Turf

Really interesting article in today's New York Times regarding foundation funding of a youth activist network run in part by MTV. The problem? Idealist and others have asked for this type of funding before... and they're not happy that a for-profit got the nod.

Nonprofit playing "mystery" role in California ballot measure

The San Francisco Chronicle reports:

[Charles] Hurth is the registered agent for Take Initiative America, a tax-exempt group formed Sept. 10, 2007, according to the organization's incorporation documents. A day later, the group made its hefty donation to fund petition-gathering that would get the so-called Presidential Election Reform Act on the June ballot.

The donation was the only reported contribution to the ballot-measure campaign, according to financial documents released earlier this week.

The proposed ballot measure would change the winner-take-all election rules for the 55 electoral votes in Democratic-leaning California. It would allocate the electoral votes based on the popular vote winner in each individual congressional district - providing an unexpected windfall for Republicans.

Leading Democratic presidential candidates and Democratic National Committee Chairman Howard Dean have charged that the effort is a Republican dirty trick to change the election rules in the middle of the 2008 presidential campaign.

But Hurth's utter lack of connections to politics in California has raised cries of foul play and suggestions that a major GOP presidential candidate could be behind the matter.

Democrats say Hurth violated the spirit if not the letter of California campaign finance laws because he would not disclose the source of his group's funding.

"Under the law, you're prohibited from making a contribution through an intermediary without disclosing the true donor," said San Francisco attorney James Harrison, representing Californians for Fair Elections, a Democratic group opposing the measure. "That's considered money laundering."

Jonathan Wilcox, the spokesman for the Missouri-based Take Initiative America group, said Hurth's organization is a nonpartisan, grassroots effort working for election reform. But he insisted, "We have a national network of donors ... and we will comply with all disclosure laws."

Roman Porter, spokesman for the state Fair Political Practices Commission, when asked Wednesday about the Democrats' charges, said. "We're aware of the concern regarding this situation, and we're reviewing it."

This is another example of where a nonprofit appears to be following all disclosure laws, but is still being asked to do more. You may recall that there were calls for Sen. Edwards to disclose funders from a nonprofit he was heavily involved in before his presidential run. It will be interesting to see if there is a movement that spawns from these types of activities to change disclosure rules for nonprofits that engage in certain election activities.

UPDATE: Apparently the folks behind the initiative aren't doing so well.

Tax Exempt Law Student Blog

Check out Jed Bodger's blog focusing on tax-exempt issues... Jed's an LLM student and a Nonprofit Law Podcast listener. The blog has some great information for anyone interested in this area of law.

California church off the hook - IRS punts

All Saints Church in Pasadena, California had been under an IRS investigation since a 2004 sermon sparked the agency to investigate whether the church had violated the prohibition on electioneering in the presidential race. The IRS has reportedly dropped the investigation, but has told All Saints in a letter that it still believes the church has violated the law. Unfortunately, the IRS is not willing to share with All Saints, or anyone else in the regulated community for that matter, why it is taking that stand.

This is frustrating. An IRS investigation is - and I'm sure the church leaders would agree - nearly as bad as being found in violation. It is invasive, expensive and irritating. After all the church went through, it is apparent that the IRS would investigate on these facts again, but would presumably not find a violation? If the IRS is intent on helping the nonprofit community follow the law, it has to give us better guidance than "facts and circumstances" standards and a handful of hypotheticals in a fact sheet.

UPDATE... more from the AP via The Washington Post.

Thompson reverses field on election law changes

CNN has the scoop on a very public flip-flop:

"The part that has not worked out and really was a mistake were the attempts to place limitations on campaign ads in certain parts of the process," the former 'Law & Order' actor said. "The Supreme Court has got better things to do then to hear a hundred different cases on a hundred different kinds of ads," he said of a process he feels has spawned a large amount of bureaucracy, diverted resources, and put "unfair limitations" on people. "I don't think that part of it was a good idea."

Thompson was a major supporter of McCain-Feingold, and if memmory serves did not have this opinion on the electioneering communications regime that the Supreme Court tossed earlier this year. No comment, other than to say two words... political expediency.

UPDATE... apparently Thompson once asked the bill to be called McCain-Feingold-Thompson. Not anymore, I guess...

