The hidden world of nonprofit advocacy

Okay, so today I Tweeted this:

It’s something I’ve been thinking for a long time. There are more and more “nonprofit organizations” whose official mission is “educational” or some such, but whose actual purpose is political advocacy, including activity that ought to be classified as lobbying but it’s not.

This is one reason I’m less exercised than some about the proposed cap on itemized deductions: a lot of “charitable contributions” are being spent politically. Many wealthy people set up their own nonprofit foundations for the purpose of spreading their political beliefs. The Koch Empire is the prime example of this, but there are lots of others. In Vermont, their number includes the Vermont Workers’ Center, VPIRG, Campaign for Vermont, Energize Vermont, Vermonters for a Clean Environment, Vermonters for Health Care Freedom, the Ethan Allen Institute, and the late unlamented Vermonters First.

That’s a heavy-hitting list of groups trying to influence our politics, and they range from far left to far right. Nobody’s got a patent on this. Although I will say that the quantity of money on the right is much greater than on the lieft. Although although I will say that Vermont is an exception to this rule; our nonprofits lean leftward.

Some of these groups do report direct lobbying activities, but because they are nonprofits, they are not legally obligated to report the source of their revenue. Some voluntarily report to some extent, but as far as I know, none of them provide full donor disclosure. Which would include name, town and state of residence, and amount of donation. (If any group does so, please let me know and I will amend this post.)

I say “Ive been thinking about this for a long time,” so what made me write about it today? Actually, the inspiration was a mistake I made on Twitter, in replying to a Tweet from the corporate-funded folks at “Stop the Vermont Beverage Tax.”

Which brought a quick response from, well, a ready chorus of right-wingers, but let’s stick with the Ethan Allen Institute, Tweeting as @EAIVT:

They’re right. At least they’re partly right. “SPN” is the State Policy Network, which is part of the Koch nonprofit empire. I didn’t lie, though; I mistakenly believed that EAI is Koch-funded. I picked this up from the Center for Media and Democracy’s “Sourcewatch,” which describes SPN thusly:

The State Policy Network (SPN) has franchised, funded, and fostered a growing number of “mini Heritage Foundations” at the state level since the early 1990s.[1] SPN is a web of right-wing “think tanks” in every state across the country. It is an $83 million right-wing empire as of the 2011 funding documents from SPN itself and each of its state “think tank” members.

Sourcewatch lists the Ethan Allen Institute as the SPN’s Vermont affiliate. There’s where I made my leap of faith. I’ll take EAI’s word for it that they don’t get money from SPN or the Kochs; too bad for them, since a lot of their fellow SPNers are ridin’ that gravy train.

Still, for EAI to pay for the privilege of SPN affilliation… it’s not correct to call them “Koch-funded,” but they’re definitely “Koch-friendly.”

I will freely admit that I sometimes shoot from the hip, as I did in this case. I try to own up when I’m wrong; this isn’t the first time and I’m sure it won’t be the last. But I could have avoided my mistake if we had better disclosure laws; I could have gone to the source instead of poking around for indirect scraps of information.

But the real point isn’t a matter of my convenience. It’s openness and transparency in our politics.

Organized political parties (and the Democrats, haha) will tell you that campaign finance laws are stacked against them. It’s better in a number of ways for donors to go through their own organizations than through parties: there are effectlvely no limits and few disclosure requirements, and they retain control over how their money is spent. That’s why the Kochs and Sheldon Adelson and Foster Friess and all those people don’t give much money to the Republican Party; they funnel their wealth through their own organizations. And when those groups are nonprofits, We, the Taxpayers, are underwriting their political activities. Nice work if you can get it.

The point is, in this modern world of political nonprofits, we need better disclosure rules. We need to know who’s spending money for what political purpose, whether they’re going through the Ethan Allen Institute or the Vermont Workers’ Center.

19 thoughts on “The hidden world of nonprofit advocacy

  1. chuck gregory

    Theere is a deep need to change the 501(c)(4) law so they are compelled to reveal their donors.

    1. chuck gregory

      Ask Vermonters for Mobility and Mortality Freedom’s Darcie Johnston who her funders are, and she will tell you she doesn’t have to tell you. The more politically poisonous they are, the less likely they are to tell you. VHFC is definitely in the pay of the for-profit health care and Koch Brothers, but I haven’t been able to document it.

  2. Cyrus

    It’s worth noting that of the organizations listed above, only two are legally allowed to be doing any substantial amount of advocacy. I agree with Chuck, the disclosure laws for (c)(4)s should be stricter. A logical next question might be… how many of these organizations are registered lobbyist employers and how many of their staff are registered lobbyists?

