Sunday, August 10, 2008
Nonprofit Under Fire for Mailers
By Colleen Heild
Copyright © 2008 Albuquerque Journal
Journal Investigative Reporter
Much of the funding for an Albuquerque nonprofit that helped send out mailers attacking a slate of state legislators this year has come from charitable organizations.
Public disclosure about its donors has been the dominant issue since the Center for Civic Policy's "voter education" activities got the attention of the state Attorney General's Office and prompted a recent lawsuit by several of the targeted legislators.
Did the two-year-old organization — headed by a former Albuquerque political consultant — engage in electioneering in violation of its tax-exempt status? Should it have to register with the state as a political action committee?
The center's executive director says no.
Eli Lee says the fliers weren't political but were part of an effort to hold elected officials accountable. Before being mailed, the material was carefully vetted by lawyers to ensure compliance with the law and was distributed outside the established federal time frames for political campaigns, Lee said last week.
On Friday, state Attorney General Gary King took a different view.
In a news release, he described the mailers as "campaign materials." And he reiterated that a youth division of the Center for Civic Policy needed to register as a political action committee to "provide the greatest amount of transparency to the electoral process."
That division, New Mexico Youth Organized, sponsored some of the mailings.
"There's an old saying that if it walks like a duck and quacks like a duck, then it's probably a duck," King said Friday. "And I think we know a duck when we see one."
Lee said he's been shocked at the controversy.
"I think it's unfairly raised doubts and has sort of cast an improper shadow over the nonprofit sector, which is the sector that ought to be holding elected officials accountable."
Sen. Leonard Lee Rawson, R-Las Cruces, is among legislators to be targeted by the mailers, which have hit both Democrats and Republicans.
Rawson complains that, as a nonprofit, the center has been able to be political without having to file the kind of financial disclosure reports required of a political action committee.
"They've been willfully defiant," said Rawson, a 22-year legislative veteran. "They feel they're above campaign reporting and yet have the gall to challenge my ethics."
Lee said the center has never turned down requests to reveal its finances. But he did decline to disclose some information requested by the Journal.
He said that $645,000 in donations was received in its 2006-07 fiscal year. This fiscal year's budget will top $1 million.
The vast majority of contributors have been institutional donors, such as the Santa Fe-based McCune Foundation, which gave $100,000. Other donors include nationally known foundations such as the Carnegie Corporation and the California-based McKay Foundation, formed by the heirs to the Taco Bell fortune.
Lee said no contributions have been received from philanthropist and social activist George Soros or any of his organizations.
Lee said the center also has "numerous individual donors who give modest amounts," but he refused to release their names.
The identities of all donors would have to publicly disclosed had they given money to a political action committee involved in an election, but nonprofits are a different type of organization.
With a 501(c)(3) IRS status, the tax-exempt center must make its annual IRS filings public. But such organizations aren't required to publicly disclose contributor lists that are attached to those filings. Donations to the center are tax-deductible.
Lee promised to make the center's IRS tax filings public when they are filed in November for the first time.
"We're happy to disclose voluntarily," Lee said. "Anytime anyone's asked us to disclose, we're going to do it."
'Swept under the rug'
At first glance, the glossy fliers look like the kind of material that shows up in mailboxes every election season. They use familiar attack tenor to portray the subject in an unfavorable light.
But missing are the words "candidate," "election" or "campaign."
The subject matter had to do with legislators' votes and how special interests might have influenced those votes.
Targeted legislators were selected in part because "they were pretty notorious bad actors in the game of campaign contributions and votes," Lee said.
"Certainly, nonprofits are allowed to criticize incumbents for their campaign contributions and/or their votes in a recent legislative session," he added.
The mailers also talked about the upcoming special session to address the health insurance crisis — a time the fliers say special interests will be out in force.
Lee said the center has sent out three or four rounds of similar mailers over the past two years, and this is the first time there's been a complaint.
But this is also a year when all 112 legislative seats are on the November election ballot.
