Transcript Document

Say What?
Lobbying Do’s and
Don’ts
Ted Waters, Managing Partner
Feldesman Tucker Leifer Fidell LLP
December 2, 2014
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TOPICS COVERED TODAY
 What is Lobbying? What isn’t
 Lobbying Restrictions for Federal Grantees
focus here is on Health Centers*
 Changes in the Uniform Grants Guidance
 Correlation to IRS
 Membership Dues
 Section 503 of the Labor/HHS Appropriations
Act or Equivalent
 Section 330 and the Budget PIN
*Remember: Section 330 has more flexibility on use of program
income, doesn’t apply to other funding!
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FEDERAL GRANTS: THE MAKING OF
PUBLIC POLICY
Authorizing Statute
(such as the Section 330, Ryan
White Act, ACA)
Appropriations Statute
(e.g., Consolidated Appropriations Act of
2014)
Federally Funded Program
(use of federal funds governed by
Circulars of the Office of Management
and Budget unless changes from
above)
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SOURCES OF RESTRICTIONS ON FEDERAL SPEECH
Under the U.S. Constitution, the Federal government (with some
exceptions) cannot restrict speech per se, but can condition
spending (e.g. through grants) on limitations on expression
Sources of lobbying restrictions:
1. Appropriations riders (condition on Federal spending)
2. Office of Management and Budget (OMB) Circulars
(condition on use of Federal grant funds)
3. Internal Revenue Code (condition for nonprofit
to maintain its Federal tax-exempt status)
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SO, WHO IS PAYING DRIVES THE TRAIN…
Non-Federal
funds
IRS Rules for
Charitable Corps.
Non-Grant
Funds/Program
Income/Match
IRS plus Budget
PIN for FQHCs,
all else add OMB
Federal Funds
IRS plus OMB &
Approps (503)
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FOR NON-FEDERAL FUNDS, IRS RULES
ALLOW LOBBYING UP TO A POINT
• Allowable lobbying limits
– Two tests: Substantial part or Expenditure
– Expenditure test (IRC Section 501(h))
• Clearer standard
• Allows 501(c)(3) organizations to elect to have their allowable
lobbying measured by amounts expended for lobbying
– Funds may be spent within certain limits, up to $1 million a year
»
(e.g. 20% of first $500 thousand of “exempt purpose expenditures”)
– No more than 25% of organization’s allowable lobbying expenses may be used for grass-roots
lobbying
• Applies only if organization elects 501(h) treatment
• In short, the “real” restrictions apply to
Federal Grant Dollars
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BUT REMEMBER: NO ELECTIONEERING!!!
A 501(c)(3) organization (and its affiliates,
directors, employees, and agents acting on behalf
of the organization) cannot engage in or conduct
any political campaign activities
Political campaign activities
– Making contributions to candidate or party
– Endorsing/promoting candidates
– Activities that favor/disadvantage candidates – appearances are
important
– Publishing candidate statements
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WHAT IS ALSO AN EXCEPTION: THE PIN’S
CLARIFICATION OF NONGRANT REVENUE
• “Section 330(e)(5)(D) of the PHS Act provides health centers with
discretion to use their non-grant funds . . . either “as permitted”
under section 330 or “for such other purposes …not specifically
prohibited” under section 330 “if such use furthers the objectives of
the project.””
• “Health centers can meet the standard of “furthering the objectives
of the project” by ensuring that the uses of non-grant funds benefit
the individual health center’s patient/target population.”
• “Consistent with Health Center Program requirements, and the
governing board’s responsibilities, health center governing boards
must approve, among other things, the health center’s annual
budget, its Health Center Program application as well as provide
oversight and monitoring of health center expenditures to ensure
consistency with the health center’s mission, goals and objectives
and the board-approved budget and project.”
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PRACTICAL CONSIDERATIONS: CONSTRUCTING A
HEALTH CENTER BUDGET
• Decision Time: Clearly Identify what you will pay
with Nongrant funds because of difficulties of
paying such costs with federal funds, such as:
–
–
–
–
–
–
Lobbying costs (rest of today’s discussion)
Equipment
Fundraising
Incentive compensation
Reserves
Marketing
• What Costs? Salaries, Fringe Benefits, Supplies,
Equipment, Space used in Lobbying must be
properly tracked and accounted for! And yes,
Time and Effort documents employee time!!!
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On to the Main Event:
Lobbying Restrictions for Federal Grantees
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WHAT ARE WE TALKING ABOUT WHEN YOU ARE
TALKING LOBBYING?
 “Lobbying” under Circulars is an attempt to
influence


the introduction of Federal or State legislation or
the enactment or modification of pending Federal or
State legislation
 “Lobbying” includes communication that is


