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Thursday, May 22nd, 2008

Posted by Niki Sullivan @ 04:38:45 pm

"We are not a political group. We are a non denominational group of Christians. The CBMC luncheon is not a political campaign event."

That's Dan DeLorenzo, a member of the CMBC, formerly the Christian Businessmen's Connection, now known as "Connecting Business and the Marketplace with Christ." They invited Republican gubernatorial candidate Dino Rossi to speak to a luncheon on Wednesday about his "life and 'testimony,'" according to a flyer for the event.

The problem: CMBC is a 501(c)3 nonprofit. And, as far as the Internal Revenue Service is concerned, Rossi could have talked exclusively about his shoe size and the event still would have run afoul of the law. (Though, if portions of this post can be trusted, there was some shop talk....)(Update: The post was removed, but I'm keeping the link. I've got a screen shot, if you're interested.)

Because nonprofits don't pay taxes, they're strictly prohibited from getting tangled up in politics. They can encourage voting in general or hold open candidate forums but, when it comes to inviting a partisan candidate to speak to a group of paying diners, the law is clear.

Under the Internal Revenue Code, all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity. Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.

I ran this by Daniel Borochoff, president of American Institute of Philanthropy, a nonprofit that specializes in watching other nonprofits.

"Yeah, they're not supposed to be doing that."

"According to IRS rules, they're not allowed to be involved in partisan political activity, and particularly involved in influencing an election. It sounds as if that's what's happening. if they were to invite all of the candidates there, that would be a different matter."

Borochoff said the group could be at risk for losing their nonprofit status -- and the tax exemption it provides -- if the IRS catches wind of this. He said they've been cracking down on this sort of activity recently.

Dwight Mason, however, sees nothing wrong with it. He's a CBMC organizer who spoke at the event.

"I feel like it's a private party. Our purpose was not fundraising, I can say that," he said.

I asked if fundraising occurred.

"There was no plea for funds. No funds were solicited."

I told him I had heard otherwise.

"You know, if there were envelopes there, they weren't anything that I had anything to do with. When you have a political campaign, I'm sure there's going to be some envelopes around somewhere."

Understandable. But whether there was fundraising is irrelevant in the eyes of the law.

"To me this sounds to me like a reporter who has an agenda."

Correct. My agenda includes something about holding people in power accountable.

Also, just to be sure, I asked Mason whether all the candidates had been invited to speak. Was this supposed to be a roundtable that went terribly wrong?

"We could invite her. We'd be happy to have her speak ... this group started out being a men's group. In the history I've been with the group, we 've had one female speaker and that was after 9/11 and she went back and was helping with 911. That's just the way, we usually don't have female speakers."

I've put calls in to Jill Strait, spokeswoman for the Rossi campaign.

Categories: Governor, Campaign news 13 comments

COMMENTS:

Permalink Comment by MarkCentz @ 03:35 - Friday, May 23rd, 2008 Email
Great work! Now, will the IRS follow through, or are there political restraints from the current administration?

And Boys Clubs, not even trying to hide themselves as such? Would they be all white, perchance?
Permalink Comment by pudgenet @ 09:58 - Friday, May 23rd, 2008 Email
Niki,

I regret to say you have no idea what you're talking about. Candidates speak to 501(c)(3)s all the time, and it is not a problem. You incorrectly note, "Rossi could have talked exclusively about his shoe size and the event still would have run afoul of the law." That is precisely NOT what the IRS says: it very explicitly DOES require the nature of the relationship to have a strong political AND partisan element.

Rossi can even talk about his positions and it is OK, as long as they do not endorse him, and the event will not run afoul of anything. This happens all the time, and the IRS routinely lets such things pass, because these sorts of things are not what the law is intended to prevent.

Further, Rossi himself did absolutely NOTHING wrong, EVEN IF you were correct about the law, so why should the Rossi campaign have anything to say about it?

And the LJ post you link to is private. Perhaps a friend of yours?

Permalink Comment by HappyHeathen @ 10:14 - Friday, May 23rd, 2008 Email
Good job Niki! Wonder how much money he raised in this so called unsolicited meeting. I think Markcentz might be right.......the IRS probably won't investigate this.
Permalink Comment by auburnstar @ 10:52 - Friday, May 23rd, 2008
Sounds like someone was a little T-O'ed they weren't given access to a private event, ahh retributive reporting at its best. Perhaps that is the real agenda here.
Permalink Comment by pudgenet @ 13:18 - Friday, May 23rd, 2008 Email
Oh Niki, one more thing, just to be clear.

When you talk about your agenda being to hold people in power accountable ... which people are those? Again, the only people who MIGHT have violated any laws is the CBMC, and they don't have any significant power. At least, not compared to the News Tribune, which is printing this false article about what the IRS laws state.

Again: it has to be political AND partisan ... as long as they would offer the same opportunity to Gregoire, and do not endorse Rossi, etc. ... perfectly legal.

You really should do some actual research with an actual expert and then print a retraction, if you value your reputation as a journalist at all.

Permalink Comment by Niki Sullivan @ 13:34 - Friday, May 23rd, 2008 Email
IRS code says: When a candidate is invited to speak at a (501(c)3), the organization must takes steps to ensure that:

1. "It provides an equal opportunity to the political candidates seeking the same office."

- When asked if Gregoire was given the opportunity to speak, Dwight Mason responded: No, they did not invite her and did not consider inviting her. "We could invite her. We'd be happy to have her speak ... this group started out being a men's group. In the history I've been with the group, we 've had one female speaker and that was after 9/11 and she went back and was helping with 911. That's just the way, we usually don't have female speakers."

