Resources You Can Use
Legal Question of the Month with Remy Barnwell, Staff Counsel
Question: Our foundation will soon be the fiscal sponsor for a local forum and one of their primary projects is to eventually get a ballot measure on the city ballot. Their first step is to apply for grant funding for nonpartisan polling and information gathering to determine whether the community is receptive.
However, if the polling is favorable, the next step will be a lobbying effort. I was wondering if you could help me determine the nuances of the "substantial part test" / expenditure test of 20% and how that's calculated (all income, expenditures, or just our operation budget alone?).
Answer: Unless your foundation has elected for the 501(h) expenditure test, which allows for non-taxable lobbying expenditures equal to 20% of total exempt purposes expenditures for organizations with exempt purpose expenditures of $500,000 or less, then your foundation will use the “insubstantial part” test.
The insubstantial part test for lobbying does not have guidance that is quite as clear as the 501(h) expenditure test, but it’s generally been accepted that under this test, a foundation may devote 3-5% of its overall expenses to lobbying. Calculating these expenses applies to all activities related to lobbying, not just expenditures. So, you will have to consider the time employees, board members, or others engage in working on the lobbying work in addition to direct expenditures and count that toward the overall limitation on lobbying activities. As a member of the Council, you have access to many of our publications, and I’ve included a link to our publication on lobbying and advocacy.
Council members are encouraged to send any legal inquiries to legal@cof.org.
Practice and Purpose of Policy
CFLeads and the Council on Foundations are partnering to offer a new public policy and advocacy training course for community foundations. This updated training will provide community foundation leaders and staff with the knowledge and resources needed to excel in advocating for the nonprofits and communities doing the hard work of social change. The training starts next week and will be held over two days, July 30 and August 6, from 1:00p.m. to 5:00p.m. ET each day. Register for Practice and Purpose of Policy today!
Retreat for New Community Foundation Executive Leaders
Are you a community foundation executive who is new to your role? Our new executive leaders retreat equips early-tenure community foundation executives with the skills and relationships needed to be successful, including the work of navigating change and staff expectations, business model innovations, and building institutions for the future. The New Executive Leaders Retreat is intended for executive leaders (CEOs, Presidents, Executive Directors) of mid- and large-sized community foundations who have been in their role for four years or less. Register today.
Philanthropy Exchange Conversations for You
News Articles
Upcoming Events
New Member Spotlight
