What Nonprofits Cannot Do

It is not enough for you to know only the definition and limits of the foundation's rights in policy work. Because foundations make grants to nonprofit organizations, it is essential to know the definition and limits of nonprofit rights in the policy arena.

The 1976 lobbying law, explicated by a set of regulations issued by the Internal Revenue Service in 1990, is very kind to nonprofits that wish to engage in public policy activities. However, the law is written in such a way that no nonprofit need exercise these rights if it does not wish to do so. Charities may “elect” to come under the law; if they do so elect, they are given broad latitude to lobby. If they do not elect to come under the law, they exist in a murky limbo in which they are required to limit expenditures for lobbying to an “insubstantial” percentage of their total expenditures. Just what “insubstantial” might mean on a balance sheet has never been defined, so any foundation making an advocacy grant to a nonelecting nonprofit should be very conservative in terms of the amount granted. There is no sense in tempting fate by making a large grant that could be deemed “substantial” by the Internal Revenue Service.