Summary of the Istook Ammendments
by Matt Carter, 2/26/2002
From "Handcuffing America's Charities"SUMMARY OF THE ISTOOK AMENDMENTS
The Silence America Amendment
The Revised Istook Amendment
The Simpson-Craig Amendment
The Silence America Amendment
On August 4, 1995, the House of Representatives passed a bill
sponsored by Reps. Ernest Istook (R-OK), David McIntosh (R-IN),
and Robert Ehrlich (R-MD) that would significantly limit the ability
of nonprofit organizations to continue advocating on behalf of
people and issues. Started as an effort to "defund the left,"
the bill will have a devastating impact on the entire nonprofit
sector especially smaller community based organizations.
The bill is unprecedented in that it would restrict the amount
of privately raised funds a federal grantee can use to do advocacy
and lobbying. If a federal grantee spends more than the specified
threshold, it will be barred from receiving federal grants. The
Congressional Research Service pointed out that this raises "significant
First Amendment difficulties." Interestingly enough, the
same restrictions would not apply to federal contracts, loans,
or tax subsidies. Thus, the bill is targeting nonprofit organizations.
Proponents of the Silence America Amendment claim there is
a need for grant reform, but really they are concerned about limiting
the advocacy voice of groups they believe oppose their political
agenda. Their amendment incorporates five points:
- They expand the existing prohibition on using federal funds
for lobbying to include general advocacy activities in this way,
federal funds could not be spent on advocacy activities even if
permitted by statute. Advocacy includes virtually all work on
public policy matters at the local, state, or federal level, including
litigation involving the government.
- They bar nonprofit organizations from federal grants if
they use too much of their private funds for advocacy activities.
If during any one of the previous five years, you spend 5% or
more of your non federal grant expenditures on advocacy, you will
be prohibited from receiving a federal grant. This will force
many community based groups to face a difficult decision: continue
advocating on behalf of people they serve or take federal grants
to provide services both activities consistent with their missions.
- They limit any association with other entities that use
15% of their money for advocacy activities. No federal grant money
can be given to such entities (e.g., rent, purchasing goods, etc.).
Additionally, if you associate with such entities even with your
private funds you will be engaging in advocacy yourself. This
will limit the ability to create coalitions and work with other
- They require posting on the Internet information from all
federal grantees on how much of their private funds were used
for advocacy activities and a description of those activities.
Only federal grantees are required to provide such information;
powerful business lobbyists, for example, are not required to
do so. This will create a new publicly accessible database that
can be used for political purposes.
- They create new enforcement procedures, including licensing
nonprofit "bounty hunters" to find groups in violation
of the various provisions of the bill. Anyone can bring a lawsuit
against a grantee for up to ten years after the violation. Those
organizations found not in compliance with the bill may be fined
$5,000 to $10,000 plus three times the value of the grant. The
bounty hunter can collect up to 25% of the recovery.
- Since the Istook bill covers federal grants that pass through
the state or local government (and may be commingled with state
or local funds), many nonprofits may not even know that they receive
federal grants and are covered by the Silence America Amendment.
The burden of proof is not on the government to demonstrate that
the grantee is not in compliance with the bill. Rather, the burden
is on the federal grantee to demonstrate with "clear and
convincing evidence" a standard not part of normal accounting
terminology that they are in compliance with the bill.
- There are many other concerns about the amendment, some
that may result from poor drafting. For example, the definition
of grant is overly broad, potentially including the beneficiaries
of government programs (e.g., children receiving school lunches,
families receiving WIC vouchers). This would limit their First
Amendment rights also. There are also some provisions in the bill
that may create similar problems for individuals who work for
nonprofit organizations as well as individuals who receive federal
- Probably one of the greatest concerns is that proponents
of the Silence America Amendment have promoted a number of myths.
For example, proponents, such as Rep. David McIntosh, claim they
are trying "to root out one of Washington's best kept little
secrets: welfare for lobbyists." Yet nonprofit organizations
are prohibited by law and regulation from using federal funds
to attempt to influence legislation, commonly called lobbying.
They are also prohibited from using federal funds to attempt to
influence the awarding of federal assistance and must disclose
such attempts even when done with private funds. Nonprofit organizations
must also file disclosure of lobbying expenses (with their non
federal funds) to the IRS each year.
- The limitations on advocacy in the Silence America Amendment
and the limitations on lobbying in the tax code are very different.
The Amendment applies to federal grantees and is more expansive
than lobbying; the IRS limits apply to electing 501(c)(3) organizations.
To compare the difference between the two as it applies to limits
on privately raised money, the average service delivery nonprofit
in Washington, D.C. spends $1,587,862 per year. Roughly one third
of the revenue comes from federal grants. According to the Silence
America Amendment, the permissible advocacy threshold would be
$53,193 (5% of expenditures, excluding federal grants). The IRS
permissible lobbying threshold would be $229,393.
- Despite three hearings on the subject and numerous press
conferences, proponents of the bill have yet to demonstrate any
systemic pattern of violations of the grant rules. In fact, there
has been no specific verifiable example of using federal funds
for lobbying purposes. Even if there was a violation, nonprofit
organizations face significant penalties, such as suspension of
grants and debarment from future grants. If there is a need for
greater enforcement, fine. But why create new law?