2. IRS says the group must ensure "it does not indicate any support or opposition to the candidate. (This should be stated explicitly when the candidate is introduced and in communications concerning the candidate's attendance.)"

-"Thank you, Dino ... and CBMC thanks you for running for governor. We want to just forward this with a word of prayer... we certainly believe prayer is important to us to communicate with the God who loves us.
Father, we are thankful of your care for us and thankful for this opportunity to hear Dino's story and pray for him and his campaign...."

3. IRS says that in the group must ensure: "No political fundraising occurs."

- "Ok at your table, this is not a fundraiser, though Dino did leave with us a couple envelopes there and I'm sure he'd appreciate that."

And the "actual expert," Daniel Borochoff, of the American Institute of Philanthropy:

"Yeah, they're not supposed to be doing that."

"According to IRS rules, they're not allowed to be involved in partisan political activity, and particularly involved in influencing an election. It sounds as if that's what's happening."


Permalink Comment by jmattheson47 @ 13:37 - Friday, May 23rd, 2008 Email
Just curious, but the VFW is also a 501c(3), so didn't Christine Gregoire "break the law" as well by speaking to them?
Permalink Comment by Ron @ 15:48 - Friday, May 23rd, 2008
pudgenet is right. A 501(c)(3) can unquestionably invite Rossi to speak without being "involved" in a campaign. And such an organization does not have to invite Gregoire to one of their events to protect themselves from punishment under the IRS code. The first amendment's protection of freedom of association guarantees this right. What you call "support" or "fundraising" is hardly enough to raise an eyebrow, and is also protected speech under the first amendment. Passing this off is holding someone accountable is a joke -- unless, of course, you have an agenda.
Permalink Comment by mjday @ 18:25 - Friday, May 23rd, 2008 Email
If the Newsw Tribune is really interested in holding people accountable, you should be camped out on the doorstep of the WEA state office for the next 5 months. These scofflaws have been flaunting the election laws big time for years. Odds are good that they'll do the same again this year. Why waste your time on small groups like the CMBC?
Permalink Comment by Ron @ 18:35 - Friday, May 23rd, 2008
Ms. Sullivan, I see that you purport to quote the IRS code to justify your story ("IRS Code says"). However, it appears that you are citing to an IRS pamphlet that provides guidance to religious organizations rather than to the United States Code, which represents the law in this matter. The Code does not say what you represent that it says. Further, your interpretation of the "code" represents a serious misunderstanding of the first amendment, and represents a significant departure from the rights that all groups enjoy (including this newspaper). Of course, there are restrictions on 501(c)(3)s. They can't contribute, endorse, or otherwise financially assist a candidate. This justifies their tax-exempt status. This doesn't mean that the IRS can dictate a group's speech or their right to assemble with whom they choose. This story is nothing but an agenda-driven stretch, justified by shoddy research.
Permalink Comment by pudgenet @ 19:22 - Friday, May 23rd, 2008 Email
Niki.

You are wrong. And that you insist on being wrong only makes you look like a poor journalist. Basically, you are pretending that the IRS code broadly prohibits contact with partisan candidates. The opposite is true: it very narrowly restricts it to explicitly partisan behavior.

First, yes, they did not invite her, but this could easily be rectified by simply inviting her, even if this was required. You're wrong that this represents a violation of the law, it could only, even if it was required (which is it not), represent a POTENTIAL violation.

Second, the quotes you included DO NOT represent support. These kinds of generic words are given by Christian groups all the time. If you think it is unreasonable that they should thank both Rossi and Gregoire for running, or unreasonable that they should pray for both campaigns, then you do not understand Christians very well. This is not *remotely* evidence to back up your case.

Third, whether they are allowed to put out envelopes is a hazy thing. It depends on who put them out and so forth. This is a potential violation depending on how it was done, although it is more than likely it would not amount to more than a warning or somesuch. (This is why many nonprofits are very strict about this, because even if this is not a violation, it can raise questions and be a distraction.)

And finally, Borochoff is not an expert, from anything you've told us. An expert would be someone who specializes in tax law and 501(c)(3)s. Is he such? Being President of a watchdog group doesn't make you an expert. And if he is telling you that they cannot have Rossi speak to them about issues, or his life story, or even mentioning his candidacy ... then he is simply wrong, and makes me think he is no expert. Try an actual actual expert.

Oh, and one more point, because you never addressed it in your response: even if this was true, why are you trying to make it about Rossi? Why are you asking his campaign for a response? This has NOTHING directly to do with Rossi. Even if everything you said was correct, Rossi did nothing wrong.

Again: who are these people in power that you say you want to hold accountable?

Full disclosure: I have a degree in journalism, I've worked with nonprofits in a political vein, and I am a member of the Republican Party who supports Rossi. So my interests here are severalfold: I detest shoddy journalism, I want to correct ignorant statements about nonprofit political activity, and I am angered by baseless hitjobs against any candidates on any side, but especially those that I support.

Permalink Comment by RyanGrant @ 20:32 - Friday, May 23rd, 2008 Email
Pudgenet: To borrow from the internet zeitgeist, you got pwned at 13:34.

mjday: Sour grapes don't taste very good, do they?
Permalink Comment by pudgenet @ 21:54 - Friday, May 23rd, 2008 Email
RyanGrant: um. So you didn't read my response or understand the issues, then. It is not possible that I got "pwn3d" by someone who is bringing up incorrect statements of fact and red herrings.

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