House Votes to Curb Political Activity of Nonprofit Groups : Congress: Bill forces recipients of federal grants to limit their spending on lobbying, lawsuits. Opponents call it an assault on free speech.

A sudden push by Republican lawmakers to curtail lobbying and other political activities by nonprofit organizations is sending shock waves through the ranks of such organizations as the American Red Cross and United Way.

Representatives of several nonprofit groups said Friday that they were surprised at how quickly the House approved legislation to impose sweeping new restrictions on all organizations and institutions that receive federal grant money. Freshman Rep. David M. McIntosh (R-Ind.) made the proposal just six weeks ago and it was adopted by the House early Friday as part of a $256-billion labor, health and human services spending bill.

The House restrictions, much broader than those in a Senate version of the legislation approved last week, would prohibit any recipient of federal grants from using more than 5% of their private funds for political activities, such as lobbying, filing lawsuits against the government and participating in political campaigns.

Federal law already prohibits the use of federal money for political purposes. Lawmakers want the additional restriction because they fear that organizations can sidestep the existing prohibitions and spend large amounts of their budgets on political activities simply by claiming that the money came from private sources.

The allegation made many nonprofit organizations furious.

“It is absolutely illegal to use a penny of federal funds to lobby,” said Bob Smucker, senior vice-president of the Independent Sector, an umbrella group representing more than 800 nonprofit organizations. “There is no evidence of a pattern of abuse [and] it seems to be lost in this debate.”

Lawmakers cited some examples of what they said were abuses but offered little evidence that the practice has been widespread.

Among the recipients most affected are thousands of universities, colleges and charitable organizations that receive a majority of the approximately $40-billion annual pool of federal grant money.

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“All we are asking is that these groups make a choice,” McIntosh said. “Be a lobbying organization or be a grant recipient. But you can’t be both and we’re not going to let you get away with lobbying with taxpayer dollars.”

The law would require groups seeking federal grants to open their books to prove that they are not using their grant money illegally and to show that they have not exceeded the 5% limit on private money. The legislation also would require recipients to provide annual reports and make periodic audits beyond similar requirements already in place.

Opponents argued that the requirements would violate the constitutional rights that nonprofit groups have to free speech and to petition the government.

“It grossly reduces the ability of ordinary people to communicate with their government,” said Nan Aron, executive director of the Alliance for Justice, an umbrella group that includes the Children’s Defense Fund and the Center for Science in the Public Interest. “It’s going to spell trouble [for nonprofit groups] on both sides of the aisle.”

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Aron said that the definition of “political advocacy” contained in the House bill is so broad that organizations would be barred from filing lawsuits on behalf of the public interest at federal and state levels and from using private money to educate the public about government policies.

The proposal became the center of an emotional debate on the House floor Thursday evening when Rep. David E. Skaggs (D-Colo.) offered an amendment that would have removed the so-called political advocacy language.

“This proposal . . . buried in this appropriations bill is an incredibly intrusive scheme designed to do one thing and that is to control certain kinds of political activity in this country,” Skaggs said. “It is designed to keep many Americans and their organizations from participating fully in this great and free land.”

Others argued that the provisions were unfair because they singled out nonprofit organizations but did not address private companies that receive federal contracts.

“I find almost amusing the suggestion that this is somehow an anti-lobbying bill,” said Rep. Earl Pomeroy (D-N.D.). “As I walk down the halls coming over to the floor of the House, I pass lobbyists, lots of lobbyists, but they’re not lobbyists representing the homeless associations . . . they are lobbyists from the defense contractors, they are lobbyists from the space station contractors and you have written them out of this exclusion. You don’t deal with them at all.”

Chris Jones, McIntosh’s communications director, said Friday that there is a clear difference between grants and contractors: grants amount to gifts from the federal government and contract money is a fee for a service. Jones also said that there are already laws regulating lobbying activities by federal contractors.

The restrictions have a long way to go before they can become law. The House measure has to be reconciled with a Senate version that is narrower but tougher.

The Senate measure, sponsored by Sen. Alan K. Simpson (R-Wyo.), is directed at just one class of nonprofit organizations--so-called 501(c)(4) tax-exempt organizations, defined in U.S. tax law as “civic organizations” or “organizations operated exclusively for the promotion of social welfare.” There are 25 kinds of tax-exempt organizations.

Any such organization receiving federal grants would be barred from using any money--public or private--for lobbying and certain other political activities.

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The Senate proposal, however, would not affect churches, schools and charitable organizations. It is aimed at groups like the American Assn. of Retired Persons, which lobbies the government on behalf of senior citizens on issues such as Medicare and Social Security.

“Big tax-exempt lobbying groups will be prevented from getting millions of taxpayers’ dollars in federal grant money while spending millions of dollars to lobby,” Simpson said.

Other examples of 501(c)(4) organizations include veterans associations, Rotary clubs, People for the American Way, the National Organization for Women and the National Right to Life Committee.