House Bill Strips Nonprofits of Basic U.S. Freedoms

On October 26, 2005, the House of Representatives passed H.R. 1461, the Federal Housing Finance Reform Act. According to the Congressional Budget Office the purpose of the bill is to “establish a single regulator -- the Federal Housing Finance Agency -- for government-sponsored enterprises (GSEs) involved in the home mortgage market.”

On first glance, the legislation appears reasonable, concentrating oversight of GSEs like Fannie Mae in one federal agency. However, buried within the bill is language that would:

Deny nonprofits providing affordable housing of an important source of revenue for that work and, in effect, deny communities of a key housing provider for individuals and families of limited and moderate means.
Strip non-profit organizations of fundamental American freedoms.

Affecting the Non-profit/For-Profit Equation?

The House legislation specifies that non-profit recipients of the new Affordable Housing Fund grants have affordable housing as their primary purpose. Of course, a number of non-profit organizations that have provided desperately needed affordable housing also provide multiple services with and for their local communities - and often nationally. The language could effectively halt this vital work.

In addition, and just as disturbing, a provision within the bill could strip non-profit organizations of their basic rights, disqualifying organizations involved in advocacy and nonpartisan voter registration activities from receiving grants.

TSNE, as part of a coalition of over 100 national progressive organizations, signed a November 18, 2005, letter to the Senate leadership advocating that this type of language should not be included in the Senate’s version of the bill. The House’s non-profit gag order is the result of an amendment by Michael G. Oxley, R-Ohio, which narrowly passed in a 210-205 vote. It states that “nonprofits and their affiliates cannot have engaged in federal election activity, electioneering communication or lobbying.”

Thus, it not only bars non-profit organizations from receiving grants for advocacy, civic engagement activities or lobbying during the grant period or the year before the grant, but it disqualifies them from funds if they affiliate with any entity that engages in such activities.

These restrictions do not apply to for-profit applicants. And the language is punctuated by the threat that “recipient use of funds will be closely tracked. Those misusing funds will be permanently barred from participation and must make reimbursement.”

Eroding Freedoms

Most community-based non-profit organizations provide some form of advocacy and community engagement in their work, understanding the vital role this work plays in bringing about systemic change. Civic engagement activities such as issue education and voter registration are tools for addressing the problems that nonprofits tackle within communities.

The experience that non-profit groups - and the communities represented - bring to these activities provides valuable information and perspectives that enable Congress and federal agencies to make more informed policy decisions. The House legislation would severely restrict this right with its dangerous and unconstitutional language included in the House bill.

Please read the letter to Senate Majority Leader Frist, Minority Leader Reid, Senate Banking Chair Shelby and Ranking Member Sarbanes regarding the anti-advocacy provisions passed in the House as part of the Affordable Housing Fund in H.R. 1461.

Share this information with your networks, so that as many people as possible can communicate with these Senate leaders on how far-reaching and unacceptable the House provisions are.

Letter to Senate Leadership on H.R. 1461

Jonathan Spack
TSNE Executive Director

Dec.-05