DMI Blog

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.

Posted at 10:52 PM, Jul 16, 2006 in Government Accountability | Permalink | Comments (2) | TrackBack (0)


Comments

Yes. It's so interesting that DMI has discovered what Astrotruf means. Certainly it exists on the national scale, but increasingly Astroturf groups appear on the local level ... in several forms. There's the absolute Astroturf groups which are primarily funded by corporations. For example, there's Working Families for Wal-Mart, with it's front man DMI's own Andrew Young. Wal-Mart gave a chunk of change to Young's consulting firm.

In NYC the lines are a wee-bit more clouded, but the fake grass-roots are there.

For example, in the Atlantic Yards plan there's Acorn, which certainly exists on its own as an entity, but acknowledges the largess they intend to receive from Forest City Ratner. Same thing with BUILD, another Brooklyn-based Ratner-funded group.

In Manhattan there was the Hudson Yards Alliance, a group controlled by Christine Quinn with substantial assistance from Cablevision. While the media dwelled on the group's stadium opposition, this group helped developers push through the Hudson Yards plan, much larger and more costly to taxpayers than the Ratner plan. There, the abuse of Eminent Domain dwarfs the Atlantic Yards.

Money doesn't have to always flow directly to the Astroturf group. It can also be funnelled through campaign contributions. And of course the New York Jets had their own Astroturf groups, but at least they were being honest in what they wanted.

Then there are those groups that may not directly get funding from the corporations, but nevertheless corporate America (or in NYC the developers) have learned how to buy-off the groups. These are the groups with their hands out, expecting something in return for supporting some project.

Remember how Al Sharpton, Keith Wright and others got bought off with the promise of jobs for the West Side stadium? It wasn't important that the jobs were temporary, low-paying jobs.

Some one dangles a carrot and it's interesting to see who jumps.

Virginia Fields did. So did Vito Lopez. They brought Jessie Jackson into town with the idea that minorities and women-owned enterprises would be showered with permanent high-paying jobs. Didn't matter that some of these plans are bad development. Didn't matter that they would kill various neighborhoods and continue the circle of primary and secondary displacement. Didn't matter that it might cost billions from taxpayer money (direct or through bonding being shifted away from building schools and hospitals). They could buy-off minority elected officials and groups whose goals include social justice.

Most of the jobs at the Meadowlands (aside from football players and the team's corporate staff) were food vendors and parking lot attendants. That's social justice for you!

Not only do corporations want to make sure people can be bought off. They want to create an official mechanism to do so: community benefits agreements. The carrot will be memorialized in the City Charter.

Posted by: Anon | July 17, 2006 02:15 PM

It's hard for me to comment on the specifics of the controversies you mention, since I'm clearly an outside observer (writing from Washington, 8 years removed from living and working in NYC). But without being able to debate the pros and cons of the specific CBAs you're addressing, I'd suggest that it is crucial for nonprofits to dig into the corporate-strategic intentions of corporations' philanthropic "gifts". Long ago, I wrote a piece for Grassroots Fundraising Journal (Fundraising Medicine: Creating Gift Acceptance Policies, Grassroots Fundraising Journal, Vol. 21: 1, 2002, available I think from www.grassrootsfundraising.org) on so-called gift-acceptance policies, advocating that nonprofits think long and hard before they simply take corporate money without examining the corporation's track record, its quid pro quo expectations, and long term implications. Because so little of corporate philanthropy is publicly disclosed, I've written about the phenomenon of "stealth philanthropy" (http://www.ncrp.org/downloads/RickCohen/RC-030102-NPQ-Corporate_Giving.pdf), where corporations are doing things with their charitable money that many of us might not think is all that charitable. Though there are parallels, there are differences between dealing with corporations for their philanthropy and negotiating with corporations for concessions in major development projects through CBAs. The political analysis isn't always easy to do or swallow: In my own organization, a philanthropic watchdog, I remember my board's reaction to my initial proposal of strict gift acceptance policies, calling for more than simply social investment screens, but examining corporations' labor track records, racial, gender, and LGBT rights track records, etc.--the idea of saying "no" to funding sources was not an easy sell. The point in my blog, however, was not a pro-or anti-CBA analysis, but a call for the public to be vigilant about corporate agendas hiding behind the cloak of philanthropy and to call for much enhanced corporate philanthropic disclosure. Re Wal-Mart, again, my lens is a philanthropic lens, and you can see what we've written in our report on Wal-Mart's philanthropy, The Waltons and Wal-Mart: Self Interested Philanthropy (available at www.ncrp.org). None of the kind of analysis I called for in the blog posting will occur without enhanced corporate philanthropic disclosure, which was in an early House version of Sarbanes-Oxley but scuttled in a bipartisan connivance in the House-Senate conference committee.

Posted by: Rick Cohen | July 18, 2006 10:07 PM