Reporting on Lobbying Activities

The San Francisco Foundation values legal nonprofit advocacy to ensure stakeholders are involved in shaping policies that affect them. It makes government accountable to the common good and allows underrepresented constituencies a voice in the process.

The San Francisco Foundation requests that grantees be aware of the reporting guidelines that must be followed by both the Internal Revenue Service (IRS) and Fair Political Practices Commission (FPPC). This is not to discourage the community from participating in civic activities, but to practice advocacy responsibly and within the law.

The San Francisco Foundation is allowed to lobby under the IRS section 501(h) election. This election allows a 501(c)(3) organization to use dollars to lobby up to a certain percentage of its annual expenditures.* The Foundation is allowed to use $1,000,000 annually on lobbying expenditures; this is the highest amount allowed for any 501(c)(3). Reporting lobbying to the IRS is strictly done in terms of amounts; the Foundation is required to track grassroots and direct lobbying time, grants, and expenditures (both in-kind and cash) and report the total dollars on the annual IRS Form 990. The definition we use to determine if an activity is lobbying for the IRS is the following: 

IRS – Sec. 4945 Definition of Lobbying

1. Any attempt to influence any legislation through an attempt to affect the opinion of the general public or any segment thereof, and

2. Any attempt to influence legislation through communication with any member or employee of a legislative body, or with any other government official or employee who may participate in the formulation of the legislation (except technical advice or assistance provided to a governmental body or to a committee or other subdivision thereof in response to a written request by such body or subdivision, as the case may be), other than through making available the results of nonpartisan analysis, study, or research.

The Foundation is also required to report to the State and local jurisdictions on lobbying activity as defined by the Fair Political Practices Act (FPPA). The body that regulates this activity is the Fair Political Practices Commission (FPPC). 

FPPC reporting is more intensive than IRS requirements as the definition includes both the IRS definition and the definition for “Actively Lobbying,” which is defined below. The FFPC requires quarterly reporting on time, expenditures, and grantmaking with specific employee detail, identification of the legislation or issue lobbied, and the agency the Foundation is funding. Additionally, FPPC campaign and ballot measure lobbying is required to be reported daily during the two weeks prior to the election, along with the inclusion in the last quarter of the calendar year and monthly reporting prior to an election.

The San Francisco Foundation files campaign expenditures as a Major Donor. This means our funding of campaign expenditures can only come from interest income earned. Using only income allows us to not source our funding when reporting. Grantees of The San Francisco Foundation are required to report any funds received from the Foundation that are spent on campaign expenditures, therefore coordination to ensure all parties are reporting properly is required. 

Resources

The Alliance for Justice (AFJ) is a nonprofit organization that is dedicated to strengthening the voice of the nonprofit and philanthropic sectors in important public policy debates by giving tax-exempt organizations a better understanding of the laws that govern their participation in the policy process. AFJ provides support through workshops, research and publications, public policy, lawyers and accountants, technical assistance and resources, and its Speaker Series. Please visit its website at www.afj.org.

California Fair Political Practices Commission Definition of “Active Lobbying”

“Actively Lobbying” means communicating with State officials or staff to express an opinion on state legislation, or state agency rules or regulations. Communication includes meetings, written communication or electronic communication.

* 501(c)(3)s are not allowed to support candidates.