Where The Battles Are Being Fought
Moderator:
Edythe Ledbetter
V.P. Administration, Center for Marine Conservation
Henry Suhrke
Editor, Philanthropy Monthly
Laura Murphy Lee
Washington Office Director, American Civil Liberties
Union
John McIllquham
President, NonProfit Times
Dr. Thomas DiLorenzo
Author, Unhealthy Charities
EDYTHE LEDBETTER
VICE PRESIDENT, ADMINISTRATION CENTER FOR MARINE
CONSERVATION
MS. LEDBETTER: Hi, I'm Edythe Ledbetter
from the Center for Marine Conservation. I'm vice president
of finance and administration there.
I'm going to move right along and
introduce to you Henry Suhrke, who is sitting immediately to
my left. He is the editor and publisher of Philanthropy
Monthly and the publisher of the survey of "State Laws
Regulating Charitable Solicitation." Prior to founding
Philanthropy Monthly, he worked in fundraising with a
variety of clients including the Kennedy Center for the
Performing Arts.
Many of you would know Mr. Suhrke
personally. Others of you know the Philanthropy Monthly. He
is a graduate of Northwestern University and holds a
Master's in Business Administration from Harvard University.
So, without ado.
HENRY SUHRKE
EDITOR PHILANTHROPY MONTHLY
Thank you.
I'd like to first react just a little bit
to the previous panel.
First, I agree with Ellie Smeal on the
importance of these activities particularly for small
organizations.
In almost all of the regulatory efforts
that affect our organizations, be it in setting accounting
standards, be it in watchdog organizations, in legislation,
things are usually done by compromise.
The fact is that the well off
organizations can afford to compromise at a level that the
smaller organizations cannot. If your voice is not at the
table, if you are a small organization at that point, you
are going to be sold into a bargain that you would not opt
for if you had spoken up.
I know of a great many instances where
that happens. The well off charities concede that accounting
costs could be allocated any way they wanted to. They still
looked good, but the small charities did not look
good.
Second, I think Mr. Keene made the
comment that public policy makers often just don't
understand the costs of direct mail. I think that's true but
there was a refreshing incident -- I think oftentimes they
do understand. The reason they do is that's how they raise
money themselves for their campaigns by direct mail. So,
that when the positions that are taken are discriminated
against a non-profit organization, it lays bare the intent,
which is not done through ignorance but it is to interfere
with the organization.
Third,the distinction very properly made
between charities and advocacy organizations is one that you
need to be rather careful about. In some state laws, a
charity is defined so as to include (c)(3) and (c)(4). That
distinction is not true in federal law. So, the definition
depends on where it is being used.
Finally, a sort of sardonic note on the
fundraising cost and the public perceptions on it.
One of the funniest things I had the
pleasure of commenting on some years ago was an annual
ranking that "Money Magazine" of all people does on
charities. They ranked as the best exemplary charity because
of its efficiency in its fundraising costs, a group that got
over 60 percent of its income from the government.
Of all people, Money Magazine ought to be
aware of that kind of distinction, ought to know
better.Well, to get onto what I really had intended to say.
It seems to me that, a powerful obstacle to a broader
understanding of the jeopard of First Amendment freedoms is
the inclinations of some very thoughtful citizens not to
take such concerns too seriously so as not to be though
naive or paranoid.
The scenario is that we are all adults
who revere the life of reason and for whom such things as
enemy lists and conspiracy theories are often extravagant or
really fictional. Don't really such things deflect the
listener's attention from the subject being discussed on to
speculation about the psyche of the speaker, who may be seen
as somewhat unsophisticated?
My thesis this morning is that from my
own everyday experience as an editor concerned with the
speech of fundraising and/or advocacy, the phenomena that
we're talking about is entirely consistent with reason and
that it is of a scope that really calls for our attention.
To start off in not so far away Brussels, the rules are
being written today that will define the legal form of an
association which is to be recognized as such by the
European union countries. Robin Guthrie, former charity
commissioner of the UK, commented as follows on the cultural
clash that is involved in that debate. He said:
Behind the proposed statute for European
association lies the assumption that it is the governments
and the commission of the European communities that will
decide whether what we do as private citizens in the public
arena is for the public good or not. Government decisions on
such matters are bound to be affected by short-term
political considerations. It is for you and me to decide
what it is in our interest as citizens in accordance with
our own judgment and understanding not what the politicians
and bureaucrats of the moment may think.
Then he comes to the crucial point.
"These thoughts are different from the notion of state and
of the individual in relation to the state that prevails in
France." He was giving this speech in Strassburg (phonetic).
It's in France. I hesitate to utter them in this company,
but they must be expressed if we are to understand each
other.
