The Risks of Not Knowing the Law

Grantees don’t necessarily know the law. Although grantees often have more legal latitude for advocacy than their funders do, it can be a mistake simply to assume that all grantees know the law and how to apply it. “One of the most important things a foundation can do if it intends to engage in advocacy work primarily through its grantees,” one grantmaker wrote, “is to be sure that they are well-trained in the legal requirements around both their own activities and those of the partnering foundation.”

A grantmaker interested in affordable housing cited a case in which a project had to be altered at the last minute because of a failure of foresight:

“A grantee was working on revenue and cost projections for an affordable housing project. A standard part of that involved getting a local tax abatement to keep the rents down. It was routine; this grantee did it all the time. But it required a legislative vote, so it was considered an attempt to influence legislation. This caught me totally by surprise. It wasn’t that there was a bill pending on taxes. It was a matter of getting a tax treatment for this specific project. The truth is, it might have been permissible for us to work on it and use our grant for it. But I hadn’t alerted our lawyers, and by the time they found out about it, there was no time for research on dos and don’ts. They just shut down that part of the grant I was proposing, and the grantee had to scramble for another way to pay for that part of the activity. Next time, I’ll be smarter about spotting this kind of thing in advance.”