On this episode, we chat about working in coalitions – one of the most effective ways for advocacy organizations to share and maximize resources to make real policy change. We go over five things to consider as you form your coalition to effectively work together.

Attorneys for this episode:  Tim Mooney, Jen Powis, Ronnie Pawelko

Topics:

• Structure
• Decision making
• Dealing with conflict
• Funding
• Assests, lists and websites

Resources: 

• Rules of the Game 29: Affiliation and Coalition Basics
• The Connection
• Coalition Checklist
• Technical Assistance

Team work makes the dream work.  While nonprofits normally have their individual policy agendas and platforms, sometimes working with an affiliated organization, most also join in coalition with others in order to more effectively drive policy change.  For example, immigration right groups may join with groups that advocate for kids to better protect our youngest undocumented immigrants. 

Today’s show addresses the differences between c3 and c4 types of organizations so that coalitions can think more strategically about how to use both within a campaign. 

• The Different Types of Nonprofits That We’ll be Talking About Today.
• Tax lawyers are not creative when it comes to naming conventions. 501(c)(3) refers to the Tax Code provision that defines the creation of a nonprofit public charity.
• That’s right, there’s 501(c)(1) through ((c)(29).
• 501(c)(3) organizations are those typically referred to as nonprofits: and are designed to be tax exempt so long as they are organized and operated for religious, charitable, scientific, literary, or educational purposes. We’ve linked to the law in our show notes so you can see the long-winded version.
• Organizations that are also tax exempt but found under 501(c)(4) of the Tax Code are referred to as social welfare organizations
• A social welfare organization is defined as a civic leagues or an organization operated exclusively for the promotion of social welfare.
• These 501(c)(4) organizations will look a lot like the public charities and are often referred to as nonprofit.
• The key takeaway is that there are lots of different types of nonprofits—organizations that do not pay a federal income tax on the money they collect at the end of the year. And because these organizations are under different sections of the tax code, different rules apply.
• That’s why tax lawyers are very creative when it comes to strategy–you can find all sorts of ways to craft language to meet what an organization can do, and to use money to its fullest extent possible, even when it is restricted in use. 
• Lobbying and Partisan work
• A c3 can lobby and do advocacy but is expressly prohibited from engaging in partisan work, anything that supports or opposes candidates running for public office.
• A c4 must have as its primary purpose the same types of activities that a c3 can do (advocacy and lobbying) but can also engage in partisan candidate work during elections so long as it is only a secondary activity for the organization
• Secondary purpose
• What is secondary? Well, generally that means less than 50% but conservative attorneys often recommend that partisan candidate work is less than 40% of the organization’s total activities. 
• So a c4 can do everything the c3 can do but can also hold candidates accountable, endorse candidates, compare candidates to the org’s issues

• Affiliated structures: Common Paymaster and other behind the scenes details (Ronnie)
• A c3 and c4 can also be related organizations and share employees and resources
• common paymaster, grants and resource agreements are the behind the scenes details that make affiliated organization relationships work–with really only the common paymaster visible to the staff as it results in one paycheck.
• So the code provides 4 different ways for common paymasters to be supported, and one of the easiest is that the c3 and c4 have at least 50% overlap on the board. Another one of the tests is that the organizations share 30% of its employees.  
• When it comes to engaging in advocacy, affiliated organizations face many of the same issues when deciding what activities to engage in. The primary issue is always how to ensure the c3 is following the rules that apply to its tax structure.
• Example of Coalition Work with c4
• Sometimes the back office flow of money needs to be discussed in coalition when talking about a coalition where the groups need to be more strategic in who pays what. Because a c3 coalition member has to be clear about how its money and name are being utilized. 
• For example, sometimes the coalition members agree to work together on a policy issue but recognize that each member is going to do different types of activities. Always be clear with your brand and where your dollars are being used.  Or like a loose coalition, mostly acting under your own name but strategically trying to stay together and pull different levers.  The goal is to not work at cross purposes or undermine each other.
• Pledge Cards by the c4.
• A c4 organization can compare its mission to whether the candidate agrees with its mission. A c3 cannot.
• Example, Vote for ProChoice Candidates Like Candidates x.
• When there’s a flyer that uses logos, the c3 logo cannot appear on a coalition flyer that is partisan.
• Knocking on Doors
• A c4 organization could wear the nonprofits shirts and provide volunteers to specific campaigns with their issue.
• For example, lets say it is a pro-immigration candidate and the c4 organization provides refugee services. The c4 can walk with flyers saying this candidate supports refugees.
• In coalition, the c3 has to think about the political perception issues when working in coalition with c4 organizations that do this type of work.
• Sharing Resources. When a c4 organization works with a c3 organizations, sometimes the c3 organization will provide a grant for lobbying purposes to the c4.  The c3 has to count that money on its 990 as lobbying, as does the c4, but in this way, the c3 can sometimes more easily account for policy work since it is providing a lump sum.  Sort of like a contractor relationship.  Similarly, if the dollars aren’t all going to lobbying, the c3 and coalition must know where the money is going.  The budget for the coalition has to be understood by all the parties.  For example, the coalition could issue the “dues request” or “funding request” outlining how much is lobbying, education, etc.
• Websites: A shared coalition website has to remain nonpartisan and cannot have the endorsement slate.  The two click idea –that the c3 reference to the c4 website land on something c3 permissible.  Or even use a pop up window.