    Vermont Workers’ Center (c)(3)
    VPIRG (c)(4) but they also have a (c)(3)
    Campaign for Vermont (c)(4)
    Energize Vermont (c)(3)
    Vermonters for a Clean Environment (c)(3)
    Vermonters for Health Care Freedom (c)(4)
    Ethan Allen Institute (c)(3)
    Vermonters First (doesn’t appear to have filed nonprofit documents with IRS)

    1. chuck gregory

      You can get the IRS 990 information for any (c)(3) organization, but it’ll be two years old. At one point I had found out the EAI depended on two-thirds of its funding from three foundations. And that’s Campaign for Vermont Prosperity, by the way. They don’t want you to get it right.

      As compared to Vermonters for Morbidity and Mortality Freedom (Darcie Johnston’s outfit), Vermont Health Care for All started up a (c) (4), and if you ask them, they will tell you who their donors are. Try get that from Darcie. . .

      1. chuck gregory

        Cyrus, you’re going to change it before you start using its present form. Trust me on this.

  3. Walter Carpenter

    Are you sure the SPN is not funded at least in part by the Koch Brothers? They must be, especially if the Institute people react so vigorously when you mentioned it. As you say, though, they are “Koch-Friendly.”

  4. chuck gregory

    The Koch brothers fund through third-party shells as well. I read recently where one anti-women’s legislation effort was funded by such a one. Mitt Rmoney also sank $10,000 into the Prop 8 effort through one located in, if I recall, Arkansas. We definitely need to end this.

  5. VCE

    501(c)3s are not allowed to advocate for candidates or influence elections. 501(c)3s are allowed to lobby up to 20% of their total budget for the year and those expenses must be reported. A Supreme Court ruling has protected (c)3s from disclosing their membership and that is the current status of the law. I assume you can imagine what would happen to members or donors whose interests are disclosed to people wishing them harm. Given the ability of wealthy people to influence elections with billions of dollars in undisclosed donations, I’m not sure there is any case to be made for (c)3s to make disclosures beyond what is required by the IRS for 990s which anyone can read on the internet.

    You left CLF and VNRC off the list. VNRC is especially interesting, if you look at their lobbyist disclosure and how many people they have in the statehouse they seem to be way under-reporting, or that was the case the last time I looked. VPIRG has both a (c)3 and a (c)4 and average annual donations for one year equal what VCE has had donated in 15 years. Since (c)4s are allowed to influence elections, it would seem appropriate to ask for disclosure of donors. But then since the election disclosure laws are so lax, what’s the point? Either the whole system changes or we’re stuck with wondering.

    But be careful what you wish for. It might be an organization you are a member of or have donated to, and if you get on a disclosed list then you are fodder for opposing forces who will no doubt use the list for purposes that you would not otherwise support. I for one will fiercely protect VCE’s members and donors from retribution by people who do not support our work and want to destroy the organization. It is not about having something to hide, it is about protecting the organization and its members from assault.

    And since it seems necessary these days in the climate of Vermont’s discussions, VCE discloses that it receives no funding from Koch brothers or the fossil fuel industry. Our donations come from people who care about Vermont, and that includes all races, political parties, income levels (we get a lot of $15 checks from people who can’t even afford that), and we help a lot of people who never donate anything. Our members help others who deal with similar issues. Over the years we’ve received grants from the Maverick Lloyd Foundation, the Park Foundation, the Lintilhac Foundation, the Johnson Family Foundation, Patagonia, and some other foundations but those have never made up more than 20% of our total budget. Given our relatively small annual budget it is an honor to be included in this discussion at all.

    1. chuck gregory

      It would be interesting to read VCE’s history of harassment of donors by people who oppose its work. I have a feeling it would be a blank piece of paper.

      Why does any worthy organization feel paranoid about the security of its donors? We are not yet the sort of plutocracy that Russia is. We don’t have journalists, civil rights lawyers and environmentalists getting murdered by agents hired to do so, much less by assorted whackos. This baseless fear of assassination and intimidation is unworthy of the American tradition. John L. Lewis, Dorothy Day, Lincoln Steffens, Sojourner Truth, William Lloyd Garrison, Clarence Darrow, Ambsose Bierce and a thousand others did yeoman’s work in behalf of truth, justice and good sense without fear for their reputation. And this paranoia on the part of the socially responsible now provides the cloak of invisibility for the effective metastasis of our own burgeoning plutocracy.

      Apparently (c)(3)’s no longer have to provide funder information. This means that EAI can claim to be supported by 500 donors when its support would be $200,000 from one wingnut foundation and $1 from 499 people.

      If I were in VCE, I would start lobbying for full disclosure.

      1. John S. Walters Post author

        “Harassment of donors” is the favorite canard of those opposed to transparency. If an organization is, indeed, funded largely by small local donors, no one’s going to harass them. Back when the conservatives were waging war against campaign finance law, they advocated transparency as the alternative. Once they’d won the war, they started trumpeting harassment as an argument against transparency.

