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WASHINGTON, D.C. — Legislation rapidly moving through Congress could force many Jewish organizations to choose between political advocacy and millions of dollars in federal grants that aid refugees, seniors and poor people.

A bill, by Rep. Ernest Istook (R-Okla.), would restrict advocacy and lobbying expenses by federal grant recipients on the federal, state and local level to $1 million annually.

That limit would apply to the total spending on lobbying by national groups and all their smaller affiliates that receive federal grants.

In Washington, D.C., the Council of Jewish Federations, the umbrella group for local Jewish federations, considers the bill so drastic it is launching an all-out campaign to stop it.

"This is a major crisis" that could affect many Jewish organizations," said Diana Aviv, director of the Council of Jewish Federation's Washington Action Office. "This would be a totally new ball game."

It is legislation whose impact has moved, in the words of one Jewish activist, from "bad to devastating" for many Jewish organizations.

A previous version of the bill, which also alarmed Jewish activists, would have cut off federal grants to individual groups that spend more than 5 percent of their annual budgets on lobbying.

The House of Representatives could vote as early as this week on the measure. The battle would then shift to the Senate.

Jewish activists and their counterparts in the not-for-profit community — the major targets of the legislation — are hoping to stop the measure from becoming law.

In an action alert to local federations, Council of Jewish Federation officials said it is "essential" that local Jewish officials contact their senators and representatives to vote against the measure.

The restrictions under consideration "could severely limit the ability of CJF's member federations and their agencies to communicate with public officials at the federal, state and local level," the communique warned.

Under the Istook amendment to the Treasury-Postal appropriations bill, money spent on advocacy by local federations and their constituent agencies that receive federal funds — such as the Hebrew Immigrant Aid Society and Jewish vocational services — would be combined with activity by the Council of Jewish Federations in calculating the total amount spent.

Proponents of the measure charge that federal grants free up organizational resources for lobbying and campaigns against the same Congress that grants the money in the first place.

This amounts to "welfare for lobbyists," they charge.

Opponents argue that existing law prevents not-for-profits from spending federal dollars on lobbying and that advocacy is an integral part of their mission.

The measure is "a rather blatant attempt to silence dissent and to muffle the diversity of opinion in the forum of public debate," Sen. Carl Levin (D-Mich.) told his colleagues last week.

With the Istook bill, the entire Jewish federation system would be in violation of the spending limit, according to CJF officials.

Although officials said they could not begin to calculate the total amount now spent on lobbying and advocacy by all federally funded Jewish organizations, they said there is no doubt that it would exceed $1 million.

The measure expands existing restrictions on the political activism of not-for-profits.

Currently, the Internal Revenue Service limits the amount of time and money not-for-profits can spend lobbying members of Congress. Under current IRS tax codes, individual not-for-profits organizations are limited, according to a sliding scale, up to a $1 million cap on lobbying activity.

The new measure not only expands these restrictions to include political advocacy in general — such as action alerts and grassroots activism — it also includes advocacy on the state and local level.

The measure could affect all Jewish organizations that receive any federal money, no matter what the amount.

For example, when HIAS officials meet with State Department officials on immigration issues, that would be considered advocacy. Anytime an elected state official requests information from a Jewish federation agency, that, too, would be considered advocacy.

Beyond federation agencies, B'nai B'rith is another major Jewish organization that would be severely affected by the legislation.

President Clinton has told members of Congress he would veto the bill if it includes the current restrictions of advocacy.