Summary of Key Provisions of the Revised
(Amendment proposed by Reps. Istook, McIntosh & Ehrlich
dated October 26, 1995) The Istook Amendment creates
an unprecedented effort to restrict grantees' use of their private,
nongovernmental funds. The Istook amendment imposes tight
limits on privately-funded advocacy by organizations that get
more than one-third of their income from the federal government.
It also limits large organizations that receive federal grants,
whether its a university, a business, a union, or a nonprofit
organization, to a $1 million cap on advocacy. For smaller nonprofit
grantees, there is a formula on how much advocacy they can undertake.
By treating most national organizations and their state and
local chapters as single entities, the Istook amendment creates
new restrictions. If a national organization allows another
organization to use its name or trademark (e.g., logo or stationery)
and coordinates lobbying or advocacy activities - a very common
situation - then the organizations would be treated as a single
entity. Thus, if any organization within the affiliated group
received a federal grant, all would be subject to the Istook limits
The Istook Amendment has a sweeping definition of "political
advocacy" and "lobbying." While the current
federal tax law definition of lobbying includes only efforts to
influence legislation, the Istook Amendment includes virtually
all efforts to influence actions of the executive branch at any
level of government. And the Amendment's definition of "political
advocacy" is even broader, including participation in public
interest litigation in cases in which a governmental entity is
a party. Both definitions - lobbying and political advocacy -
include associating with other entities that spend more than 15%
on political advocacy. The Istook Amendment is really not about
prohibiting the use of federal grants for attempts to influence
legislation - that is already prohibited.
The Istook Amendment creates tremendous record-keeping and
reporting burdens on federal grantees. Grantees would be required
to bear the burden of proving, by clear and convincing evidence,
their compliance with the Istook provisions. Each year grantees
must report on their advocacy activities and describe how much
of their private funds they spent on those activities; this report
will be posted on the Internet. This will require new bookkeeping
requirements to track activities defined as "political advocacy"
and "lobbying." (For charities, it will be bookkeeping
requirements beyond the annual reporting to the IRS, which has
yet another definition of activities to monitor.) Moreover, because
payments by a grantee to an organization whose political advocacy
expenses exceed 15 percent or $25,000, whichever is greater, is
prohibited, the grantee must ask all their employees, suppliers,
and consultants to disclose their own political advocacy expenses
and certify they are not putting the grantee in Jeopardy.
The Istook Amendment would expose federal grantees to a serious
risk of legal harassment. Bounty hunters can sue a grantee
under the False Claims Act for up to 10 years for noncompliance
with the Istook Amendment. The bounty hunter can collect up to
25% of the cost recovery. With information posted on the Internet
and burdensome record-keeping requirements, it is likely that
nonprofit organizations will face frivolous and costly law suits.
The Istook Amendment has serious constitutional defects.
The Supreme Court has held that it is unconstitutional for government
to condition the receipt of government funds on giving up protected
First Amendment rights. The Congressional Research Service and
several constitutional scholars concluded that the original Istook
proposal violated this principle. There are also constitutional
concerns over the fact that the Istook Amendment covers grants
but not contracts.
Analysis of the Simpson-Craig Restrictions
on Advocacy by Federal Grantees
On November 8, 1995, the House of Representatives passed, as Title
III of the Continuing Resolution (H.J. Res. 115), an extremely
burdensome set of restrictions on advocacy activities of federal
grantees proposed by Representatives Ernest Istook, David McIntosh,
and Robert Ehrlich ("the Istook Amendment"). On November
9, the Senate amended the Continuing Resolution to replace the
Istook Amendment with alternative advocacy restrictions on federal
grantees proposed by Senators Alan Simpson and Larry Craig ("the
- Like the Istook Amendment, the Simpson-Craig Amendment would
impose major new recordkeeping requirements on federal grantees.
- Like the Istook Amendment, the Simpson-Craig Amendment would
impose substantial restrictions on federal grantees' use of private
funds for lobbying activities. The Simpson-Craig Amendment's definition
of lobbying activities, while less sweeping than the Istook Amendment's
definition of "political advocacy", nonetheless encompasses
a considerably broader range of federal advocacy activities than
the current federal tax or grant rules.
- The Simpson-Craig Amendment also establishes an absolute prohibition
on the receipt of federal grants by section 501(c)(4) organizations
(i.e., social welfare nonprofit organizations) that engage in
lobbying activities and have annual expenditures of $3 million
- Perhaps as the result of a drafting error, the Simpson-Craig
Amendment would have a much more restrictive effect on noncharitable
grantees than would the Istook Amendment.
- Unlike Istook, The Simpson-Craig Amendment would not impose
extraordinary burdens on the use of affiliated organizations to
separate grant-funded activity and privately-funded advocacy.
- Like Istook, the Simpson-Craig Amendment would create an unjustified
disparity between federal grantees and federal contractors.
The proponents of the Istook and Simpson-Craig Amendments have
failed to demonstrate any pattern of abuse by federal grantees
that could justify imposition of these highly burdensome restrictions.