SPN Political Activity

SPN Political Activity is a breakout article from the main article on the State Policy Network (SPN).

Please see the State Policy Network for more.

(Parts of this article were first published as part of the Center for Media and Democracy's November 2013 report, "EXPOSED: The State Policy Network, The Powerful Right-Wing Network Helping to Hijack State Politics and Government," and are used here with permission.)

SPN and its affiliates push an extreme right-wing agenda that aims to privatize education, block healthcare reform, restrict workers' rights, roll back environmental protections, and create a tax system that benefits most those at the very top level of income.

SPN President Tracie Sharp was the recipient of the American Legislative Exchange Council's (ALEC's) 2009 "Private Sector Member of the Year Award." ALEC gave her the award because, according to an ALEC "scholar" and founder of SPN member think tank the Evergreen Freedom Foundation (now called simply the Freedom Foundation), "Not only have SPN members assisted legislators in drafting model legislation, they've been key in killing some proposals by 'rent-seeking' special interests." A 1991 research report on ALEC makes abundantly clear that ALEC's role is to facilitate what most would define as lobbying. It quotes ALEC materials saying, "The cornerstone of the ALEC program is the forum it provides for the private sector [read: for-profit corporations] to work in a one-on-one relationship with state legislators to develop public policies that are pro-growth, pro-business and pro-freedom." The same report says that SPN itself -- when it was called the Madison Group -- was launched by ALEC, so the close ties between the two groups go way back. However, SPN's tax forms indicate that it does no lobbying.

Although SPN's affiliates -- like SPN -- are registered as educational nonprofits, several appear to orchestrate extensive lobbying and political operations to peddle their legislative agenda to state legislators, despite the IRS's regulations on nonprofit political and lobbying activities.

Nonprofit Think Tanks Become Lobbying Powerhouses

 * "They're pretty darn active. They're visible in every committee room I serve on... I don't view them at all as nonpartisan." - Idaho Sen. Cherie Buckner-Webb on the Idaho Freedom Foundation

Acknowledging the group's political power, conservative commentator Michelle Malkin called the SPN member Idaho Freedom Foundation a "do" tank. Darcy Olsen, president and CEO of SPN member think tank the Goldwater Institute, told the National Review, "We're in the business of applied policy." Applied policy appears to translate to changing state laws. Although most do not register lobbyists, many SPN members advance legislation through ALEC and outside of ALEC. They are in frequent communication with members of the legislature and have exerted strong influence on changes to state laws.

The Idaho Spokesman-Review reported in September 2013 that the Idaho Freedom Foundation "had three registered lobbyists, was a constant presence in the Capitol and led the opposition to the governor's biggest legislative proposal of the session, the bill creating a state-based health insurance exchange. It rated 150 bills against its agenda, assigning positive or negative scores, and tracked lawmakers' votes. The group writes legislation, testifies to committees, sponsors lectures and tours for legislators, conducts polls, publishes reports and sends out emails, and its lawmaker scores have been prominently featured in campaign ads."

Think tanks in Arizona, Colorado, Illinois, Kentucky, Michigan, North Carolina, Texas, and Washington have all drafted state legislation hamstringing worker and environmental protections and more, and "sponsored" it through the process of becoming an ALEC "model" bill for the states. Think tanks also push their own model legislation. Arizona's Goldwater Institute has a section of its website devoted to 16 "model" bills purported "to expand liberty," including three bills to undermine the federal Affordable Care Act and a bill to form a contract among states in an attempt to make enforcement of any federal gun control legislation the "equivalent of a federal crime."

