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Laws Governing Philanthropic Advocacy in the United States


In the United States, many philanthropic and charitable organizations are considered to be foundations. The U.S. Internal Revenue Code, however, makes a clear distinction between private foundations and public charities. In general, foundations are nonprofit organizations that provide funding and technical assistance to other nonprofit organizations for a number of reasons. They provide funds and services in support of the public good and also in order to influence political decisions in which they have an interest. Private independent foundations are the most common type of foundation and are usually established by an individual and run by a board of directors. There are also corporate foundations, which are created and funded by businesses, and community foundations that are supported and operated by public citizens of a particular community. Private foundations have more restrictions and fewer tax benefits than public charities, which raise money from the general public.
A private foundation, in the United States, is a charitable organization described in the U.S. Internal Revenue Code by section 509. Specifically, a private foundation is a 501(c)(3) exempt organization. In this paper I will aim to explain the laws governing the actions of foundations and how these laws affect the ability of the foundation to influence policy development and the policy making process.
Section 501(c)(3) of the U.S. Internal Revenue Code is a tax law provision granting exemption from the federal income tax to non-profit organizations such as foundations. Although the law states that "no substantial part" of a foundation’s activities may be devoted to lobbying, those with very large budgets may lawfully expend an enormous amount of money every year on lobbying under the "substantial part" test. Whether a foundation’s attempts to influence legislation constitute a substantial...