It seems to me that the issues, to
identify the issues that we are here -- and to focus our
attention on where First Amendment freedoms, which are the
basis of our civil society are at stake, is clearly
preliminary to understanding and consistent with the life of
reason.
It is the people who worry about the
naivete or paranoia that may be behind them. We have to
identify where those issues are.
A second point. In Canada, the first
fundraising as protected speech at an appellate level was
recently decided in favor of the speech interests in
accordance with the new Canadian Constitution. However, that
decision is being appealed. The subject, in any case, is
just opening now in Canada. It is not settled.
I cite these cases to demonstrate the
universality of concerns that we are addressing. The
everyday battles, however, are much closer to home.
Consider this. In 1990, the State of Ohio
passed a new Charitable Solicitation Law, one of the most
egregious provisions which was that, the state forbade any
solicitation funds for the "dissemination of information
about missing children," unless the soliciting organization
had the help of a professional fund raiser or if it had been
in business or had federal tax-exemption for less than two
years, things which obviously have nothing to do with their
publishing information about missing children.
In 1992, the Federal District Court under
Judge Walter Rice, informed the state that such a provision
was clearly unconstitutional. However, Ohio is appealing the
ruling and the State's argument before the U.S. Court of
Appeals for the Sixth Circuit is uniquely revealing.
The legislature of Ohio enacted this
regulation based on this permissible judgment that the
distribution of materials relating to missing children is
one of the most effective tools in the search for missing
children. This search has become a continuing activity in
which the state is directly involved by statute. The State
of Ohio now operates an information bulletin concerning
missing children, a missing children clearinghouse and a
missing children educational program.
In other words, Ohio has simply asserted
that it has the power to silence private speech, because it
wants to exercise that power on its own to the detriment
and, I might say, on the backs of missing children. It is
really, if you think about it, a reprehensible activity.
There is not even the claim that it wants to prevent fraud
or any proof that the private efforts, historically have had
any harmful effects. The plea is simply for the efficiency
of monopoly.
I think you will recognize that this is
exactly the argument that's being decided in Brussels right
now, which after all, that effort is not so far from
home.
Let's look at the Federal Trade
Commission. Recently, the acting director of the Consumer
Protection Division of the Federal Trade Commission
testified before a U.S. Senate subcommittee that the FTC in
its new initiatives against charitable fundraising abuses,
which he calls abuses, had been greatly aided by the
cooperation of state attorneys general, private, watchdog
organizations, et cetera, through "providing them with
scripts, forms and other information on suspicious
fundraising."
Who is paranoid?
It just seems to me, this is a sad
commentary on our government's regard for First Amendment
freedoms that a government agency head would have no qualms
about even using that kind of language in public testimony,
the purpose of which was to get expanded scope for his
agency. What I'm trying to show is the evidence which, in my
opinion, is strong that many regulatory provisions of
federal, state and local law are intended to prevent speech
which is a very difficult thing to comprehend.
These include mandated disclosures which,
by their time placement of tedious or of a tedious nature
can have no effect but to preclude speech. In that same Ohio
statute there are recitations that must be made of the name,
the status and the address with ZIP codes, et cetera of each
organization that may benefit from such a
solicitation.
They wrap these disclosures in the mantle
of education of donors or consumer protection really doesn't
save the situation at all. It is clear that they are
intended so that people will not speak, because it is too
honest to do so.
Let me turn to the IRS.
Recently acute observers identified a
trend in IRS determination letters for tax exemption being
conditioned on actions not required by law. It is important
to note that the goodness of government's intention is not
at issue here.
Washington attorney, Ben Tazewell
(phonetic), writing in that estimable publication,
"Philanthropy Monthly," said that the IRS, "As a condition
of receiving a favorable determination letter granting
tax-exempt status required some charities, one, to promise
that the organization would not award any contract to an
insider." What about an employment contract?
Two, "promise that the board of directors
would be comprised of unrelated persons representing a broad
segment of the community and/or, three, promise that the
organization will solicit at least three outside bids for
all significant purchases and services."
In the vital area of lobbying, vital to
all of you particularly here, the IRS, in at least one case,
informed a charity that its tax-exempt status was
conditioned upon the organization using the expenditure test
under Section 501(h) to measure its lobbying, instead of the
provision of the law that this is an optional selection with
each organization.
I think it's important to remember that
the motives of government for such actions are very -- some
are as crude as the search for efficiency. Some are
politically motivated. Some may be motivated by the best of
intentions and some are intended to prevent speech.
The motivation, really is not the point.
Today's good intentions may have quite different results
tomorrow under the aegis of new bureaucrats. That, it seems
to me, leads to the genius of his unique coalition. To
preserve our freedoms, it seems to me, we must raise and
defend the hard-won concerns of our freedom of expression.
Government does not need to patronize non-profits with any
superior knowledge of what is good for us.
