When Republicans took over state legislatures and the US Congress in 2010, we were promised a war on unemployment. Instead we’ve gotten a war on the environment, women, minorities, unions and everything else that moves, organizes and votes Democratic.
What the heck happened? While a lot of attention has rightly been focused on Super PACs, there’s another type of organization that has had an even more dramatic and troubling impact on our democracy. Secretive, tax-exempt 501©(3)s have been gaming our system, enabling corporations and private foundations to buy our democracy at wholesale. They have orchestrated a broad sweep of extreme legislation across the country while using a tax-exempt status to hide their funders and sustain their existence through favorable IRS treatment. Two organizations in particular, the American Legislative Exchange Council (ALEC) and Americans United for Life (AUL) have led the charge in what has been described as “ghostwriting the law” but which in fact goes far beyond that.
The idealized “Schoolhouse Rock” version of our democratic process works something like this: Constituents concerned about a problem in the community contact their representative in the legislature, who recognizes the issue and decides to respond. The legislator works together with a skilled staff to draft legislation. The legislation is honed in committees where other members bring the perspective of their districts.
Finally, the entire body votes for the bill and it either succeeds or fails on its merits. We all know that this ideal has long been perverted by lobbyists and large donors who hold undue sway in our democracy. Less visible but even more pernicious is the impact of organizations like ALEC and AUL who turn legislating into a wholesale, Costco-style activity.
Rather than legislators gleaning policy ideas from their constituents, ALEC and AUL prompt them on the right legislation to promote. Rather than work with their staffs to draft legislation that works for their communities, legislators download boilerplate bills and in the words of former Wisconsin Governor Tommy Thompson “disguise them a little bit, and declare that ‘It’s mine.’” ALEC and AUL then move in to provide expert testimony, talking points, briefs and any other resources they can to get the bill made into law.
While ALEC’s focus has been on delivering favorable legislation for its corporate benefactors, AUL’s has been eroding women’s reproductive choices and options. As if this top-down big money perversion of our laboratory of democracy was not bad enough, AUL and ALEC’s tax-exempt status means that they do not have to disclose their donors, and their donors get charitable contribution tax deductions. In other words, not only are corporations and other wealthy interests gaming our system but they’re getting a tax write-off for doing it.
Whether it’s voter suppression laws, rolling back environmental regulations, limiting collective bargaining, or mandating invasive ultrasounds, nearly every aspect of public policy has been impacted by either ALEC or AUL. Florida’s controversial “Stand Your Ground” law has now been adopted in some form by 25 states thanks to ALEC’s Castle Doctrine model legislation.
ALEC has also been behind bills in 33 states allegedly aimed at voter fraud, but which really seek to reduce voting among young people and minorities. AUL has been quite active as well. Thanks to AUL’s aggressive efforts, 44 states introduced legislation that would seek to negate the impact of the Affordable Care Act and 21 states have introduced legislation that would require women seeking an abortion to have a medically unnecessary ultrasound.
I could go on but you get the point. The impact has been dramatic and because of ALEC and AUL’s 501©(3) status, the work has been done in secrecy and at the taxpayer’s expense. There is a strong case to be made that both ALEC and AUL are acting in violation of their fully tax-exempt status. If they are not in violation of the law however, the implication is even more troubling. It should not be legal for partisan lobbying outfits to masquerade as public charities in order to further their political ends, no matter what those ends may be.
Bear with me for just one paragraph of legal background. To achieve 501©(3) status, organizations must attest that they do not engage in political activity and that lobbying does not make up a “substantial part” of their activities. Lobbying is defined by the IRS as “carrying on propaganda, or otherwise attempting, to influence legislation.” The IRS leaves the definition a bit open but gives a few examples of activities it would consider lobbying such as: “Direct lobbying by the organization or its officers to directly influence legislators.” If your organization does engage in a substantial amount of lobbying then you must file as a less desirable 501©(4) organization. Super PACs like Stephen Colbert’s are 501©(4) organizations.
The donor disclosure requirements for 501©(4)s are lax, but for©(3)s, they are non-existent. 501©(3)s do not have to disclose donors of any amount at any time. Significantly, Super PACs and other©(4)s also receive much less favorable tax treatment. They must pay taxes on their political activities AND (here’s the key point) contributions to©(4)s cannot be written off for tax purposes.
