Rick Cohen

Nonprofits Carrying Out the Lobbying Agendas of Their Corporate Sponsors

It should be no surprise to learn that some corporations have taken to the model of Jack Abramoff and created nonprofits to shill for their political interests without disclosure. A Bloomberg News article by Mike Forsythe lays out examples such as these: Reliant Energy paying for 61% of the 2001 budget of a nonprofit called American Taxpayers Alliance which attacked California Governor Gray Davis for "pointing fingers" during the state's corporate-manipulated electricity crisis in 2001 (Reliant subsequently paid more than $450 million to settle claims that it actually had manipulated electricity prices in the state); Intuit paying 1/5 of CapitolWatch's budget for a two-year period as the nonprofit lobbied for tax deductability changes in the law (Intuit is the maker of the well-known Turbotax software, and one of Intuit's lobbyists was the former ED of CapitolWatch); and Pfizer which contributed substantial sums to two nonprofits, 60 Plus and United Seniors, as they opposed then President Clinton's drug benefit proposal which would have been managed by Medicare rather than private insurers and HMOs (they also advocated in support of a Republican, corporate-friendly alternative).

In all of these cases, the recipient nonprofits were 501(c)(4) organizations, the corporate donations not eligible for the charitable tax deduction. But as (c)(4)s, the organizations could do a lot more political work than a (c)(3), and by contibuting to the (c)(4) organizations, the corporations got to bypass lobbying disclosure requirements.

The fact that some corporations are doing what Jack Abramoff did, to hide behind the nonprofit corporate form to conduct undisclosed lobbying for special interests, shouldn't be a surprise. There are unfortunately lots of examples of corporations funding ostensibly independent nonprofits that actually serve as front groups for their corporate benefactors. Common Cause published an interesting report not all that long ago about such "astroturf" (as opposed to grassroots) nonprofit lobbying on telecommunications legislation, and the Center for Science in the Public Interest's Lifting the Veil of Secrecy published in 2003 is a phenomenal database of corporate support for charities and professional associations serving as corporate front groups.

The problem? Corporations are required to disclose their contributions to nonprofits if they are made through corporate foundations, but increasingly less corporate philanthropy flows through their foundations and more gets distributed through marketing departments, executive offices, and other corporate departments immune from philanthropic disclosure requirements. While corporate grantmaking is apparently rising, corporate grantmaking through their foundations--that is, the portion required by law to be disclosed to the public--is decreasing. So, perhaps as much as half of corporate contributions to nonprofits is not disclosed to the public. As a result, it is frequently only in retrospect, due to intrepid reporters like Forsythe at Bloomberg News, that the public discovers that some nonprofits are basically carrying out their corporate funders' lobbying agendas.

Although the nonprofit sector has been skittish on this topic, it's time to call for enhanced disclosure of corporate "philanthropy" so that front groups and astroturf nonprofits are revealed for who and what they are.

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Posted at 10:52 PM, Jul 16, 2006 in Government Accountability
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