        As far as I know, the only instances of anything like “harassment” involved big corporations making big donations to ultra-conservative causes like ALEC or same-sex marriage bans. In Vermont, the only time anyone’s gotten blowback was Lenore Broughton, who self-funded an advocacy group to the tune of over $1 million. Her definition of “harassment” included any and all questions, no matter how politely worded.

        I know of no instance in which an individual was “harassed” over a donation of $50 or $100. If VCE (or any other group) has a long and local list of small donors, they would gain credibility via disclosure.

      2. chloramine

        I’m not sure you understand the laws governing 501(c)3s. That’s understandable since, as someone once put it, they are one of the most highly regulated entities in existence. They come with constraints on free speech such that I, as the head of a 501(c)3, have restrictions on what I can say on some topics.

        As for one person being able to donate a large sum and $1 from a lot of other, nope, that won’t work. If one or two individuals provide the majority of funding for a 501(c)3 they will lose their “public” status and will become “private”. And then there are changes that flow from that, I don’t know what they are because I haven’t had to deal with them. But they do check, five years after giving 501(c)3 status the organization goes through a test to see if they still qualify as “public”.

        Curiously, the IRS does not require disclosure of the number of donations that come in, something that’s always puzzled me. They require disclosure of donors $5000 and above. I guess that’s how they figure out if a few people are funding the majority of the work. VCE could have 1000 $1 donors and 1 large donor to make up the balance of our annual donations and we would lose our “public” status.

        VCE and at least two other small non-profits in Vermont have been the target of harassment, not directed at our donors since they are not disclosed, but directed at staff. Having been the target of that unpleasantness, it has made me extra aware of the need to protect our contributors from similar attacks. Yes, to the point that I have had to be in regular contact with the State Police over the years.

        Regarding John’s comment below about not disclosing donors being a canard, I don’t agree. In Vermont, I’ve seen members of one 501(c)3 organization get nails in their driveway, a dead dear head in their garage, and other kinds of extremely offensive harassment. I don’t know why you think it doesn’t happen in Vermont. People along VAST’s snowmobile trails who have complained about exhaust fumes or operating after hours have found their dead goat hanging from a tree. If anything, because of the nature of how some Vermonters harass others, it can be more extreme than what might happen in a city.

        It is easy to look at one side of the disclosure problem. Sure I’d like to know who VPIRG’s donors are. But as others have pointed out in comments regarding EIA, there are obvious associations that make it possible to come to some conclusions.

        To John’s comment about groups focused on political persuasion, VCE’s primary focus is working with citizens to have a say in what goes on in their communities and to hold corporations accountable for their actions. Political activity is banned by our 501(c)3 status but we can do limited lobbying in the statehouse. As VCE’s only registered lobbyist, I have gone to the statehouse three times this year, once to a public hearing, once to listen to an educational program a committee was putting on, and once to testify to a committee. It is a very small part of what we do, and definitely not our primary work.

  6. Lee Russ

    The Koch foundations often fund an organization until it’s “up and running” then decrease direct support. Which makes me wonder whether the question for EAI should be “has EAI ever been funded, directly or indirectly, by Koch money?”

    Certainly EAI’s membership in the State Policy Network connects EAI to other groups that are or have been Koch funded. And EAI touts the ALEC-produced “Rich States/Poor States” ( publication that oddly equates “rich” with low levels of government activity and “poor” with high levels of government activity. That little linguistic sleight-of-hand produces the odd–but obviously intended–result that the states viewed as “rich” are often the poorest in terms of economic wealth.

  7. Connor Gibson

    True that Koch doesn’t fund Ethan Allen Institute directly – we track Koch’s giving to climate science deniers, which includes most of the SPN’s 63 members (in all 50 states) plus over 200 other “associate members” – Americans for Prosperity, Cato Institute, Heritage Foundation, etc etc

    SPN is confusing, since it is an actual nonprofit in Arlington, VA, but also the name of the network that incorporates its many many members. I’m really pleased as a Vermonter and as a researcher working on this to see you untangle that. This is modern lobbying – bankshot plays at politicians by running public relations to confuse their constituents.

    Koch does fund State Policy Network (the organization) directly. We know from leaked SPN grant proposals to another Koch-like foundation that SPN helps to secure funding for its members, and SPN:

    And who knows! Maybe Ethan Allen Institute is just hiding Koch grants through middlemen money laundering groups like DonorsTrust and Donors Capital Fund, which have help anonymize donors sending over a hundred million dollars to political front groups over the last decade.

    Sourced from tax filings from the donor groups, here’s some info on Ethan Allen Institute’s funding from the State Policy Network, and from Donors Capital Fund. It needs to be updated, Foundation Center, Guidestar or Citizen Audit will have latest 990s from Koch, Donors, SPN, etc.

  8. Walter Carpenter

    “Which makes me wonder whether the question for EAI should be “has EAI ever been funded, directly or indirectly, by Koch money?”

    Me, too, and thanks to everyone for all the investigative work. .


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