As a general matter, organizations or corporate entities which receive federal funds by way of grants, contracts, or cooperative agreements do not lose their rights as organizations to use their own, private resources for what may generally be termed "political" activities because of or as a consequence of receiving such federal funds. When discussing "political activities" by such private grantees or contract recipients, this report is including the activities of lobbying or advocating for legislative programs or changes; campaigning for, endorsing, making electioneering communications concerning, or contributing to political candidates or parties; and voter registration or get-out-the-vote campaigns. Although (with some exceptions) organizations receiving federal grants or contracts are not, by virtue of such receipt, required to abdicate or refrain from exercising their First Amendment rights of political speech, participation, or expression with their own resources, such organizations are uniformly prohibited from using the federal grant or contract money for such "political" purposes, unless expressly authorized to do so by law. These recipient organizations must thus use private or other non-federal money, receipts, contributions, or dues for their political activities, and may not charge off to or be reimbursed from federal contracts or grants for the costs of such political activities. Certain entities, because of the nature of the organization or its tax status, may have particular limitations or restrictions on political or advocacy activities which would apply, in most instances, regardless of the entities' status as a federal grantee or contractor. § 501(c)(3)), are limited in the amount of lobbying in which the organization may engage, and are prohibited from participating or intervening in any political campaigns. Corporations and labor unions are expressly prohibited from making contributions for federal elections (2 U.S.C. § 441(b)), and federal government contractors are prohibited as well from making political contributions in such elections (2 U.S.C. § 441(c)). Corporations, labor unions, and federal contractors, however, are all allowed to establish and finance separate segregated funds which may act as political action committees (PACs) to gather voluntary contributions and make political campaign contributions or expenditures. Non-profit social action organizations (which are tax-exempt under Section 501(c)(4) of the Internal Revenue Code [26 U.S.C. § 501(c)(4)]) are prohibited from engaging in certain lobbying activities, even with their own funds, if they receive federal grants, but may establish affiliated social action groups through which an organization and its members may exercise First Amendment rights of advocacy and speech using non-federal resources. "Electing" organizations (electing the "expenditure test" for lobbying limits for 501(c)(3)s under 26 U.S.C. Notwithstanding other provisions of this Circular, costs associated with the following activities are unallowable:
(1) Attempts to influence the outcomes of any Federal, State, or local election, referendum, initiative, or similar procedure, through in kind or cash contributions, endorsements, publicity, or similar activity;
(2) Establishing, administering, contributing to, or paying the expenses of a political party, campaign, political action committee, or other organization established for the purpose of influencing the outcomes of elections....

			Federal Acquisition Regulation

The Federal Acquisition Regulation applies to for-profit businesses and entities contracting with the federal government, and in a similar manner and in identical wording to the OMB limitations for non-profit grantees, prohibit the use of federal contract funds for political campaign purposes, and prohibit the writing off to a federal contract the expenses for such activities.
This report discusses the permissible "political activities" in which organizations, associations, or businesses may engage if such entities receive federal funds through a grant or a federal contract. When discussing "political" activities by private grantees or contract recipients, this report includes lobbying or advocating for legislative programs or changes; campaigning for, endorsing, making campaign related expenditures, or contributing to political candidates or parties; and voter registration or get-out-the-vote campaigns.
Generally, organizations or entities which receive federal funds by way of grants, contracts, or cooperative agreements do not lose their rights as organizations to use their own, private, non-federal resources for "political" activities because of or as a consequence of receiving such federal funds. However, such organizations are uniformly prohibited from using the federal grant or contract money for such political purposes, unless expressly authorized to do so by law. These recipient organizations must thus use private or other non-federal money, receipts, contributions, or dues for their political activities, and may not charge off to or be reimbursed from federal contracts or grants for the costs of such activities.
Certain entities, because of the nature of the organization or its tax status, may have particular limitations or restrictions on political or advocacy activities which would apply, in most instances, regardless of the entities' status as a federal grantee or contractor. Thus, charitable 501(c)(3) organizations (entities exempt under 26 U.S.C. § 501(c)(3), which are entitled to receive tax deductible contributions) are limited in the amount of lobbying in which the organization may engage, and are prohibited from participating or intervening in any political campaigns. Corporations and labor unions are expressly prohibited from making contributions to candidates, parties, or committees in federal elections (2 U.S.C. § 441(b)), and federal government contractors are prohibited from making political contributions in such elections (2 U.S.C. § 441(c)), although corporations, unions, and federal contractors are all allowed to establish and finance separate segregated funds which may act as political action committees (PACs) to gather voluntary contributions and make political campaign expenditures and contributions.
Non-profit social action organizations may lose their tax-exempt status under Section 501(c)(4) of the Internal Revenue Code (26 U.S.C. § 501(c)(4)) for engaging in certain lobbying activities, even with their own funds, if they receive federal grants; but these organizations may establish affiliated social action groups (other 501(c)(4)s) through which the organizations and their members may exercise First Amendment rights of advocacy and speech using non-federal resources. Additionally, under certain federal programs, other specific restrictions or limitations may apply to federal funds and activities within the scope of that particular program.
Legislative attempts to flatly require private organizations or entities to forgo or abdicate their First Amendment rights of speech, expression, or advocacy with their own, private resources as a condition to be eligible to receive federal grants or contracts would encounter serious First Amendment obstacles under the "unconstitutional conditions" cases, as well under any analysis of permissible limitations on so-called "government speech." The recent Supreme Court decision in Citizens United v. Federal Election Commission has reaffirmed the right under the First Amendment of private entities, including corporate entities, to engage in independent political speech by way of making independent political "expenditures."