Resources at bolderadvocacy.org

https://www.law.cornell.edu/uscode/text/26/501

BA Coalition Checklist: https://bolderadvocacy.org/wp-content/uploads/2018/03/BA-Coalition-Checklist-1.pdf

https://www.bolderadvocacy.org/wp-content/uploads/2016/12/501c4-Strategy-and-Discussion-Guide.pdf

On this episode of Rules of the Game, we’re going to talk about money. Because at this point you already know that 501(c)(3) public charities and 501(c)(4) social welfare organizations are allowed to lobby and pursue robust advocacy agendas, but how can they secure funding to make their short and long-term advocacy goals a reality? Stick with us for the next few minutes, and we’ll have the answers you are looking for. 

Our hosts for this episode: 

Natalie Ossenfort  

Jen Powis 

MISCONCEPTION #1: Foundations are not allowed to fund lobbying – REALITY: Both public and private foundations can fund grantees that lobby 

• COMMUNITY FOUNDATIONS 

• Just another type of public charity 
• Allowed to engage in lobbying and directly fund grantee lobbying activities 
• Lobbying grants will count against lobbying limit of foundation and public charity grantee 

• PRIVATE FOUNDATIONS 

• Rules for private foundations are a bit more restrictive than those for public charities / community foundations 

• Not allowed to engage in lobbying and effectively prohibited from earmarking grants for lobbying purposes (if they do these activities, the foundation and managers are subject to a prohibitive excise tax) 
• This does not mean that private foundations can’t fund grantees that lobby: 

• General support grants are not earmarked for any particular purpose, so a grantee could choose to use those funds for lobbying without exposing their private foundation funder to an excise tax  
• Specific project grants are another option. So long as the grantee’s project budget clearly delineates between lobbying and non-lobbying expenses, the private foundation can fund up to the non-lobbying portion of the grant request without earmarking funds for lobbying / exposing itself to an excise tax.  

• Grantees can go to multiple PF’s, each can give up to the non-lobbying portion of the grant request. 

• GENERAL 

• Both private and public foundations must prohibit their funds from being used for partisan political purposes / support or opposition of candidates 
• Grantees should carefully check the language of their grant agreements to see if lobbying is prohibited. Language that says that the funds are “not earmarked for lobbying” is not the same as language that says that lobbying is prohibited. 
• EXAMPLES that sound restrictive, but actually permit lobbying:  

• “Lobbying and Non-Permitted Uses: This grant is not in any way earmarked to support or carry on any lobbying or voter registration activity. Grantee warrants that none of these funds will be used to influence legislation unless permitted by law.” 

• “This grant is not earmarked for influencing legislation within the meaning of IRC Section 4945(e), and the foundation and Grantee have made no agreement, oral or written, to that effect.” 

MISCONCEPTION #2: Foundations can’t fund public charity voter registration drives 

• Both private and public foundations can fund the NONPARTISAN voter registration activities of public charities, but the rules for private foundations can be a bit complicated… 

• VR Drive must be nonpartisan, over multiple election cycles, in five or more states and cannot be subject to conditions requiring use of the funding in a specific state or election cycle. 

• There are also requirements related to the grantee’s finances (e.g. at least 85% of organization’s income must be spent on activities relating to the purposes for which it was organized) 
• Public charities can receive an advanced ruling from IRS certifying their ability to receive private foundation voter registration grants (confirms that organization meets the requirements of sec. 4945(f) of tax code) 

MISCONCEPTION #3: Foundations are not allowed to fund 501(c)(4)s. REALITY: Both private and public foundations can fund 501(c)(4)s…. if they know the rules 

• COMMUNITY FOUNDATIONS 

• Can fund any work conducted by 501(c)(4) that the community foundation itself would be allowed to engage in (e.g. lobbying, but NOT partisan political activity) 
• IRS presumes that grant to 501(c)(4) is for lobbying  

• needs to count against public foundation’s grassroots lobbying limit (unless grant was expressly made for direct lobbying purposes and foundation can show that funds were spent on direct lobbying) 
• Grant will not be counted as a lobbying expense if it is a controlled grant expressly given for non-lobbying purposes (prohibits lobbying with grant funds) 

• PRIVATE FOUNDATIONS 

• Must use “expenditure responsibility” when making grants to organizations that are not 501(c)(3)s 

• Must conduct a pre-grant inquiry and execute a written grant agreement. The foundation must ensure that funds are spent only for the purposes expressly agreed upon. 
• Must obtain detailed reports from grantee about how funds are spent 
• Must provide complete report of expenditures to IRS on annual 990-PF 
• Must prohibit partisan political activities AND lobbying. Because of this, it’s often easier for 501(c)(4)s to raise lobbying funds from individuals and community foundations. 

Resources 

Foundation Advocacy Grants: What Grantees Need to Know 

Investing in Change: A Funder’s Guide to Supporting Advocacy