If ALEC Violates Tax-Exempt Status, What About NCSL?

Carolina Journal recently reported on a concerted attack by left-of-center advocacy groups against the American Legislative Exchange Council — a nonpartisan membership organization of state lawmakers that promotes federalism and free-market policies at the state level. CJ’s reporting noted that the left-leaning groups attacking ALEC have ignored another nonpartisan organization that advocates policy at the state level: the National Conference of State Legislatures.

Meantime, such activities as bill drafting, model legislation, and disseminating research and analysis for the use of legislators across the country are standard activities for many nonprofit organizations of the right and left. But it is ALEC’s participation in such activities that has drawn the ire of many left-of-center groups.

For more than a year, Common Cause, the Center for Media and Democracy, and the Color of Change have been bombarding ALEC’s corporate members with emails, Facebook and Twitter postings, and demonstrations, urging ALEC’s sponsors to stop funding the nonprofit.

ALEC and its supporters say the goal is to starve ALEC of money and, ultimately, to silence it and other policy groups that oppose big-government policies.

Citing concerns over corruption from corporate influence and money in politics, Common Cause promotes itself as a grass-roots organization that seeks to increase the participation of citizens in the political process and that protects the civil rights and civil liberties of all Americans.

In April, Common Cause filed an IRS whistleblower complaint that claims ALEC misuses its 501(c)3 tax-exempt charity status by illegally lobbying for bills in state legislatures across the country.

The complaint accuses ALEC of being “a corporate lobbying group masquerading as a public charity” and engaging in “taxpayer-subsidized lobbying” by helping legislators write model bills that are friendly to business interests.

The Center for Media and Democracy, itself a 501(c)3 tax-exempt nonprofit corporation, founded the website ALEC Exposed, a project that encourages activists to pressure politicians, corporations, and nonprofits to drop their sponsorship of ALEC.

CMD publishes a list of bills at the federal and state level they say resemble ALEC “models,” and urge supporters to write about these bills and proposed legislation to show how ALEC has affected their schools, neighborhoods, universities, cities, and states, and submit their postings to CMD’s sister site, SourceWatch. Writers are told a neutral viewpoint is not required.

“Through ALEC, global corporations are scheming to rewrite your rights and boost their revenue,” states the ALEC Exposed headline.

The websites for Common Cause, Color of Change, and CMD push the ALEC Exposed agenda and are using the controversy to raise money for their causes.

Drawing particular ire from liberal groups are proposed voter ID legislation, state-level immigration enforcement, and “Stand Your Ground” laws.

In a May press conference, Alan Dye, legal counsel to ALEC, told reporters that ALEC disseminates nonpartisan research and analysis. The Constitution grants individuals the right to petition the government. Lawmakers and citizens need clarity, and the public interest is best served when education is available to lawmakers and the general public, Dye said.

Common Cause and other left-leaning organizations are advocating for a constitutional amendment that would overrule the Citizens United decision.

On ALEC Exposed, CMD compared ALEC to NCSL.

NCSL also accepts funding from unions, nonprofits, and for-profit corporations through its tax-exempt, 501(c)3 NCSL Foundation. The foundation sponsors NCSL events, giving sponsors and donors have open access to state legislators. Among the corporate sponsors are BP America, Comcast Cable Communications, Verizon, and Wal-Mart. Wal-Mart also had been a member of ALEC until it was pressured to drop its membership.

Mary Boyle, vice president for communications at Common Cause, told CJ that ALEC is different because “they call themselves a nonpartisan, tax-exempt charity but receive funding primarily from lobbyists and corporate principals, whereas NCSL is funded mostly by taxpayers,” said Boyle.

Corporate sponsorship of the NCSL Foundation was not relevant, Boyle said, because NCSL’s mission is to educate lawmakers and promote the sharing of ideas and does not have “teams of lobbyists sitting side by side with legislators to draft model legislation like ALEC does.”

Common Cause itself has an education fund, a 501(c)(3) nonpartisan tax-exempt charitable organization.

According to the most recent IRS Form 990 available on its website, Common Cause Education Fund spent more than $2.4 million in 2010 on its campaign to “challenge the influence of corporate interests on public policy,” emphasizing the efforts by wealthy conservative activists Charles and David Koch to, among other things, “advance their agenda of dramatically lowering personal and corporate income taxes.” That effort includes the attacks on ALEC.

In a statement on ALEC’s website in response to the whistleblower complaint, Dye said the attacks “are based on patently false claims being made by liberal front groups that differ with ALEC on philosophical terms.”

NCSL spokesman Jon Kuhl told CJ that NCSL has no official comment about the attacks on ALEC. Kuhl mentioned many of the same points addressed in the Common Cause complaint, however, including that state legislators govern NCSL and NCSL does not draft model legislation.

NCSL’s own website states it helps lawmakers draft legislation. March 26, 2010, NCSL hosted a webinar titled “Creating Great Legislation: How Legislators and Drafters Work Together,” led by Bruce Feustel, NCSL senior fellow for legislative management.

State House Minority Leader Joe Hackney, D-Orange, a former NCSL president, said NCSL “holds training for legislative staff on writing a better bill but does not write the bills with corporations holding veto power over the legislators like I understand ALEC does.” He said NCSL does not promote any bills to the states, only to Congress.

Michael Sanera, director of research and local government studies at the John Locke Foundation, said he has served on various ALEC task forces for more than 10 years. The task forces have a public-sector and private-sector chair, with the private sector represented by businesses, nonprofits, and state think tanks.

Public-sector members have the final say in policy decisions and what become ALEC resolutions, Sanera said. Recently, ALEC’s Energy Task Force, on which he serves, was discussing Renewable Energy Portfolio Standards — state regulations that require electric utilities to increase their use of solar, wind, and other renewable energy sources. Legislators opposed REPS, Sanera said, but some of the private-sector members, including utility and solar companies, wanted them. The resolution adopted by the task force recommended states with REPS to repeal them.

On its website, ALEC states that “to the extent any ALEC model bill is successful, it is because it provides legislators and their constituents with the kind of free-market, limited-government solutions they want.”

Karen McMahan is a contributor to Carolina Journal.