IRS rules state that 501(c)(3) nonprofits, such as the center, cannot intervene in an election to support or oppose any candidate.
Lee said the fliers had nothing to do with the election, adding that one flier was mailed targeting a lawmaker who isn't even running again.
He said federal guidelines define the primary election season as 30 days before an election. So the first round of fliers, which cost about $21,000, went out March 1, shortly after the end of the legislative session and three months before the June primary.
"We very consciously ended the direct mail program April 1 ... so it wouldn't get confused into the election season," Lee said.
More recent fliers were sent prior to Aug. 1. That's because the federal government defines the general election season as beginning 60 days before an election, he said.
The second round targeted one Democrat who faces no opposition this year, and two Republican lawmakers who have Democratic opponents.
Three legislators targeted earlier this year lost their seats in the primary.
On Aug. 1, they sued the center and other nonprofits alleging fraud and seeking to nullify the election outcome. Lee called the lawsuit without merit and full of inaccuracies.
"Our job was to alert constituents about their (the lawmakers') campaign contributions and their votes," Lee said. "That's a legitimate public policy issue ... that's been swept under the rug (by those who sued) because they've decided to attack the messenger instead."
The letter matter
One of those targeted, longtime Sen. Shannon Robinson, D-Albuquerque, complained to King's office earlier this year.
Others lawmakers targeted included Reps. Dan Silva and Debbie Rodella and Sens. James Taylor, David Ulibarri, Lidio Rainaldi, Bernadette Sanchez and Diane Snyder. Snyder is a Republican; the others are Democrats. All were running for re-election except for Rainaldi.
Robinson's complaint prompted a letter from the attorney general to Secretary of State Mary Herrera in May asking that she require New Mexico Youth Organized — which sponsored Robinson's mailer — to file as a political committee. No other nonprofits were named, though at least one other was a mailer sponsor.
Lee said King's letter was based on incorrect information.
Over the past two months, Lee said no one from the offices of either the attorney general or the secretary of state has formally advised the center about the matter.
Deputy Secretary of State Don Francisco Trujillo said last week his agency was waiting for further guidance from King's office.
"I wouldn't say it's a deliberate holdup, it's just that they're looking at the legalities and what's the best course of action," he said.
On Friday, after hearing reports that his office might be backpedaling on the issue, King issued a press release in response to what he called erroneous reports and took a more definitive stance.
Spokesman Phil Sisneros, however, said late Friday the matter was still under review.
Across the country, nonprofit coalitions are forming to increase citizen participation and advance political reform, according to a study by the Proteus Fund.
"Exciting new ventures led by state activists aiming to realize long-term, comprehensive social change have emerged over the last two years," states a Sept. 2007 report by the Proteus Fund, which studied Lee's nonprofit group.
For years, Lee ran Soltari Inc., an Albuquerque political consulting firm that represented progressive political candidates, nonprofits and small businesses. He helped in Gov. Richardson's Moving America Forward campaign in 2003-04. Lt. Gov. Diane Denish and First Congressional District Democratic nominee Martin Heinrich are among his former clients.
In July 2006, he and five of his employees left Soltari to help form the Center for Civic Policy.
During its first year, while waiting for a decision on its non-profit status from the IRS, the center was a project of another nonprofit, the New Mexico Community Foundation.
The center's coalition members include Common Cause, Conservation Voters New Mexico Education fund, Sage Council, SouthWest Organizing Council and New Mexico Youth Organized. The latter two groups sponsored the mailings. Common Cause has worked with the center on ethics reform issues.
Lee said there's an important role for nonprofits in helping voters distinguish fact from fiction when considering the actions of their elected officials.
But forming a political action committee shouldn't be a requirement for the center, he said, "because I do not believe our actions have been political at all.
"I have no problem disclosing whatever people want us to disclose, but I think (registering as a PAC) would set a horrible precedent for all the other groups that engage in trying to be watchdogs for elected officials."