WASHINGTON, D.C., February 10, 2017 – Alliance for Justice and the Council on Foundations are weighing in on a case that has serious implications for nonprofits’ ability to weigh in on policy matters. The organizations have filed a joint amicus brief in Parks Foundation v. Commissioner of Internal Revenue in the United States Court of Appeals for the Ninth Circuit.
The case raises important issues regarding the application of the Internal Revenue Code’s lobbying rules to private foundations and charitable organizations. The decision being appealed was originally handed down by the United States Tax Court, and AFJ contends that if that decision were to stand, both private foundations and public charities would face great restrictions on their policy-influencing activities, particularly in the ballot measure context.
The brief aligns with the mission of AFJ and its Bolder Advocacy program to encourage nonprofits and foundations to advocate effectively, and to protect their right to do so.
“Nonprofits’ vital work in their communities includes working to influence public policy that affects their missions and their constituencies,” said Abby Levine, Director of Alliance for Justice’s Bolder Advocacy program. “We’re asking the Ninth Circuit to reverse a Tax Court ruling that hurts nonprofits’ ability to speak out on public policy issues. Congress intended 501(c)(3) nonprofits to have the right to influence policy in ways that are not now defined as lobbying. But the Tax Court has made a ruling that could expand the definition of lobbying so much that many nonprofits might be forced to curtail their work in a way that Congress never envisioned.”
In the decision now being appealed, the Tax Court looked at radio messages created and funded by a private foundation. The court ruled that the messages, for the most part, constituted taxable expenditures under the Internal Revenue Code (IRC). The messages contained information and commentary relevant to upcoming state ballot measure elections, and were each around 30-60 seconds long. Although several of the ads did not mention specific ballot measures by name, the Tax Court decided that both the foundation and its manager were liable for excise taxes under IRC provisions.
AFJ argues that the Tax Court used an overly broad interpretation of the terms “refer to” and “reflect a view on” when deciding how the radio messages approached the ballot measures. We believe that if these terms were applied in the same way to a whole host of nonprofit communications, it could seriously restrict those communications far beyond the intent of the law.
The amicus brief, dated January 31 and written by Michael B. Trister and Joseph W. Steinberg of Trister, Ross, Schadler & Gold, describes the legislative history of the 501(c)(3) lobbying rules—and how Congress defined lobbying in limited terms to allow private foundations and public charities to discuss public policy issues. It explains how the Tax Court’s decision is inconsistent with relevant statutory and regulatory provisions.