Fate in Senate of Nonprofit Gag Provision Uncertain

Nonprofits Monitoring Other Legislation for Advocacy Restrictions After a stinging five vote loss in the House, nonprofit groups continue their efforts to oppose the inclusion of any restrictions on the use by nonprofits of private funds for nonpartisan voter registration and advocacy in the Senate's version of an affordable housing provision. At the same time, Head Start advocates are examining pending reauthorization legislation to determine if new language in it would restrict the use of private funds for Head Start grantees. Led by the affordable housing community, nonprofit groups have rallied against an appalling set of anti-advocacy provisions in a House bill dealing with affordable housing and are continuing to work to ensure the language is not included in the Senate version. The affordable housing language is part of a broader bill providing oversight of Fannie Mae and other government sponsored enterprises (GSE). On Nov. 18, a coalition of 108 nonprofit organizations sent a letter to Sens. Bill Frist (R-TN), Harry Reid (D-NV), Richard Shelby (R-AL) and Paul Sarbanes (D-MD) declaring strong opposition to the inclusion of any anti-advocacy language in the GSE regulatory reform bill. H.R. 1461, the Housing Finance Reform Act, passed the House 331-90 on Oct. 26, despite a provision that disqualifies nonprofits from receiving affordable housing grants if they have engaged in voter registration and other nonpartisan voter activities, lobbying, or produced "electioneering communications." Organizations applying for the funds are barred from participating in such activities up to 12 months prior to their application, and during the period of the grant even if they use non-federal funds to pay for them. Most troubling, affiliation with an entity that has engaged in any of the restricted activities also disqualifies a nonprofit from receiving affordable housing funds under the bill. The Senate GSE bill, S. 190, currently does not contain an affordable housing fund provision, to which the anti-advocacy language could be attached. The Senate Banking Committee approved the bill last July on a party-line vote after rejecting a substitute offered by Sen. Jack Reed (D-RI) that would have included an affordable housing fund. The fate of the Senate's GSE bill is questionable. Although many agree a new regulator providing oversight for Fannie Mae and Freddie Mac is needed, some predict that key areas of disagreement between Democrats and Republicans could doom the legislation next year. The Senate bill includes tight restrictions on Fannie Mae and Freddie Mac's portfolio holdings and also limits the types of mortgage investments Fannie and Freddie could include in their portfolios. Meanwhile, nonprofits in other issue areas are looking out for possible restrictions on their private funds hidden in other legislation. An example of this is S. 1107, the Head Start Improvements for School Readiness Act. The legislation, which reauthorizes Head Start through fiscal year 2010, could create new barriers to voter registration by slightly tweaking a prohibition on program funds to encompass the program itself, including Head Start grantees' private funds. Twenty percent of Head Start monies are private funds. The older Head Start language stated that the restrictions applied to program funds. The new proposed language is less clear and refers to restrictions that would be applied to the program - which is not defined under the Head Start Act.. This slight revision could have significant implications for how Head Start grantees may use their private funds, as such funds might be considered part of the program. Reportedly, the language came out of a compromise between Sens. Judd Gregg (R-NH) and Edward Kennedy (D-MA), after Gregg offered more restrictive language in committee. It is unclear why Gregg offered the language, as regulations in the Head Start Act and OMB Circular A-122 already prohibit a Head Start agency from using Head Start federal funds, federal matching funds (including in-kind donations), Head Start services, or Head Start employees in carrying out any political activities, including voter registration and transportation to or from the polls. The House Head Start reauthorization bill, H.R. 2123, passed by a 231-to-184 margin on Sept. 22, does not contain the modified language proposed in the Senate. Experts are now examining possible implications of the language. Nonprofit organizations should be aware that there may be language in other bills that infringe on a grantee's private funds, and to report it to their national association or OMB Watch.
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