Nonprofit Law Podcast #15: Kicking off the election season series

Episode #15 of the Nonprofit Law Podcast is up and at 'em... this week I begin a month-long series on election season and nonprofits with a basic overview of the rules. Check out the shownotes and resources at nplawcast.com!

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Word from the IRS...

As reported in the AFJ Advocacy Digest:

"The number of tax-exempt organizations charged with violating Internal Revenue Service rules by engaging in prohibited political activities is likely to continue growing during 2008's presidential campaign, a top IRS official said Sept. 19. Lois Lerner, director of exempt organizations for IRS, made the remarks during a panel discussion at the annual meeting of the Council on Governmental Ethics Laws (COGEL)," reports BNA Money & Politics (subscription required).

I'll be starting a month-long election related activity series starting Sunday on the Nonprofit Law Podcast so your nonprofit can avoid things that will catch the eye of the IRS...

Nonprofit Law Podcast #14: Who gets to see what?

Episode #14 of the Nonprofit Law Podcast is swimming in the Internets... this week I revisit the topic of disclosure in "who gets to see what?". Check out the shownotes and resources at nplawcast.com!

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Comments on IRS Form 990

Alliance for Justice filed comments on the new Form 990... check out the full scoop here (PDF). The highlights are:

1) Lobbying reporting is expanded in confusing and inconsistent ways
2) The definitions of key terms are inconsistent with their current interpretations
3) The IRS questions improperly interfere with the internal governance and management of nonprofits
4) The IRS failed to address special reporting problems that are unique to 527 organizations

We'll see if the IRS addresses AFJ's issues when they respond to comments later in 2007 or early 2008.

Required reading

Lloyd Mayer of Notre Dame Law School has written a great article titled, What is this Lobbying that We are so Worried About? Here is the syllabus:

Lobbying is both an essential part of our democratic process and a source of some of our greatest fears about dangers to that process. Yet when Congress, the public, and scholars consider loosening or, as is more often the case, tightening the restrictions on lobbying, they usually assume that everyone knows what activities are in fact “lobbying.” They therefore overlook the fact that multiple definitions of lobbying currently exist in the various federal laws addressing lobbying. This Article seeks to fill this gap by answering the question of how lobbying should be defined for purposes of the existing federal laws relating to lobbying. The Article first explores the three sets of applicable laws, which tax lobbying, disclose lobbying, and restrict lobbyists. This exploration reveals that all three sets of laws arise out of a common concern regarding the influence of interest groups on government actions. Drawing on the extensive research regarding how interest groups wield such influence, the Article then determines that this research strongly suggests that the vulnerability to interest group methods that raise the greatest concerns varies depending on the type of government actor that an interest group seeks to influence. The Article therefore proposes the adoption of single definition of lobbying that covers all direct attempts to influence government officials and employees in Congress and at the very highest levels of the Executive Branch, while excluding attempts to influence other types of government actors and to influence the public.

Nonprofit Law Podcast Catch-Up

Back from my travels, and time to play catch-up with the Nonprofit Law Podcast... Check out editions number 12 and 13 in your podcatcher of choice, or click on the handy players below. Shownotes and resources for both can be found at nplawcast.com!

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NLP 12: Personal vs. organizational activity


NLP 13: The new IRS return for small nonprofits

Foreign referendums and lobbying

I'm typing this on my iPhone in Costa Rica after an interesting couple of days exploring volcanoes, coffee plantations and... a ballot referendum. All of this reminded me of an interesting quirk in tax law
to post for nonprofit law blog readers.

In a few weeks, Costa Ricans will vote whether or not to join the other Central American countries in approving a set of free trade agreements with North America. In my travels this week, I have seen
campaign signs supporting and opposing the referendum (some decidedly low-tech... like the one on the left here)... Which leads me to the tax law quirk. If you are a US 501(c)(3) public charity, taking a stance on this referendum counts as direct lobbying, even
though it is foreign legislation. It's always been an interesting wrinkle, and rarely applies to most charities, but it's something to
be mindful of if your organization deals with such matters.

See? Even when I try to take week off from nonprofit law, I can't
quite manage to do it! Regular blogging resumes this week, and a new
nonprofit law podcast should be up on Sunday. Have a great weekend!