Here’s a question I hear a lot from nonprofit orgs: If a private foundation gives us a grant, can we still spend money on lobbying?
The short answer is yes. The rules actually are friendlier than most people think, and they work a little differently depending on whether the grant is for general operating support or a specific project.
As a preliminary matter, private foundations face strict rules on lobbying under Section 4945. But when a foundation makes a general support grant to a public charity, the only question is whether the grant is “earmarked” for lobbying, meaning there’s an oral or written agreement that the funds will go toward legislative activities. So, no earmarking = no problem. With non-earmarked general support grants, the grantee charity can use its overall budget however it sees fit, including on lobbying.
(A note for the charities out there receiving funding: even though the regulation doesn’t require it for general support grants, foundations will often ask you for a budget showing that your non-lobbying expenditures exceed the grant amount. It’s a good practice to have one ready.)
As an alternative, private foundations also can make specific project grants. With these, the math really matters. If a foundation wants to fund a defined project that includes lobbying, it can do so under what’s sometimes called the “Project Grant Rule.”
That rule provides that the grant can’t be earmarked for lobbying, and the grant amount can’t exceed the non-lobbying portion of the project budget. So if your project has a $200,000 budget with $30,000 of that allocated to lobbying, the foundation can grant up to $170,000 for that project specifically, without issue. If the foundation grants over that amount for the project, the excess is a taxable expenditure for the foundation.
And yes, it’s a little baffling but multiple foundations can fund the same project, each independently measuring its own grant against that $170,000 non-lobbying ceiling. So, in this hypothetical, two foundations each could give $100,000, funding the entire $200,000 project between them, and neither grant would be a taxable expenditure despite the grantee having devoted $30,000 of the project budget to lobbying. In other words, the recipient charity spends $30,000 of that money on lobbying, but none of it is attributed back to either foundation.
Foundations have more room to fund advocacy-minded charities than many people assume. The key for grantees is keeping clean budgets and understanding which set of rules applies to each grant.
