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September 9, 2015
Judging Candidate-Related 501(c)(4)s Is a Tricky Business
by Paul C. Barton

Full Text Published by Tax Analysts®

Visitors to the website of the Conservative Solutions Project first see a pop-up box showing Sen. Marco Rubio, R-Fla., "leading the fight" against the nuclear agreement with Iran and asking them to add their names to a petition opposing it.

After clicking away the box, they are presented with page after page of videos about the alleged flaws of the agreement, quite a few starring Rubio, a presidential candidate. Mixed in are videos on a few other topics, such as Rubio's plan for dealing with China and Rubio's "pro-growth and pro-family" ideas on taxes.

The Conservative Solutions Project ( is one of eight groups claiming exemption from taxes under section 501(c)(4) with links to 2016 White House contenders, all Republicans. They are associated with particular candidates, by the Center for Responsive Politics (CRP) and others, because the political operatives running them are known to be close to the politicians. CRP lists super PACs and other types of groups linked to Democratic candidates, but no 501(c)(4)s.

The websites of the other seven candidate groups are:

Mission Statements: Real or a Cover Story?

While the websites, and group "missions" they describe, strike some as innocuous, advocates of campaign finance reform caution they are likely a ruse to hide a more politically oriented purpose that shouldn't qualify for a tax exemption.

All of the sites emphasize either current conservative causes like defeating the Iran agreement or long-championed Republican issues like school choice, family values, and promoting economic growth. And some more than others prominently mix in pictures and videos of their candidates -- as well as some favorable portrayals of them.

For instance, the website for America Takes Action, a group founded by Huckabee, starts with a nearly full-screen picture of the former Arkansas governor, a picture repeated on the top of its "issues" page; after which it switches to a picture of Huckabee with Israeli Prime Minister Benjamin Netanyahu on the page describing the group's mission.

About its mission, it says: "America Takes ACTION (ATA) is founded on the principle that societal change is a result of good people uniting and acting together. ACTION stands for Activating Citizens to Impact Our Nation. That's our goal. Great nations don't just happen. Good governments don't evolve naturally. These are a result of citizens caring deeply about the greater common good, joining forces and working together for societal advancement."

And in describing Huckabee himself, the website says: "Governor Huckabee served as the governor of Arkansas for 10-1/2 years leading the state with an impressive record of growth. Since then he has become recognized as a national leader for conservatives. He is a tireless advocate for the issues ATA is committed to."

The Pataki-related website opens with dominating pictures of the former New York governor and features links to interviews in which he describes Washington's dysfunctionality and what it will take to fix it.

On the other hand, a visitor to the website of the group linked to Bush, Right to Rise Policy Solutions, would be hard-pressed to find any references to the candidate. There are no pictures of Bush and his name shows up only in the footnotes to a policy paper about education reform.

The group describes its mission as helping to "continuously make the case for liberty over big government to protect and strengthen the American Dream."

Evaluating Political Activity

After perusing all eight websites, David Keating, president of the Center for Competitive Politics, told Tax Analysts their mission statements seem in keeping with the kind of issue advocacy that can clearly qualify as a "social welfare" function for a 501(c)(4). They list agendas, Keating said, that "look like the agenda of any mainstream conservative group." If the politicians they picture weren't running for president, "I don't think anyone would blink an eye," he said.

And while the website of the group linked to Santorum, Patriot Voices, still features several videos involving the senator, it has distanced itself from him, said Cleta Mitchell of Foley & Lardner LLP, the attorney for the nonprofit. "There were careful efforts to separate the staff and volunteers so that Patriot Voices could continue after Sen. Santorum decided to enter the 2016 presidential campaign," Mitchell said. Santorum founded the group in 2012, when he also ran for the White House.

Mitchell, who also represents Rubio's group, said the Conservation Solutions Project was founded in 2014 "to develop new conservative solutions to intractable public policy problems -- and to find new ways to communicate conservative ideas to nontraditional audiences. That is its primary purpose and mission."

Keating, meanwhile, noted some irony: The websites that seem to promote their candidates the hardest, such as Jindal's, Perry's, or Pataki's, are linked to presidential aspirants who are doing the worst in recent polling.

But others beg to differ about just how innocuous these groups are. "If you are just going on mission statements, some of them would seem to fit the social welfare purpose," said Lawrence Noble, senior counsel for the Campaign Legal Center, a campaign reform advocacy and litigation group. "However, the IRS does not base the determination on just the mission statements. Rather, the issue is whether their primary activities fit within the definition of social welfare and are not for political purposes, and that would involve looking beyond just what they do on the Internet."

Noble said assessing their purpose requires looking at spending, including which other groups they donate to, what kind of television ads they buy, and the volume of those buys, plus what other miscellaneous tasks they perform, such as opposition research, to help their candidates.

And a lot of the hard data needed to make such judgments will be on their Form 990, "Report of Organization Exempt from Income Tax," which they won't have to file with the IRS until after the 2016 elections. Other information, such as reports on advertising that expressly advocate the election or defeat of a particular candidate or ads purchased near a primary or general election that associate candidates with particular issues, will come from Federal Election Commission filings that are more timely than the Form 990s.

Attorneys Who Know What to Say

CRP lead nonprofits investigator Robert Maguire also warns against reading too much into the websites. "I doubt much of the text for any of those sites went online before a nonprofit lawyer took a look at it," he told Tax Analysts. "The truth is, though, that it's quite easy to craft a mission statement that conforms with IRS regulations and leaves the door open for political activity."

He added: "Rubio's group for example seeks to 'transform the tax code, restore our military and America's standing in the world, and shrink and restructure the federal government.' Such an expansive mission statement serves as good cover for ads that talk about the candidate's stance on pretty much any issue that might come up in the course of the election."

Some hard data needed to evaluate these groups' purposes are already coming in. NBC News and the Tampa Bay Times report $2.6 million in television ads featuring Rubio already, most of it bought by the Conservative Solutions Project. And the 501(c)(4) linked to Jindal -- America Next -- in July reported to the FEC $340,534 in television ads advocating his election.

Maguire said Jindal's group, which already had its exempt status approved, has little to worry about in regard to its 2016 activities. Its chances of an IRS audit, he said, are only 7 in 1,000. "We've established at this point that it's remarkably easy to explain away your political activities to the IRS, particularly if you've got the nation's best nonprofit lawyers on retainer," Maguire said.

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