For many foundation managers, meeting community, regional, or even global needs is a primary aspect of everyday business. But when disaster strikes, foundations may find the need to quickly provide relief while accurately navigating a new set of grantmaking rules. These guidelines outline the basic legal considerations of a variety of popular giving options for managers of public and private foundations and corporate giving programs.
Corporate Philanthropy refers to the investments and activities a company voluntarily undertakes to responsibly manage and account for its impact on society. It includes investments of money, donations of products, in-kind services and technical assistance, employee volunteerism, and other business transactions to advance a social cause, issue, or the work of a nonprofit organization. Corporate foundations and corporate giving programs traditionally play a major role in these areas.
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In international grantmaking, private foundations often make grants to organizations (“Initial Grantees”) that, in turn, re-grant those funds to other non-public charity organizations or individuals (“Secondary Grantees”).
Since the terrorism attacks of September 11, 2001, grantmakers and other charitable organizations have become quite familiar with the work of the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) in the area of anti-terrorism concerns. OFAC has been one of the key U.S. government agencies seeking to shut down terrorism funding around the world and, in conducting that activity, has focused considerable attention on charities.
Private foundations wishing to make a cross-border grant must ensure that:
- The grant is clearly for a charitable purpose, and
- The grant counts as a qualifying distribution for the purpose of meeting the foundation’s annual distribution requirement.
The easiest way for a private foundation to satisfy both of these requirements is to choose a grantee that is recognized by the IRS as a public charity.
Since the November 7, 2002 publication by the United States Department of the Treasury of its “Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-based Charities,”1 grantmakers have grappled with the problem of how to comply with their legal obligations under Executive Order 13224, the USA Patriot Act, and other laws and regulations that prohibit financial transactions with terrorists and their supporters.2 The Treasury Guidelines map out one route to compliance, but both grantmakers and operating charities have criticized them for failing
This list highlights some of the ways that private foundations and public charities (including community foundations) may engage in public policy without lobbying. Public charities have further flexibility and may engage in lobbying activities not described below.
1.Direct communications with legislators or their staff about a general issue of concern. To use this lobbying exception these direct communications may not either refer to specific legislation or legislative proposal, or if specific legislation or proposal is referenced, no view may be expressed on such legislation.
Grantmakers can legally participate in the political process by following guidelines established by the IRS. Here are some tips.
An overview of the laws that govern what private foundations can and can't do regarding involvement in the public policy process.
Companies and their private foundations must carefully navigate the do’s and don’ts of contact between foundation employees and legislators.
How should the company foundation's grants and activities fit into the sponsoring company's efforts to develop strong relationships with government officials? Is it self-dealing for company lobbyists to mention the good works of the foundation? May foundation employees lobby legislators? Should foundation grantees play a role in promoting the interests of the sponsoring corporation?
Sabbaticals are not too uncommon in the nonprofit world for foundation executives or senior management. It can be a useful time to reflect on past accomplishments, revitalize, and gain renewed inspiration for future work. Sabbaticals for board members likewise can have similar positive effects but should be approached with care.
When to Think Twice