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Charity Status Of Conservative Group Challenged


This is MORNING EDITION from NPR News. Good morning. I'm Renee Montagne.


And I'm Steve Inskeep. Good morning.

Opponents have intensified a campaign against a group that drafts and promotes bills for state lawmakers to enact. The American Legislative Exchange Council, or ALEC, says it stands for limited government, free markets and federalism. The corporate-funded group has promoted much debated ideas - from voter ID rules to stand your ground gun laws.

The group Common Cause contends ALEC's legislative work is an abuse of its status as a charity. And now it has filed a whistleblower complaint designed to force the IRS to investigate. Here's NPR's Peter Overby.

PETER OVERBY, BYLINE: The core of the complaint is this: The American Legislative Exchange Council shouldn't be allowed to deal with legislation, to keep on doing what it does, while keeping its status as a 501-c-3 charity. Bob Edgar is president of Common Cause.

BOB EDGAR: Corporations that have been funding this organization have, in fact, been lobbying and getting a tax break. The taxpayers of the United States have been paying for a lobbying operation because these corporations can take this off on their taxes.

OVERBY: For 501-c-3 charity groups, such as the United Way, or a university endowment, there are strict limits on lobbying. ALEC says, on its tax returns, that it does no lobbying at all. But corporate lobbyists work on ALEC panels alongside state lawmakers as they draft model legislation to be introduced in state capitols. ALEC's private-sector members pay almost the entire annual budget. Again, Bob Edgar.

EDGAR: It's very simple. It's not a complicated issue. We don't think the IRS is going to have any trouble reviewing the case that we've made.

OVERBY: ALEC's lawyer couldn't be reached. Kaitlyn Buss, a spokeswoman for ALEC, declined to comment on the specifics of the whistleblower complaint. She noted it had been filed at the start of the weekend. But she said it's part of a concerted assault on ALEC by groups that oppose its free-enterprise, small-government agenda.

KAITLYN BUSS: Extremist groups that are hell-bent on silencing organizations that differ with them, ideologically. I think this is a strong attack, and it's obviously coordinated, it's coming from a lot of different angles. It's moved throughout the country to intimidation attacks on legislative members and private sector members.

OVERBY: She says Common Cause itself is using the anti-ALEC campaign for self-promotion.

BUSS: They're effectively fundraising off attacks on ALEC, to the point of, If you give us money, we'll give you a preview of the next thing we come out with.

OVERBY: The campaign against ALEC became public just this month. Liberal groups waged grassroots operations and a dozen big corporations said they had dropped their ALEC memberships. The whistleblower complaint is based on some 4,000 pages of ALEC documents. Some are public, like the tax returns. Many others were leaked last year to a group called the Center for Media & Democracy. Common Cause says it obtained, still others, in state capitals.

The complaint says that ALEC spends about two-thirds of its budget to promote legislation. It cites spreadsheets, where ALEC tracked bills and talking points meant to guide lawmakers in arguing for legislation before passage and defending it afterwards. The complaint also says that corporate members are able to veto legislative proposals, even if the legislative members are in favor.

STATE REPRESENTATIVE JOHN PISCOPO: No, no, in fact that's wrong.

OVERBY: This is Connecticut State Representative John Piscopo, a 24-year member of ALEC and now its first vice chairman.

PISCOPO: Legislation is a collaborative effort between the public and private sector. The public sector can just vote it down, basically.

OVERBY: Piscopo says ALEC does effective work because the corporate members get to participate.

PISCOPO: Some organizations put them in the back of the room, and they don't have a voice or a vote. And they just sit back there and just say: Oh I don't know, these guys, you know, do these people really realize what they're doing. We give them a full voice and vote and an ability to contribute.

OVERBY: This is the second try by Common Cause to get an IRS investigation of ALEC. It sent a letter last summer, but there's no way of knowing what the agency did with it. The complaint is filed under the Tax Whistleblower Act, so the IRS has to act. But there's nothing in the law about a timetable or a deadline.

Peter Overby, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Peter Overby has covered Washington power, money, and influence since a foresighted NPR editor created the beat in 1994.