In addition, many SPN think tanks also hold "legislative forums," seminars, "policy previews," "policy orientations," etc. when their state's legislature begins a new session. Whether called lobbying or not, these events present state legislators with bills being pushed as priorities by the think tanks for that legislative session. These events have been held by the Montana Policy Institute, the Idaho Freedom Foundation, the Freedom Foundation of Minnesota, the Texas Public Policy Foundation, and Oregon's Cascade Policy Institute, the Mississippi Center for Public Policy, Louisiana's Pelican Institute for Public Policy, North Carolina's John William Pope Civitas Institute, New Jersey's Common Sense Institute, the Oklahoma Council of Public Affairs, and the Illinois Policy Institute, according to SPN News. These events are intended to do things like "show lawmakers how to fund transportation infrastructure with private money," that appear to be phrased to avoid works like "convince," "persuade," and "lobby."

As 501(c)(3) nonprofits, SPN think tanks may not take part in "substantial" lobbying activities in attempting influence legislation, and too much lobbying activity risks the loss of tax-exempt status. Lloyd Hitoshi Mayer, a nationally known expert on nonprofit tax law and a law professor at the University of Notre Dame, defines lobbying as "any attempt to influence any legislation through communication with any member or employee of the legislative body, if the communication refers to specific legislation, and reflects a view on such legislation" and says of the work of SPN members like the Idaho Freedom Foundation, "Most organizations that do this kind of stuff form themselves as (c)(4)s, so they avoid these issues." Some of the SPN groups have (c)(4) arms to which donations are not tax-deductible because of the substantial lobbying, but many do not.

A set of coordinated fundraising proposals obtained and released by The Guardian in early December 2013 confirm many of these SPN members' intent to change state laws and policies, referring to "advancing model legislation" and "candidate briefings." These activities "arguably cross the line into lobbying," The Guardian notes. The funding proposals are from 40 SPN members to the Searle Freedom Trust, a private foundation that funds right-wing groups such as Americans for Prosperity, ALEC, Americans for Tax Reform, and more. It is the family foundation funded by the "NutraSweet" fortune of G.D. Searle & Company, which was purchased by Monsanto in 1985 and which is now part of Pfizer. The documents were submitted to Stephen Moore, Wall Street Journal editorial board member, founder of the Club for Growth, and ALEC "scholar," who was asked to review the proposals and "identify your top 20 and bottom 20 proposals."

The documents also confirm what The New Yorker's Jane Mayer showed in a November article, that SPN Executive Director Tracie Sharp peddled disinformation to The Guardian and other press outlets when she told them in a November statement responding to CMD's report that SPN members are "fiercely independent, choosing to manage their staff, pick their own research topics and educate the public on those issues they deem most appropriate for their state." Mayer reported that Sharp told SPN leaders behind closed doors that, far from being independent, SPN members' agendas are often "driven by donor intent" and that "the donors have a very specific idea of what they want to happen."

Case Study: Michigan's Mackinac Center and "Right to Work"
A powerful example of how certain SPN affiliates work directly to change state law without reporting any lobbying to the Internal Revenue Service (IRS) -- which requires such disclosures of direct and grassroots lobbying by 501(c)(3) non-profit organizations such as the SPN state affiliates -- is that of the Mackinac Center for Public Policy's efforts to make Michigan a "right to work" state.

On December 11, 2012, governor Rick Snyder signed into law a "right to work" bill, which undermines collective bargaining by allowing workers to freeload off the benefits of union negotiations without paying the costs of union representation. The Mackinac Center and its funders, such as the billionaire DeVos family of the Amway fortune, had been coordinating behind close doors to effect this change "for 25 years," as a Mackinac blog post boasted after the bill passed, going on to call the passage of the bill "a classic example of the Overton Window of what's politically possible moving in the proper direction. Mackinac Center experts have been pushing that window toward right-to-work since 1990."

In fact, SPN singled out the Mackinac Center's president, Joseph Lehman, for its highest award at its 2013 annual meeting, the "Roe Award" named after SPN founder and building materials supply magnate Thomas Roe. Why? For "the passage of a right-to-work law in Michigan," another blog post boasted. Betsy DeVos presented the award to Lehman, and Dick DeVos was recognized as well.