All in all, they are much less appealing recipients of corporate funds in particular and are actually barred from receiving money from private foundations. Many corporate bylaws actually prohibit giving to 501©(4)s. It’s not an exaggeration to say that the very existence of organizations such as ALEC and AUL is dependent on their 501©(3) status.
According to their attestations to the IRS, ALEC does not engage in lobbying and therefore legitimately reports as a 501©(3). Their public statements, actions, and records tell a different story. For this reason, Common Cause, a nonpartisan organization dedicated to government reform and transparency has called on the IRS to revoke ALEC’s 501©(3) status. In a letter to the IRS, Common Cause details the many ways in which ALEC violates their tax-exempt status by lobbying.
In fact, an even cursory inspection of the organization’s activities and statements reveals that not only does ALEC engage in lobbying, but lobbying is the organization’s entire raison d’etre.
Their bylaws state directly that they “formulate legislative action programs” and ”…promote the introduction of companion bills in Congress and state legislatures.” According to their IRS filings, over 80 percent of their total expenses in 2009 went to either developing model legislation in task forces to be pushed in state legislatures or hosting conferences where their corporate benefactors could mingle with legislators and lobby them on issues of particular interest.
In other words, lobbying! ALEC’s correspondence with legislators is also quite telling. On March 5, 2010 for example, ALEC Task Force Director Amy Kjose sent an email to an Ohio State Senator saying in part, ”..we are encouraging as many states as possible to consider the Private Attorney Retention Sunshine Act (PARSA) legislation…. If you feel so inclined, ALEC would be happy to provide support.” In another document, ALEC details the type of support they could provide including: “in-depth policy papers,” “talking points on ALEC model legislation,” and “coordinated testimony.” I don’t know what Newt Gingrich would call that, but most people would recognize urging legislators to introduce specific legislation and providing testimony, briefs, and talking points as lobbying.
Americans United for Life follows much the same model as ALEC. Like ALEC, they attest in their IRS filings that they perform no lobbying but their legislative impact and public statements indicate otherwise. AUL’s stated mission on their website is: “to defend human life through vigorous legislative, judicial, and educational efforts, on both the state and national level.” They go on to state: “AUL attorneys work tirelessly across the country to help legislators write common-sense laws that protect human life at every stage…”
According to AUL’s 2009 IRS filing, over half of their program budget went to ”…specific legislative efforts including developing model legislation.” These lobbying efforts have been incredibly successful. The organization’s President, Charmaine Yoest notes how effective AUL’s efforts have been at pushing legislation in state houses noting: “During the 2011 state legislative session at least 86 bills were introduced in 32 states that were based on AUL’s model language or upon which AUL’s legal experts consulted. Ultimately, 28 of those measures became law in 2011. AUL’s experts testified 21 times…”
Indeed, AUL’s efforts have been extremely successful as evidenced by the record number of abortion restrictions signed into law in 2011. It defies common sense to think that an organization having such an obvious legislative impact, with a directly stated goal of enacting legislation, engages in zero lobbying. Is it possible that the IRS disagrees?
Both ALEC and AUL should be investigated by the IRS and if they are not meeting the IRS standard, their coveted 501©(3) status as public charities should be revoked. What would be even more outrageous is if ALEC and AUL are actually technically meeting the criteria set by the IRS.
It is horrifying that such blatantly political lobbying outfits could legally operate in total secrecy and on the taxpayer’s dime. Just based on the broad geographic and topical sweep of the legislation these two organizations have successfully pushed, there is no Super PAC, candidate committee, or K Street firm that can compare. Every American, whether or not they agree with ALEC and AUL’s policy agenda, should be outraged that powerful moneyed interests can buy our system and get a tax deduction for it. We’re not so naïve as to think that we can go back to a Schoolhouse Rock ideal (if it ever really existed).
But is it too much to ask that we should know who’s behind the laws impacting our families and communities? Is it so unrealistic to request that taxpayers subsidize real charities rather than partisan lobbying shops? Must we accept our legislators simply as marionettes with their strings pulled by secret corporate puppeteers? Changing the status quo is never easy though and particularly not in this case. ALEC and AUL have already perfected the art of getting their way. Unlike Justice Scalia however, we cannot be deterred by a tough challenge. The stakes are much too high.