South Carolina State Rep. Ted Vick (D) announced today that he’s resigning from the American Legislative Exchange Council.

“When I joined ALEC eight years ago, it was a very different organization,” Vick said in a statement. “Over the years, ALEC has steadily drifted to the right and away from its original purpose.”

Vick is far from alone. Major corporations are pulling out. Politicians are backing away. An IRS complaint has been filed.

So what is ALEC, and why is it causing such a fuss?

ALEC was formed in 1973 by conservative activists Lou Barnett and Paul Weyrich (who also founded the Heritage Foundation), along with then-State Rep. Henry Hyde (R-Ill.) and other Republican legislators. The goal: bring conservative economic policy ideas to the state and local level.

Task forces for various issues were originally formed in conjunction with the Reagan Administration, but over time those policy shops evolved into partnerships with private companies. While the group has some Democratic members, like Vick (until today), most of its legislative leadership is Republican.

While legislators pay $50 a year to belong to the group, most of the ALEC’s money comes from corporations. According to tax returns obtained by the New York Times, in 2010 the group had a $7 million dollar budget, with some companies paying hundreds of thousands of dollars in dues.

ALEC and its supporters argue that the group provides a unique opportunity for the public sector and private sector to work together on everything from education to healthcare to environmental policy. Exxon Mobil, Pfizer, and Wal-Mart are among the major corporations on its board. About 2,000 state legislators are members.

Criticism, an ALEC spokeswoman said, is inspired by the group’s conservative philosophy, not its methods.

“It really comes down to a difference of principle and ideology,” said Kaitlyn Buss. “ALEC stands for free markets and limited government, and they want to silence that.”

Critics say lawmakers are selling out their constituents by pushing corporate wishlists behind closed doors.

At ALEC summits, corporations vote with representatives on task force legislation in committees, before they reach the full legislative board. Lawmakers often bring those bills nearly verbatim to their statehouses.

Activists who have been working against ALEC say the real turning point came last summer, when a whistleblower leaked 800 pieces of ALEC model legislation to the Center for Media and Democracy. The group created a new website, ALEC Exposed, to house the drafts and publicize ALEC’s work.

“The outpouring of concern about ALEC today is the result of enormous work and preperation behind the scenes by numerous public interest organizations and researchers and writers and journalists across the country,” said Lisa Graves of CMD.

The leaked documents made it easier for ALEC’s critics to tie controversial legislation back to the group — including the “Stand Your Ground” laws that drew national attention after the death of Florida teenage Trayvon Martin.

“A confluence of events created an opening for people to focus a little bit more on what this organization was about,” said Marge Baker of People For the American Way, a liberal group. “Part of ALEC’s modus operandi was to operate behind the scenes without a lot of visibility. It’s getting that visibility now.”

The civil rights group Color of Change began pressuring the group’s corporate partners late last year over ALEC’s support of voter ID laws. Pepsi Co. dropped out in January. But the boycott really gained steam after the Martin case; a dozen groups have now pulled out.

‘As we started focusing on stand your ground laws, that connected back to ALEC,” said Executive Director Rashad Robinson, and “Stand Yoru Ground” laws became part of the group’s pressure campaign.

ALEC is trying to do a bit of damage control. It recently disbanded its Public Safety and Elections Task Force, announcing that the group would return to focusing solely on economic issues.

Buss said that the public attention is “a good way to get our message out there” and that “in the end I think we’ll come out stronger than before.”

But ALEC’s critics are not satisfied.

Common Cause is challenging ALEC’s status as a tax-exempt charity in a complaint to the IRS, based on more leaked documents and FOIA requests. .

Whether the lawsuit succeeds or not, like the Koch Brothers (themselves ALEC supporters), the American Legislative Exchange Council has gone from a little-known acronym to a political fireball.