Mackinac created or helped create two new online publications -- called "Michigan Capital Confidential" and "Watchdog Wire Michigan" (a project of the Franklin Center, of which Mackinac is a "partner") -- to communicate its claims, gain public support, and put pressure on the governor to adopt its "right to work" changes to state law.

In audio released in early 2013 by Progress Michigan, Mackinac Director of Labor Policy F. Vincent Vernuccio was recorded as telling supporters at an Americans for Prosperity "Citizen Watchdog Training" that he had met with Michigan lawmakers to make a plan for ramming "right to work" laws through the state legislature. And in a series of 2011 emails between Mackinac staffers and Michigan Rep. Tom McMillin about a different piece of legislation, Mackinac's Jack McHugh told McMillin, "Our goal is outlaw government collective bargaining in Michigan, which in practical terms means no more MEA" (Michigan Education Association, the state's teachers union). In another email, McMillin told Mackinac staffers, "my ability to impact this decision could be assisted by hearing your thoughts...soon (and again, this is off the record - ok?)"

Based on these email exchanges and other evidence, U.S. Rep. Sandy Levin (D-MI) asked the IRS to investigate Mackinac and "take appropriate actions to ensure that the Mackinac Center is in full compliance with federal tax law."

But, despite all its efforts to achieve major legal changes such as "right to work," and its own admission that it had been pushing the change and communicating with state legislators about it, the Mackinac Center reported no lobbying to the IRS in 2012, 2011, or 2010.

See PRWatch.org for more.

Nonpartisan Educational Organizations or Partisan Advocacy Machines?
As 501(c)(3) nonprofits, SPN think tanks are registered as charitable educational organizations, holding the same IRS status as churches, universities, and nonprofit charities. Unlike other political organizations, contributions to SPN think tanks that are 501(c)(3) organizations are tax deductible. This means that corporations and individuals (like the Koch brothers) that fund their operations can get a tax write-off for funding SPN efforts. This also means that SPN think tanks are prohibited from participating in partisan political campaign activity, and they are also prohibited from making political contributions.

Several SPN think tanks appear to have made political campaign contributions to partisan political accounts, all to Republican candidates or political committees, including in:


 * Colorado: The Independence Institute has made 164 political contributions totaling $527,447 from 1995 to 2013, many being itemized as "non-monetary." All but 24 of the contributions are "in-kind" contributions, which could range from loans to supplies to volunteer time.
 * Florida: The James Madison Institute contributed $591 to the Florida Republican Party on June 20, 2006.
 * Illinois: The Illinois Policy Institute made two $275 direct individual contributions to the Illinois Republican Party in May 2008.
 * Michigan: The Mackinac Center made two contributions: $500 to the Michigan Republican Party in August 2010 and $100 to the Livingston County Republican Committee in March 2003.
 * South Carolina: A federal political action committee titled the "South Carolina Policy Council Federal PAC" was registered with the Federal Election Commission from 1993-2006.
 * Utah: The National Institute on Money in State Politics reports that the Sutherland Institute has made four contributions to the Utah Republican Party (2002, 2010, 2011, 2012), totaling $2,750. Utah’s state public disclosure website lists contributions dating back to 2008, and the contributions made by the Sutherland Institute to the Utah Republican Party between 2010 and 2012 are listed in the database.
 * Washington: The Evergreen Freedom Foundation (now called simply the Freedom Foundation) has made 14 political contributions between 2002 and 2010, totaling over $2,000.
 * Wisconsin: In July 2012, the Milwaukee Journal Sentinel reported that the MacIver Institute and Americans for Prosperity jointly spent an estimated $3.7 million touting Gov. Scott Walker's policies during the 2012 Wisconsin gubernatorial recall election.


 * "I don't know if they can maintain their tax-exempt status... I think they are big time overstepping their bounds. I think it's wrong." - SC Republican Senator Paul Campbell on the South Carolina Policy Council's political activity