House Passes Rule to Restrict Nonprofit Advocacy

By Debra E. Blum

The House of Representatives on Wednesday passed legislation that would disqualify charities from receiving federal money from a new housing fund if they have lobbied or carried out any other advocacy activities -- such as voter registration -- within 12 months of applying for a grant.

The legislation was passed as part of the Federal Housing Finance Reform Act of 2005 (H.R. 1461), a measure that is intended to enhance oversight at Fannie Mae and Freddie Mac, government-sponsored companies that were created to establish a market for secondary mortgages.

The bill calls for the two companies to dedicate 5 percent of their after-tax profits to a new fund that will promote low-cost housing for needy families.

But critics say the advocacy provision would unfairly gag nonprofit groups and prevent them from doing legitimate work.

The advocacy provision was crafted in response to concerns about the housing fund from a group of conservative Republicans who charged that it would become a slush fund for political advocacy.

The provision would prohibit charities involved in any kind of political activity, even if those activities are paid for with private money, from receiving grants from the new fund. The prohibition would extend to groups that are affiliated with other organizations that engage in political activities.

Lawmakers voted 210 to 205 to add the advocacy limits to the legislation.

Rep. Barney Frank, Democrat of Masschusetts, proposed to soften the provision so that groups that pursued voter-registration efforts would not be covered by the advocacy limit. His effort failed, with 220 lawmakers voting against his measure and 200 voting in favor of it.

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