Home      Login

Abstract: 

Particularly during election years, family foundations need to be alert to the prohibitions on lobbying and political campaign activity by private foundations. Impermissible lobbying and political campaign activity may occur in ways that are not obvious or intuitive. Costs paid or incurred for lobbying and political campaign activity constitute taxable expenditures subject to excise tax. Worse yet, extensive lobbying or political campaign activity could cause an organization to lose its tax-exempt status. With abundant citations to the Internal Revenue Code and exhibits (“Private Foundation’s Opinions and Recommendations Qualify as Technical Advice or Assistance,” “Tax Treatment of Specific Project Grants,” “Application of Budget Test to Multiyear Specific Project Grants,” and “What Happens When Grantor Has Reason to Doubt Grantee’s Representations,”) this article reviews the broad range of considerations family foundations and their advisors should take into account to ensure they understand the prohibitions around lobbying and political campaign activity, and the circumstances under which violations are likely to arise, to avoid inadvertent violations of rules.

Keywords: Taxable expenditures under IRC §4945; voter education; candidate appearances; issue advocacy; internet activity; foundation-government jointly funded projects

Affiliations:  1: Strasburger & Price, LLP.