RESTRICTIONS ON AFFILIATIONS, ADVOCACY, AND NONPARTISAN VOTER PARTICIPATION FOR GRANTEES MUST BE REMOVED SIMILAR TO THE 1995 ISTOOK ANTI-ADVOCACY AMENDMENT A bill that will likely reach the House floor within the next two weeks has a provision that would disqualify nonprofits from receiving money from a new affordable housing fund if they have engaged in voter registration and other nonpartisan voter participation activities or lobbying for certain groups within 12 months of applying for the money. They would also be barred from these activities during the grant period, even if non-federal funds were used to pay for it. More specifically, the bill would sweepingly restrict any group that affiliates with an organization that engages in such activities from applying for funds under the affordable housing fund. Promoted by conservatives, this provision has anti-advocacy antecedents that reach back more than 20 years to other attacks on nonprofit advocacy, such as the Istook amendment and proposed changes to OMB Circular A-122. All nonprofits should be concerned about the precedent that would be set by this housing provision. Summary of the Proposed Anti-Advocacy Provisions The bill, Federal Housing Finance Reform Act (H.R. 1461), would strengthen oversight of government-sponsored enterprises, such as Fannie Mae. When the bill passed the House Financial Services Committee in May, Committee Chairman Michael Oxley (R-OH) and Financial Services Capital Markets Subcommittee Chairman Richard Baker (R-LA) added a new Affordable Housing Fund (AHF) to be supported by contributions from Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac would be required to contribute 5 percent of their after-tax income to establish this fund. The Republican Study Committee (RSC), a conservative body within the House, opposed the AHF, claiming it would harm private enterprise. After failing to stop the bill in committee, members of the RSC contended that money from the fund will be used to "finance third-party advocacy groups that have agendas far beyond simply increasing affordable housing for low-income Americans." Rep. Tom Feeney (R-FL) took an even stronger tone, explaining that he would "rather burn the money then give it to advocacy groups." The RSC asked then-Majority Leader Tom DeLay (R-TX) not to schedule a vote by the full House until their concerns were addressed. DeLay held up the floor vote, and then Oxley negotiated changes with the RSC in order to get the bill to the floor. An agreement was announced on October 9 that reduced the size and duration of the Affordable Housing Fund and addressed the advocacy and voter participation issues. However, neither Oxley’s office nor the RSC released specifics, leaving many who were monitoring the bill uncertain what the deal was. Newly obtained draft language now provides the elements of the deal. One provision in the “discussion draft” requires AHF grant applicants “other than for-profit entities” to have “affordable housing” as their primary purpose. It restricts use of grant funds exclusively to support affordable housing activities. The draft also disqualifies grant recipients if, for the preceding 12 months prior to applying for the funds and during the grant period, the group:

• Engages in voter registration, voter identification, get-out-the-vote, or other nonpartisan voter participation activities;
• Publicly promotes, supports, attacks or opposes a candidate for federal office;
• Broadcasts that refer to federal candidates within 60 days of an election or 30 days of primary; or
• Lobbies, except if the group is a 501(c)(3) organization lobbying within permissible limits.

Affiliation with any entity that engages in any of the above activities during the same time period — 12 months before applying for a grant or during the grant period — will also disqualify the group from receiving money from the AHF. What Does This Mean? The Affiliation Provision The affiliation provision is quite sweeping and raises substantial constitutional questions about restricting who groups may associate with. Under this provision, an organization with an affiliated 501(c)(4) organization could not receive money from the AHF if the 501(c)(4) lobbies, or engages in any electioneering activities whether partisan or nonpartisan. In 1995, Congress already restricted 501(c)(4) organizations that lobby from receiving federal grants. There was bipartisan support for this restriction on the condition that a 501(c)(4) can establish a separate 501(c)(4) that does not lobby or a 501(c)(3) organization to receive federal funds. At that time, Sen. Carl Levin (D-MI) said to the amendment’s sponsor Sen. Alan Simpson (R-WY): "[I]n fact, this amendment does not preclude, as the Senator from Wyoming phrased it, the splitting of an organization and the creation of another organization which could do the lobbying effort while organization No. 1 receives the Federal grants. So offhand I do not see that this precludes 501(c)(4) from a number of options which it currently has, and therefore I am not in a position where I can say that I oppose it, because it seems to me it leaves open many options for 501(c)(4)." Simpson concurred with Levin’s assessment and added later in the debate after concern was raised about constitutional implications: "What we are saying is if anyone gets stung here in this process, they can go become a 501(c)(3) if they are really into big-time charity, doing things that you would like to see charities do. They can be a 501(c)(3). That is a charitable corporation; that is $1 million limiting activity of lobbying. They can give up lobbying or they can go into a separate split-off. They can split into two, a lobbying organization or a grant organization. That is what we are saying." This provision runs counter to the compromise that was worked out 10 years ago. There has been no problem with that compromise. Furthermore, there is no evidence of organizations that receive federal funds either using federal funds for lobbying or electioneering, which is at the heart of the housing provision. Congress and the Supreme Court have recognized that the right of government to limit advocacy by one type of group is constitutional only because the group has the right to create an affiliate to carry out the other activities. This provision violates those protections. Voter Engagement Activities This discussion draft would undermine the intent of the Help American Vote Act and various other laws that permit federal grantees to engage in nonpartisan voter participation activities, such as registering people to vote. It runs counter to mainstream values to encourage Americans to exercise their right to vote, an important role the charitable sector plays. Lobbying Restrictions The discussion draft appears to be aimed at limiting 501(c)(4) groups that lobby from receiving federal grants, but, as mentioned above, that is already current law. The provision in the discussion draft may also disqualify cooperatives, nonprofit development corporations, and other types of nonprofits that have a primary purpose of providing affordable housing that are not exempt under 501(c)(3). The provision restricting electioneering communications would also restrict paid broadcasts that refer to federal candidates within 60 days of an election or 30 days of a primary. This applies even if the broadcast does not refer to the election, but it is a genuine grassroots lobbying communication or nonpartisan educational message. Background on Nonprofit Advocacy Attacks For more than two decades, conservatives have taken aim at silencing advocacy by nonprofit federal grantees. In 1983, the Reagan administration proposed modifications to grant management rules called Circular A-122 that would have barred all advocacy by nonprofit organizations that receive federal funds, including advocacy paid for with non-federal funds. Nonprofits would have had to conduct grant activities and advocacy under separate operations or affiliations. A firestorm of protest by nonprofit organizations across the country resulted in final rules that appropriately implemented statutory restrictions on using federal funds for lobbying or electioneering. In 1995, Reps. Ernest Istook (R-OK), David McIntosh (R-IN), and Robert Ehrlich (R-MD) lead an effort to pass legislation that would have made an extreme form of the original Reagan proposal law. Once again, the nonprofit sector rose up in unison to speak out against it. With bipartisan support, the Istook amendment was stopped. Since then, various versions of the Istook amendment have appeared in specific appropriation or program legislation, but none have passed. The provision in H.R. 1461, advocated by the RSC, comes from the same orientation as these past anti-advocacy attacks. Conservatives do not like the viewpoints of some groups that receive federal money and want to silence them. This amendment, like the Istook amendment, needs to be stopped dead in its tracks. It has implications for the entire nonprofit sector.