Ask Catalyst: Your Philanthropy Questions Answered

Welcome to Ask Catalyst, a monthly round-up of your most pressing questions about philanthropy and nonprofit work, answered. Navigating the world of funding can be complex, whether you’re wondering about funding rules, finding the best ways to amplify your impact, or staying connected to what matters most in your community. That’s where we come in!

Our mission with Ask Catalyst is simple: to provide clear, practical, and down-to-earth guidance that helps you in your work and fosters stronger connections in the philanthropic space. Drawing on the expertise of our staff and members of our community, this is your go-to space for answers, ideas, and support, no matter where you are in your giving journey.

In this first edition, we’ll be tackling the dos (and one big don’t!) of advocacy, how small grants can create a big change, strategies to keep up with community needs, even when you’re stretched thin, and H.R. 9495. Have a question you need addressed? Ask us here and we’ll get back to you with answers within two business days!

Question 1

Can I make a grant to an organization that advocates about policy issues? 

Yes! Most of the work that nonprofits do in the policy and advocacy arena falls under what the IRS considers education. That includes explaining policy issues, hosting candidate forums, encouraging people to vote, and speaking with legislators about community needs. The only thing that cannot be funded is direct lobbying to either elect a person or pass a specific bill. A great strategy is to support organizations through general operating funds so that any advocacy dollars they have can go straight to that work. Check out Catalyst’s “Advocacy 101” recording (54 min) and the resources from Bolder Advocacy about all the ways that public and private foundations can support a vibrant democracy.

Question 2

My organization gives small grants, and sometimes it feels like we’re just a drop in the bucket. How can I ensure that even our smaller contributions can make a meaningful difference? 

Even small grants have the opportunity to make a big difference! One way to make your impact felt strongly is through supporting grassroots or emerging organizations. Smaller nonprofits often operate with leaner budgets and fewer resources, so even a modest amount can contribute to vital programs or help them scale their efforts. Beyond the immediate financial support, small grants can also serve as the start of a long-term relationship. You can amplify your financial support by introducing grantees to your networks, advocating for them within funding circles, or attending their events.  

Another powerful way to extend the reach of your grant is through collaborative funding. By partnering with other funders, you can pool resources to support a shared cause, increasing the impact of your collective contributions. Explore the collaboratives we convene at Catalyst, and discover how you can multiply the effect of your giving through strategic partnerships. 

Question 3

My team doesn’t have the time or staff to be out in the community consistently, but I still want to make sure we’re addressing the biggest needs in our region. Without staff to track the work, how can we stay informed about where our support is most needed? 

It’s important to stay informed about community needs, even with limited staff capacity. Here are some strategies to consider:

1. Collaborate with Local Networks: Partner with local nonprofits and community foundations that have direct knowledge of community needs.
2. Leverage Data and Reports: Utilize local reports from organizations like United Ways or government agencies to understand pressing issues.
3. Join Regional Grantmakers’ Collaboratives: Engage with philanthropic networks, such as Catalyst, to learn from peers working in your region.
4. Engage with Community Leaders: Stay in touch with community leaders and nonprofit executives to stay updated on emerging needs.
5. Fund General Operating Support: General operating grants give nonprofits the flexibility to address their most urgent needs.

QUESTION 4

I’ve seen a lot of concern from people surrounding the “Nonprofit Terrorism” Bill H.R. 9495 – what is going on?

H.R. 9495, formally known as the Stop Terror-Financing and Tax Penalties on American Hostages Act, primarily aims to ensure that individuals who are unlawfully detained or held hostage are not penalized due to missing a tax filing deadline. There is broad support for that component. The part of the bill that is concerning would give the individual serving as Secretary of the Treasury the ability to designate a 501(c) organization as “supporting terrorism” and strip them of their tax-exempt status without sharing their evidence or reasoning.

As it stands, staff at the IRS are already charged with monitoring and investigating any organization that is suspected of providing support to terrorist organizations. They do this alongside the agency’s broader regulation of acceptable activities for a 501(c) organization. The function is apolitical and includes a series of checks and balances in the process. Moving this power to an individual political appointee opens the door to abuse of that power for political gain.

While H.R. 9495 initially failed in the House of Representatives, on a second vote, it passed and will now be considered by the Senate. In November, the United Philanthropy Forum, alongside Independent Sector, Council on Foundations, and National Council on Nonprofits issued a statement that explains the premise and faults of this bill.

Catalyst supports the protection for individuals who are detained or held hostage included in this bill. We also believe it is critical to investigate and address bad actors in the tax-exempt sector. However, H.R. 9495 needs significant amendment to do that in a way that adds to existing law and does not pose a threat to critical nonprofit services and law-abiding organizations.

We will continue to monitor this bill and provide updates on its progress and any actions that we believe should be taken.