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Charity lobbying law--30 years later.

About 30 years ago, on October 4, 1976, President Gerald Ford signed into law legislation that promised to clarify and significantly expand the rights of public charities to lobby. The legislation, which was part of the Tax Reform Act, H.R. 10612, had been pushed aggressively since the early 1970's by more than 100 organizations that comprised the Coalition of Concerned Charities.

A lead organization in the Coalition was the National Mental Health Association, whose affiliate, the Mental Health Association of Maryland, was being threatened in 1971 by the Internal Revenue Service (IRS) of having its tax exemption revoked for substantial lobbying. There was no clear IRS definition of what constituted "substantial" lobbying, but that didn't stop the IRS from leveling the charge.

This threat sent a chill through state mental health associations, all of whom lobbied state legislatures aggressively to improve care in state mental hospitals. And the word soon got around to other groups that dealt with health, welfare, environment and related issues, causing many to drop or seriously curtail their lobbying.

The National Mental Health Association asked attorneys at the Washington law firm of Caplin and Drysdale to examine the lobbying activities of the Maryland Association. The information they gathered proved convincing to the IRS that the group's lobbying was not "substantial" and the IRS dropped the charge.

However, the damage was done. Charities had always been uncertain about how much lobbying they could conduct under the "substantial" rule and the Maryland case only heightened the anxiety. It was that enormous concern that led to the enactment of the 1976 legislation, after three sets of hearings in the early 1970's. The legislation put to rest the "substantial" rule by permitting charities to elect to come under the 1976 legislation which not only provided clear definitions of what actions constituted lobbying but also permitted generous spending on lobbying.

So advocates of charity lobbying thought the problem was solved. Obviously, most charities would elect to come under the new law. And, the advocates thought that most charities would lobby because advocates found it such an obvious and effective way of meeting the needs of those they served. It didn't happen.

Based on the IRS definition of what constitutes lobbying, less than 1 percent of all charities lobby and of those that lobby, less than 1 percent elect to come under the 1976 law, according to research by OMBWatch. The same research shows that less than 3 percent of all charities even choose to fall under the 1976 law, and only 16 percent of such electors lobby.

What is the result of this failure by charities to take advantage of the 1976 law to speak out to legislators about the needs as they see them every day? Some 20 percent of the nation's children live in poverty and 44 percent are without health insurance. Each night 39,000 people are homeless in New York City, including 17,000 children, the greatest number since The Depression.

The Index of Social Health, published by Fordham University, shows that the nation's social health is continuing to slide. The categories that have worsened include children living in poverty, child abuse, average weekly earnings, affordable housing, health insurance coverage, food stamp coverage, the gap between rich and poor, and out-of-pocket health costs for those over 65. Food stamp coverage and income inequality have reached their worst levels on record. U.S. infant mortality has increased by 3 percent, the first increase in four decades.

This, from the wealthiest nation on Earth. Charities have a responsibility to speak out about those needs, which they see daily.

There are several ways the law could be strengthened to encourage more charity lobbying. When the 1976 legislation was passed, it did not index for inflation the amount charities can spend on lobbying. As a result, inflation has eroded permitted spending by about 60 percent. The amount that may be spent should be restored. At the very least, the current amount that may be spent should be indexed for inflation to stop further erosion.

In addition, the law should be changed to permit charities to spend as much on grassroots lobbying (that is, urging the general public to contact legislators) as the charities may themselves spend on direct lobbying of legislators. There is no good reason for the glitch in current law which permits charities to spend only one-fourth as much on encouraging grass roots lobbying, as they may spend on lobbying legislators directly.

The importance of changing the law to permit more aggressive lobbying by charities was stated best by the religious leader Paul H. Sherry, who said, "The primary role of voluntary associations in American life is not service delivery but to continually shape and reshape the vision of a just social order ... to argue with other contenders in the public arena, and to press for its adoption and implementation. For voluntary associations to do less than that is to abdicate their civic responsibility."

Robert Smucker, now retired, was the long-time lobbyist for Independent Sector and is the founder of Charity Lobbying in the Public Interest, which recently changed its name to Center for Lobbying in the Public Interest in Washington, D.C.
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Title Annotation:Commentary
Author:Smucker, Robert
Publication:The Non-profit Times
Date:Oct 1, 2006
Words:865
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