ALEC Is a Lobby, Not a Charity
The evidence is overwhelming: This nonprofit is not entitled to tax-exempt status.
By BOB EDGAR
During my 12 years in Congress, I got to know plenty of lobbyists. They wrote endless letters, called on me at my office, pursued me through the Capitol, and chatted me up over hors d’oeuvres at fundraisers around Washington. I learned a lot about what they do and how they do it, knowledge that’s proven useful in my post-congressional career, including my current role as president of—and occasional lobbyist for—Common Cause.
One observation I’ve had is that the best lobbyists take extra care to follow the rules. After all, it’s pretty hard to promote or protect your client’s interests or hold on to your client’s business if your name starts showing up in news stories with even the smallest hint of a scandal, much less a real legal problem. If you don’t believe me, just ask Jack Abramoff.
So I was surprised when my staff discovered evidence that the American Legislative Exchange Council (ALEC), an organization backed by some of the biggest and most respected names in American business, is violating—flouting, really—federal tax laws and at least skirting some state lobbying laws.
Common Cause started looking at ALEC out of concern about some of the legislation it has helped promote, and about the way it gives corporate interests special access to and an equal vote with elected officials in developing that legislation.
A lot of ALEC legislation appears to have been drafted by companies that are members of the organization to enhance their profits. It’s understandable, and not necessarily bad, that companies support legislation that benefits them. But the way ALEC hides its initiatives—wining and dining state legislators behind closed doors at resort hotels and then stepping into the background as those legislators introduce the bills under their own names—is deceptive.
Other ALEC bills, like the “Stand Your Ground” laws that have generated so much controversy in the wake of the Trayvon Martin tragedy, have no apparent connection to the free-market and limited-government agenda that ALEC claims to promote.
The “tax whistleblower” complaint Common Cause filed against ALEC with the Internal Revenue Service in April has nothing to do with any of that, however. It counters claims by ALEC that it is a charity entitled by law to tax-exempt status, demonstrating that it’s actually a well-organized lobby.
Taxpayers shouldn’t be asked to subsidize anyone’s lobbying by providing a tax break for the donations that support it. ALEC should be held to the same rules the law imposes on other lobbying organizations.
That includes us. Like many nonprofits, Common Cause operates as two organizations. One, the Common Cause Education Fund, solicits tax-deductible contributions under Section 501 (c)(3) of the IRS code to support our educational and research efforts. The second, Common Cause, conducts our lobbying and operates under Section 501 (c)(4); its contributors get no tax break in return for their support.
ALEC does not dispute that federal tax laws put strict limits on lobbying by (c)(3) groups; it simply insists it does not lobby. But we have made public and submitted to the IRS more than 4,000 pages of materials—mostly ALEC’s own records—that document its lobbying. The materials include emails and “issue alerts” detailing arguments on behalf of ALEC’s “model” legislation, talking points to coach legislators through questions about those bills, and tracking documents to help ALEC member lawmakers guide the bills through the legislative labyrinth. There are even copies of invitations to social events hosted by ALEC member companies, a National Rifle Association-sponsored clay pigeon shooting event and a Reynolds Tobacco “cigar reception” among them.
ALEC has not challenged the authenticity of this evidence, even as its attorney has accused Common Cause of running a “tired campaign to abuse the legal system, distort the facts and tarnish the reputation of ideological foes.”
If ALEC’s member companies and state legislators are so sold on the merits of the bills they’ve developed and gotten passed, why hide their involvement in the lobbying they do to get the bills enacted? Why risk their reputations by claiming a tax deduction to which they’re not legally entitled?
Common Cause is not interested in shutting ALEC down. We would like nothing better than to have the debate on ALEC focus on the merits of the legislation it develops and promotes. But ALEC and its member companies ought to observe the same rules that the tax and lobbying laws impose on everyone else.
—Mr. Edgar is president and CEO of Common Cause.