written or oral
for or against the legislation
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RESTRICTIONS ON “LOBBYING” UNDER OMB
CIRCULARS
The Circulars make unallowable costs for:
 Direct lobbying: making a direct appeal to Congress or State
legislature to introduce legislation or act on pending legislation
 Per OMB, does NOT bar “normal informational
interchange” between legislators and grantees
 Grassroots lobbying: the preparation, distribution or use of
“publicity or propaganda” to make a direct appeal to the
general public
 Limited to “efforts to obtain concerned actions on the part
of the public,” e.g. by calling legislator; does NOT bar
“attempts to affect the opinions of the general public”
 “Legislative liaison activities” (preparing for lobbying)
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CONTINUING APPROPRIATIONS ACT (CAA) OF 2012,
SECTION 503
EXPANDED Restrictions on Using Federal funds:
• Lobbying on state-level executive actions
(regulations, administrative actions, executive
orders), as well as lobbying on regulations,
administrative actions, executive orders proposed
or pending before Congress or a local legislature
• Lobbying on the local level (before city
councils, county commissions, etc.)
• Advocacy related to proposed, pending, or future
(1) tax increases and (2) regulation of any
legal consumer product esp. Guns!
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WHAT IS NOT “LOBBYING”?
• “Lobbying” typically does not include sharing factual
information with the public
• Activities that are not lobbying:
– Educating the public on personal health behaviors and
choices, available services, unmet needs in your
community and so on
– Working with other organizations, public agencies to
achieve institutional or systems changes that do not
require governmental action
– Communicating with the public about health risks and their
consequences
• Put another way, educational activities could result in
changes to the law due to increased awareness but
that doesn’t make it lobbying!
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THE NEW UNIFORM GRANTS GUIDANCE AND
LOBBYING –WHAT’S THE IMPACT?
• Consolidated lobbying rules at 2 C.F.R.§ 200.450:
• New exception to the prohibition on use of grant funds for
lobbying – any activity excepted from definition of
“lobbying” under Internal Revenue Code
• New provision - grantor agencies must establish
procedures for resolving in advance with individual
grantees any significant questions concerning
interpretation or application of the lobbying rules
• Plus, Explicit limitation on Membership Dues to
organizations with a “primary purpose” of lobbying, see 2
C.F.R.§ 200.454
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Exceptions in Grey Areas…
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QUALIFICATIONS/EXCEPTIONS TO LOBBYING
PROHIBITION
Section 503 and OMB Circulars contain exceptions to “lobbying,” applicable to
different types of grantees. We are focusing today on #2 and #5.
1. Section 503: “normal and recognized executive-legislative relationships”
and “participation. . . in policymaking and administrative processes within
the executive branch of that government” (applicable to state, local, and
tribal governments)
2. OMB Circulars: “technical and factual presentations on topics directly
related to the performance of a grant” (all grantees)
3. OMB Circulars: “any activity specifically authorized by statute” to be
undertaken under the award (all grantees)
4. OMB Circulars: “any lobbying . . to influence state legislation . . . To avoid
material impairment of the [grantee’s] authority to perform the grant”
5. OMB Circulars: any activity “specifically excepted from the definitions of
‘lobbying’ or ‘influencing legislation’ by the Internal Revenue Code
provisions [on tax-exempt status] (nonprofit organizations)
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Exceptions to Lobbying
Prohibitions
-- Technical and Factual Presentations to
Legislative Body
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“TECHNICAL AND FACTUAL PRESENTATION” DEFINED
The following are excepted from the scope of the “lobbying”
restriction under the OMB Circulars:
• Technical and factual presentations on topics directly related to the
performance of a grant . . . (through hearing testimony, statements,
or letters . . .) in response to a documented request . . . made by
the non-Federal entity’s member of congress, legislative body or a
subdivision, or a cognizant staff member thereof, provided such
information is readily obtainable and can be readily put in
deliverable form. . . .
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WHY IS THIS ALLOWED?
• This is an exception to the direct lobbying prohibition
• Encourages utilization of grantee expertise
• Narrow exception
• Limited to circumstances when grant funds can be used
to provide a presentation that does contain a direct
appeal to government decision makers to take action on
a law
• OMB revised the scope of this exception in 1984, in
response to concerns that it was worded too narrowly and
unduly limited freedom of speech
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“DOCUMENTED” REQUEST
• May be written or oral (oral request documented after
fact)
• Request need not be specific but must be “bona fide”
and “may not be open-ended or indeterminate”
• No specific requirements for “documenting” the request
• Recommend maintaining a written record of request
in files
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MAY INCLUDE ADVOCATORY CONCLUSION
• The exception does not preclude
communication of an advocatory conclusion
• Advocatory conclusion must “clearly and
naturally flow[] from the technical and factual
data presented” and be a “distinctly minor
aspect of the overall presentation”
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Exceptions to Lobbying
Prohibitions
-- IRS Rules
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2 C.F.R.§ 200.450(c)(2)
(iv) Any activity excepted from the definitions of
‘‘lobbying’’ or ‘‘influencing legislation’’ by the
Internal Revenue Code provisions that require
nonprofit organizations to limit their participation in
direct and ‘‘grass roots’’ lobbying activities in order
to retain their charitable deduction status and
avoid punitive excise taxes, I.R.C. §§ 501(c)(3),
501(h), 4911(a), including:
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2 C.F.R.§ 200.450(c)(2)
(iv)(A) Nonpartisan analysis, study, or research
reports;
(B) Examinations and discussions of broad
social, economic, and similar problems; and
(C) Information provided upon request by a
legislator for technical advice and assistance, as
defined by I.R.C. § 4911(d)(2) and 26 CFR
56.4911–2(c)(1)–(c)(3).
UPSHOT: Largely the Same but with more
Examples/Guidance
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QUESTIONS?
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