The American Legislative Exchange Council held its annual States & Nation Policy Summit in Washington, DC from December 4-6 at the Grand Hyatt Hotel, just a stone’s throw away from my office. Perhaps best known for its ‘Stand Your Ground’ legislation often cited in the death of Florida teen Trayvon Martin, ALEC was front and center in the news last week because of the disclosure of a trove of documents detailing its financial woes by The Guardian.
Given the proximity of the conference and my penchant for rabble-rousing, I of course paid a visit to my newly minted friends from this past August. I didn’t see Lew or John, but I did make a new pal in Montana State Representative Jonathan McNiven (R-44), although he probably won’t see it that way in the not-too-distant future.
I went undercover to try to dig up some dirt on this tax-exempt, allegedly nonpartisan, “educational non-profit”(wink wink), that many watchdogs say is really a partisan, special-interest lobbying effort. It seems its own members agree– McNiven, a first time conference attendee and himself a Republican, thought the summit was overtly pandering to party politics, specifically to the “wingnuts.” He went further, saying that speakers, like Tea Party Senator Ted Cruz, were “slandering” the other side, the other side being the Democratic Party.
Without the ‘nonpartisan’ designation, however flimsy it may be, the activities of the American Legislative Exchange Council would clearly be considered lobbying, which is not allowed for tax-exempt 501(c)(3) organizations. According to the IRS:
Under IRC 501(c)(3), there are certain circumstances where nonpartisan analysis, study, or research of matters pertaining to legislation may be educational and will not constitute attempts to influence legislation. This occurs where the material is available to the public, governmental bodies, officials, and employees, and where the organization does not advocate the adoption or rejection of legislation.
Lobbying would be allowed if ALEC were a 501(c)(4) advocacy organization, and the distinction is very important. Here’s why… contributions to 501(c)(3) organizations, or educational non-profits, are tax deductible; those made to 501(c)(4)s are not. That means fundraising is much harder for (c)(4)s.
Beyond tax-exemption, the nonpartisan designation is more important in terms of wooing corporate donors. If ALEC were unmasked to the public as a front for the Republican Party, then member corporations could face consumer backlash and ultimately a hit to revenues. Witness the effect of ALEC model bills like ‘Stand Your Ground’ and voter suppression.
In the face of the ensuing public outcry, nearly 60 corporations terminated their memberships. Now, there is nothing wrong with advocating certain outcomes to legislation. What is wrong is to maintain a nonpartisan ruse in order to obtain tax-exemption and easier corporate fundraising.
McNiven himself espoused a politics of compromise, of focusing on the “real issues” over rhetoric, repeatedly using the word “win-win.” I found him to be a refreshing anomaly in today’s Republican Party. Watch the video below for the full context of our conversation…