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Nonprofits Become A Force in Primaries
Use for Donations Is Under Scrutiny

By John Solomon and Matthew Mosk
Washington Post Staff Writers
Wednesday, December 5, 2007

Nonprofit groups created to educate the public and lobby on issues have started inserting themselves into the presidential primaries, adding an unexpected wild card to wide-open elections in both parties.

The groups provide a new avenue for routing millions of dollars into an election cycle already awash with spending by traditional political organizations. The nonprofits are competing with the campaigns for voter attention, especially in early-voting states such as Iowa and New Hampshire, and their advertising, phone calls and mailings could help diffuse the candidates' own messages.

The nonprofits enjoy advantages over traditional political groups because there is no limit to who can give or the size of the donations, and no requirement to publicly disclose the contributors.

After months of quiet planning, the groups' activities are starting to surface in the primary states:

Friends of the Earth Action, a nonprofit that supports former senator John Edwards (D-N.C.), runs radio ads praising his environmental record and asking why Sen. Hillary Rodham Clinton (D-N.Y.) had not taken a stand on a global warming bill.

Americans for Fair Taxation, which wants to replace all federal taxes with a national sales tax, has spent $2.5 million so far. The group bought 400 tickets to Iowa's Republican straw poll and bused in supporters who helped its favorite candidate, Mike Huckabee. The former Arkansas governor finished a surprising second.

And NumbersUSA is mobilizing its 1.5 million members to make calls and send e-mails to pressure the candidates to end illegal immigration. The group is keeping a scorecard on the presidential candidates, finding former senator Fred D. Thompson (Tenn.) rapidly improving and Sen. John McCain (Ariz.) as "dead last" among the Republicans, its leader said.

"For us, it is all about the presidential campaign, the rest of December and January," said Roy Beck, executive director of the decade-old NumbersUSA, whose primary target on immigration issues has been Congress. "We don't want anyone casting a ballot who really cares about immigration to do it without knowing where the candidates stand."

The nonprofit groups, known by the designation 501(c)(4) because of the tax code section that applies to them, have been around for decades. They have long been a force influencing Congress and state legislatures. Conservatives have extensively used them over the past decade to help gain support during debates over legislation.

This year, these nonprofits have already started to encroach on turf that has been dominated by political parties, political action committees and, in the past few elections, by independent political groups created under section 527 of the IRS code. The latter groups spent $685 million in 2004 trying to influence voters with everything from antiwar messages against President Bush to ads sponsored by a group of Swift Boat veterans that questioned the heroism of Democratic presidential nominee John F. Kerry.

The 501(c)(4) groups pay no taxes on the donations they collect, but -- unlike charities -- their donors do not get a tax deduction. They are allowed to make political endorsements and engage in other political activities as long as political action is not their primary purpose.

"You can do many of the same things you can with a 527 while also shielding your donors, and that is very attractive to the organizers and their backers," explained Michael E. Toner, a Federal Election Commission chairman who retired earlier this year and now serves as Thompson's presidential campaign counsel.

Toner said the groups began raising money more than a year ago for activities in the primaries and are now poised to be a "major theater" for outside political activity throughout next year.

"I think part of it is you got an open-seat election and you have very competitive races in both parties," he said.

They will need to proceed with caution, according to federal regulators. Lois G. Lerner, who monitors nonprofits for the Internal Revenue Service, said she is "sensitive" to the possibility that people bent on influencing the outcome of an election might try to shroud their spending by forming a nonprofit.

"We're well aware that these groups may be used more in this campaign," Lerner said. "We are on the lookout, and we are prepared to look into allegations if things are being done improperly."

Federal election regulators are closely watching the activities of independent groups because of their ability to raise unlimited amounts of money, including from corporations and labor unions. If the FEC determines that the groups should be designated as political committees, they can accept no more than $2,300 from any individual.

If nonprofits put up an advertisement that expressly urges viewers to vote for or against a candidate -- or solicits donations for that purpose -- the FEC will intervene, said Robert D. Lenhard, the commission's chairman.

"We will look at what they say in their ads, and what they say in their solicitations," Lenhard said. "To the degree that influencing elections is their major purpose, they will need to register as a political committee."

Campaign activity by these nonprofits only adds to the cacophony already put out by traditional political groups. One 527 group, the conservative Club for Growth, plans to make a six-figure television-advertising buy in Iowa this week with a commercial that concludes with the line: "Call Mike Huckabee. Ask why he supported all those taxes."

