A recent letter from the Internal Revenue Service to the Washington, DC-based nonprofit, Charity Lobbying in the Public Interest, sheds light on the rules that govern private foundation lobbying. CLPI had requested that the IRS answer a series of questions aimed at clarifying the law on foundation support of nonprofits that engage in lobbying. The response from the IRS dispels the misperception that foundation funding of nonprofits that lobby is inappropriate and illegal. The CLPI letter had asked the IRS to clarify the conditions under which private foundations can pursue activities designed to influence public policy, when a foundation can make a grant to a nonprofit, and the freedom permitted to foundations to both lobby and earmark funds for lobbying by nonprofits. The IRS response notes the difference between what private foundations can do themselves and the wider scope of activities they can fund. It details the conditions under which private foundations can engage in activities that shape public policy. According to the IRS, private foundations may engage directly in a wide range of educational activities that influence the formation of public policy but are not lobbying, as long as the foundation does not state a viewpoint on specific legislation in its communications with legislators or their staff, and does not present a call to action. The restrictions do not limit foundationsÕ contact with executive branch officials in order to assist the development of regulations. The letter specifies the conditions under which a foundation can make a grant to a nonprofit for a specific project that includes lobbying. It states that a private foundation can make a grant to a public charity for a specific project that includes lobbying if no part of the grant is earmarked for lobbying, and the private foundation obtains a proposed budget that shows that the amount of the grant does not exceed the amount budgeted for activities that are not lobbying, as long as the foundation believes in the accuracy of the budget. The letter also makes clear the ability of community foundations, which are public charities and therefore under different regulations than private foundations, to engage in or fund lobbying activities. This gives them greater flexibility than private foundations. If they have chosen to use the expenditure test in Section 501(h) of the IRS Code to measure their lobbying limit, they can engage in or fund lobbying activities up to their expenditure limit. If they do not use the expenditure test, they may lobby to the extent that their lobbying does not constitute more than an insubstantial part of the community foundationÕs activities. Private foundations have historically been cautious about funding nonprofit organizations that engage in lobbying. The IRS letter makes it clear that foundations may fund groups that lobby, and provides guidance that foundations may safely rely on to facilitate funding. Lobbying is a powerful advocacy tool for nonprofits, and the IRS letter provides a powerful endorsement and reinforcement for nonprofits to engage in the public policy arena Ñ and an important clarification for foundations that want to support their work.