From "Handcuffing America's Charities." EXECUTIVE SUMMARY On August 4, 1995, the House of Representatives passed the Labor, Health and Human Services Appropriations bill for FY 1996 with a provision by Representatives Ernest Istook (R-OK), David McIntosh (R-IN), and Robert Ehrlich (R-MD) that would limit the advocacy voice of federal grantees and impose significant new paperwork burdens. That provision, called the Istook Amendment, was modified and offered as an amendment during a House-Senate conference on another spending bill, the Treasury, Postal Service, and General Government Appropriations bill for FY 1996. After Senate conferees rejected the Istook Amendment, House supporters then attached another version of the amendment to the stop gap funding measure, called a continuing resolution. Again, the Senate rejected the revised Istook Amendment, but offered an alternative sponsored by Senators Alan Simpson (R-WY) and Larry Craig (R-ID). The House rejected the Simpson-Craig amendment, then proposed yet another version of the Istook Amendment, along with three McIntosh amendments, to the lobby reform bill. While the Lobby Reform Act of 1995 passed in December, none of the amendments offered by Istook, McIntosh or Simpson were included. In March 1996 another version of Istook's legislation was added to the Omnibus Continuing Resolution (H.R. 3019), and narrowly passed the House (211-209). Subsequently, this Istook Amendment was stripped from the CR in conference, and the Omnibus CR, funding the Federal govenment for the remainer of FY 96, was passed April 26, 1996. While the particulars of the different Istook Amendments vary, they all have three common characteristics: they limit the amount of privately raised funds that can be used by federal grantees for advocacy purposes; they have expansive definitions of advocacy; and they all create new, burdensome regulatory and paperwork requirements for charities. Overall, the Istook Amendment has caused quite a stir in the nonprofit sector, because the sector relies on federal grants to provide services throughout the country and views advocacy as central to the mission of providing services. Supporters of the Istook Amendment argue that the bill would only affect large national organizations, but community groups in every state have raised concerns about its impact. Although it is difficult to quantify the impact of the Istook Amendment, we do know that a broad cross-section of charities would be affected. This report provides at least one case example in every state of an organization that would be affected by the Istook Amendment. Given more time, we could have had many more examples, and provided considerably more detail. Nonetheless, we have provided information on how to contact the organizations listed in this report so that you may get further information from them directly. The following case examples are based on a telephone survey, and since the details of the amendment have been a moving target, it has been impossible to get precise information from community groups about how they would be affected by the specific provisions of the Istook Amendment. For example, when we started the survey, the limits on private funds for advocacy was 5% of non-federal grant budgets, but by the time we concluded the survey, it was a sliding scale going from 20% to 5%, depending on the size of the organization's non-federal grant-related budget. A second reason that it was impossible to get exact figures on which organizations would exceed the permissible advocacy thresholds, is that the definition of prohibited activity (e.g., "political advocacy") includes activities currently not monitored. Each year, charities must submit reports to the IRS about lobbying activities, and, therefore, have mechanisms for monitoring how much is spent on lobbying activities. Lobbying, however, is defined only as attempting to influence legislation at the local, state, and federal levels -- vastly different than the activities included in the Istook Amendment. Despite the difficulty in identifying the specific activities organizations would have to curtail as a result of the Istook Amendment, two points came up in virtually every conversation. First, the broad definition of "political advocacy" or "lobbying" will require charities to reclassify many of their traditional non-lobbying activities as lobbying. This will add new paperwork burdens on charities and will likely cost more money to monitor. Equally troubling is the assumption in the amendment that advocacy activities are inappropriate for charities. Repeatedly, charities point out that they work in partnership with the government to provide services, research, education, and much more - and that they are often best suited to provide input to policymakers about gaps in service delivery and ways to improve services, as well as to speak on behalf of the people they serve, thereby giving them a voice in our society. Because charities do not stand to profit by their advocacy, they should be encouraged, not discouraged, to be advocates. This report provides more than a hundred examples of activities that would now be called lobbying under the Istook Amendment that most consider to be traditional activities of charities. In Indiana, for example, the state mental health association described working with a state agency to assist in the closing of a residential institution and moving the patients into community care settings. The activity saved the state money and has become a model that is being replicated in other states. Yet this would now be called lobbying because their activity influenced state actions, and, as a result, would require costly new bookkeeping for the association. It is quite possible that the expenditures for these types of activities will exceed the permissible advocacy threshold in the Istook Amendment, thereby making the association ineligible for federal grants. Thus, they literally have to pay a price for carrying out the mission of the organization. The second point that came up in every conversation was the chilling impact of the Istook Amendment. Regardless of whether an organization would exceed the permissible advocacy threshold or not, the general response was that they would simply not engage in matters pertaining to public policies - or that they would give up their federal grants. Most nonprofit organizations are scrupulous about following federal rules (e.g., OMB Circular A-122) and do not want to run afoul of these rules. They do not have high priced accountants and lawyers that can guide them through the maze of Istook Amendment provisions and, therefore, they would err on the safe side of not being an advocate or not taking the federal grant. They warn that there is a high price for this: the people they serve will no longer have a voice; community residents can no longer rely on the nonprofit organization to be a spokesperson for them; and local and state policymakers will no longer be able to tap their expertise and resourcefulness. And if they have to give up the grant to pursue their advocacy, this would create an untenable Catch-22 for them -- be an advocate, but not provide the service. Nearly every charity pointed out that service delivery and advocacy go hand-in-hand. The Catholic Community Services in Salt Lake City, Utah, feeds over 500 people a day in their homeless shelters, receives federal grants, and views itself an advocate for homeless families. The Vermont Public Transportation Association provided over 420,000 trips to doctors' offices and hospitals, receives federal grants, and views itself an advocate for seniors and those with disabilities. The Big Brothers/Big Sisters in Delaware receives a combination of federal and state grants for a variety of projects including one to establish a mentor relationship between volunteers and children from single-parent families. Yet they, too, are active in advocating on youth issues, including child abuse. But because the Istook Amendment is so technical and confusing, they would be afraid to do any advocacy. One senior citizens group in Michigan, run by an 85 year old man, said he could not even understand one provision in the Istook Amendment that dealt with the definition of an "affiliated organization" -- yet he knew he was covered. And with the "bounty hunter" provision that allows anyone to sue a federal grantee for up to 10 years for alleged noncompliance, most charities are fearful they will be sued -- even when trying to faithfully comply. The irony is that many charities were established in response to the needs of the community and have Board members who are respected leaders who recommend community action. They view the Istook Amendment as unfair. The American Lung Association of Oregon, for example, cannot understand why they would be subjected to harassing law suits and strict limits on pursuing a smoke-free environment, when the tobacco industry, which receives government subsidies, is free to give campaign contributions and lobby all it wants in order to generate greater profits. There is little doubt that the Istook Amendment will have enormous impact at the community level. We hope this report provides a better understanding of what some charities do with their federal grants and how advocacy plays a critical role in the work they do.