetite for legal lobbying and value leaders who think creatively about how to use a 501(c)(4). Foundations can also make sure that grant agreements avoid legally unnecessary restrictions against 501(c)(4) activities, ensure grant agreements are not more restrictive than the law requires, and directly fund 501(c)(4) work.
Nonprofits need to overcome operational hurdles.
The second barrier philanthropy can help overcome is operational: Legal advice on engaging in lobbying or 501(c)(4) activities can easily drain a smaller organization’s budget, and leaders have little to no training or resources to help them weigh the pros and cons of lobbying or other non-501(c)(3) work.
Leaders who opt to lobby or form non-501(c)(3) entities have even less support figuring out how to integrate the new work into their organizational structures — how to craft well-designed resource-sharing agreements, build systems to track staff time, or manage budgets and strategic planning between joint legal entities. Our movement needs more organizational capacity-building and training programs to help non-501(c)(3)s overcome these operational hurdles and improve their effectiveness.
In addition, we need to engage in learning and evaluation to support this emerging field. Grant makers can invest in the development of case studies that document innovative best practices and help leaders judge whether lobbying or creating multiple legal entities might maximize their impact.
Finally, grant makers can help nonprofits find and pay for qualified lawyers and training programs that provide guidance, increase board confidence in lobbying work, and empower experimentation while complying with the law.
Investing in an ecosystem that supports a variety of groups advancing social good, not just charitable organizations, philanthropy can also help build an ecosystem that nurtures the growth of an array of organizational structures beyond charities alone.
For example, many foundations already run fellowships or fund training sessions for executive directors and 501(c)(3)s. These programs could be expanded and adapted for a broader range of legal entities. This includes expanding leadership pipeline and organizational development programs.
Grant makers can also invest in raising the skills and knowledge of consultants and those who help nonprofits build their management and leadership capacity.
Most nonprofits rely on trainers and consultants to enhance their skills — but too few have experience working with multiple but related legal entities. Fundraising staff and consultants need to know how to create plans that finance and share resources among related groups. Organizational development consultants need to know how 501(c)(3)s, 501(c)(4)s, and PACs are allowed to coordinate and share resources — and how they’re not.
By funding the development of 501(c)(4) resources, infrastructure, and training; encouraging innovative thinking; and cultivating a sense of community among 501(c)(4) staff, consultants, and trainers, grant makers can boost our movement’s effectiveness and capacity exponentially.
A Holistic View
Traditional approaches to movement-building are critical to building community-based power. But alone, they cannot secure victory on the policy issues of our day.
Philanthropists, nonprofit leaders, consultants, trainers, and others should adopt a more holistic and comprehensive view of movement-building — one that allows us to use all the strategies and legal structures needed to exercise influence, maximize impact, and win critical policy battles.
As more organizations strengthen our movement by using the full range of strategies needed to win, philanthropy can lessen the obstacles they encounter along the way — and usher in a new era of impact.
Deborah Barron is founder and executive director of New Left Accelerator, an advocacy group that works to build new tax-exempt structures to advance the progressive movement, and the Capacity Shop, a related charitable organization.
Correction: A previous version of this article referred to the Grove Foundation; it is the Grove Action Fund that helped strengthen organizations classified under Section 501(c)(4).