Emily's List, a longstanding PAC, has spent more than $100,000 on polling, a special Web site and staff to encourage caucus-goers to support Clinton in Iowa. "That's just the beginning," said Ramona Oliver, the group's communications director. "It's going to be a significant investment."

The impact of 501(c)(4) groups is already on display in Iowa and New Hampshire.

Common Sense Issues Inc. became the latest to jump into the fray, launching a major phone and Internet operation last weekend designed to identify potential Huckabee supporters and to get them to the Trust Huckabee Web site ( http://www.trusthuckabee.com), where they can register to become "precinct captains" for the Iowa caucuses. In an e-mail, the group said its goal is to identify and educate Huckabee supporters "on the importance of the caucuses and show them how to win their respective caucuses for Governor Huckabee."

The computerized calls rankled recipients who support other candidates. The calls contained negative information on some GOP rivals of Huckabee, such as noting that former New York mayor Rudolph W. Giuliani backs abortion rights, and positive information on Huckabee, recipients said. "It all kept coming back to, 'Would you like to know more about Huckabee?' " said Phil Corr, an evangelical pastor in Charles City, Iowa, who supports former Massachusetts governor Mitt Romney.

Huckabee this week distanced himself from the effort. Romney's campaign asked the Iowa attorney general yesterday to investigate the calls.

Common Sense Issues was created earlier this year, according to IRS records, by Harold "Zeke" Swift, who was recently listed as a co-host of a fundraiser for Huckabee held late last month in Ohio.

Patrick Davis, the executive director of Common Sense Issues, described the calls as educational "artificial-intelligence" efforts and said they are being made nationally.

The precinct-captain organization it is building for Huckabee, he said, will be kept entirely separate from his presidential campaign. The group is also involving itself in a Senate race in Colorado. Davis said the group has decided to file with the FEC reports that identify its election activities as regulated independent expenditures, with the first one listing about $40,000 in expenses.

On the Democratic side, Friends of the Earth Action endorsed Edwards earlier this fall. Then the nonprofit sprang into action. In October, the group aired a 60-second radio ad in New Hampshire that highlighted its endorsement, saying that Edwards has the "courage to lead on global warming."

Last month, the group aired radio ads in Iowa noting that Edwards has taken a "courageous stand" in opposing Senate legislation on global warming that it said is a "breathtaking giveaway to corporate polluters." The ads asked why Clinton has not done the same. "Call Senator Clinton and tell her we've had enough of corporate polluters and billion-dollar giveaways," the ad said.

This week, Clinton sponsored two amendments to the legislation. They address the environmentalists' concerns.

The environmental group, like most nonprofits, had been quieter in previous primaries. The group endorsed former senator Bill Bradley (D-N.J.) in 2000, but it ran no ads. In 2004, it stayed on the sidelines during the primaries.

Americans for Fair Taxation, which was formed more than a decade ago by several Houston businessmen, has spent about $2.5 million on what it calls its "early-primary strategy." It has sought to mobilize voters in the early-voting states of Iowa, New Hampshire and South Carolina, as well as in Florida, a Feb. 5 Super Tuesday state.

The group's strategy resembles a candidate's playbook: postcards, humorous issue ads featuring a jackalope and a hospitality suite at one of Iowa's earliest showcases for GOP candidates, the Lincoln Day dinner in April, that offered free liquor and "Fair Tax" stickers.

Fair Tax organizers used talk radio to pitch their plan and scheduled a bus tour to more than two dozen Iowa cities. Huckabee made the group's tax plan a key part of his campaign message. Other Republicans endorsed the plan but have not campaigned on it.

The group's biggest coup came in August when it filled 10 rented buses, mostly with Huckabee supporters, and purchased 400 tickets for the Iowa Republican straw poll, the first symbolic vote of the 2008 race. Huckabee's second-place finish started his rise in the polls.

"Basically, we said, 'If you'd like to go to the straw poll, we'll buy your ticket and feed you funnel cakes all day,' " said Fair Tax spokesman Ken Hoagland.

The Fair Tax group has at least one close tie to Huckabee. The nonprofit's chief operating officer, David C. Polyansky, departed last month to take a senior job in Huckabee's presidential campaign.

The group has kept up its high-profile presence, buying all the tickets to a minor league baseball game in Clinton, Iowa, and giving them away to people who would listen to a five-minute pitch on its tax plan. During the pitch, the group spelled out where each presidential candidate stood on the plan.

The organization acknowledges that it is targeting the presidential primaries. "It is very hard to get any attention or coverage on an alternative tax system," Hoagland said. "Once you have an effect on the political process, then you are having an impact on maybe getting something done."

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