Fund raisers should not have to apologize
for their work, since "paid employment" is after all the
norm in our society. I think we ought to be able to
recognize where that came from.
Our system assumes that it is not the
role of government to decide what ought to be discussed. It
is enormously in the interest of our everyday ability to
achieve our recognized objectives that we have support in an
organization that institutionalizes the vigilance that is
necessary for us to survive.
Thanks.
MS. LEDBETTER: Thank you very much.
As we go along, I think it's important to
remember that for many of us, we experience the burden of
the regulations and respond in terms of the compliance to it
rather than to the underlying threats as they are really
presented and I think that's been very helpful to bring that
out. I'd like to go on now and introduce John McIllquham,
who is President of the Nonprofit Times.
He's seated in the last filled seat at
the table. John, as President of the Nonprofit Times
produces the largest publication for executives in the
nonprofit industry. He has also served as National Director
of Advertising and Public Relations for the GALLUP
organization, and has been Vice President Publisher of
Fundraising Management.
Thanks very much, John.
JOHN MCILLQUHAM
PRESIDENT NONPROFIT TIMES
Good morning.
I'd like to take a slightly different
view than those opinions which have been expressed this
morning. I'd like to share with you a story of my days as
president of a residence hall at Ohio State University in
which I was exposed to my first political battle and perhaps
my last.
The great issue of the day which consumed
a number of sleeping and waking hours of my time was, can
women come to visit men on open house days from Sundays
between the hours of seven to nine.
This political battle which enraged many
of the students at Ohio State ended up with me agreeing to
the University's insistence that if we were going to have
open houses, I was to issue rulers to appointed floor
representatives whose job it was to measure the door
openings, which could be closed no longer than two and one
half inches.
I used to call my father persistently as
I got engaged in the special interests that were forming in
the dormitory, conservatives asking for dress codes and
liberals opposing them. My father passed along a message to
me which I would like to share with you because it probably
capsulize most of the problems that non-profits are facing
today.
He said to me, if you continue to do what
you do you'll continue to get what you got. The point is
that non-profit organizations, though they disdain and scorn
government interference and, as Eleanor Smeal pointed out
this morning, are increasingly dependent upon government
support.
We have just completed a seven-year study
of the 100 largest charities in the United States. Our
definition of a charity is an organization whose revenues
comprise at least 10 percent from public support. In this
way, we could exclude organizations whose sole support comes
from endowments or fees for services.
Of these 100 largest charities which, by
the way, represent two of our every ten dollars contributed
to all charities in the country -- approximately $22 billion
in 1993. Of these 100 charities, the top 10 charities raise
half of the revenue for the entire 100.
What is significant about these numbers
is that over the past five years, the percentage of public
contributions continues to slip as the percentage of
government funding continues to rise. In 1993, these 100
charities generated 22 percent of their $21 billion from
government grants.
As a matter of fact, Catholic Charities
which was also mentioned, is the largest fundraising
organization in the country last year raising $1.93 billion
but $1.27 billion of that comes from government
grants.
Lutheran Social Ministries, which raised
$1.8 billion fell off of our list entirely because 93
percent of their income now comes from government sources.
The Girl Scouts of America which in 1991 reported that 70
percent of the $450 million came from public contributions,
in 1993 reported that their $460 million comes from less
than 20 percent of public support, a 50 percent drop in
public contributions over the last three years. And the list
goes on.
Volunteers of America and the Association
of Retarded Citizens with combined revenues of $1 billion
have an average of 70 percent of revenues from government
resources.
What amazes me is that even though these
organizations disdain the regulation, they are now in a
position, as United Cerebral Palsy and several of them are,
of hiring lobbyists and representatives to make sure that
when a state releases a new program that they are on the
line first. If the regulators attempt to see organizations
in a way which you and I see them which is important in
advocating viewpoints, then they are completely befuddled by
the attacks that non-profit organizations are continuing to
be exposed to in the press. Let me point to a recent example
of what happens to regulators who act in the name of not
only consumers, but in protecting their privacy.
The State of Hawaii passed a bill which
will take effect in January 1995. It was passes as a
consumer protection bill and in the last page was this
little paragraph which apparently nobody read, which
essentially said that no non-profit organization can solicit
any resident in the State of Hawaii unless they get that
resident's permission in advance.
(Laughter)
This so-called positive option was
generally seen by the state attorney general's office as a
way of protecting Hawaiian residents from so-called mainland
charities that are taking dollars away from Hawaiian
charities.
The issue is that not one non-profit
trade association, not independent sector, not the National
Society for Fundraising Executives, not the American Society
of Association Executives, did anything about reversing the
impact of this bill. The Disabled American Veterans
convinced the Direct Marketing Association, however, to try
to intervene and they retained a legislative council to go
to Hawaii and try to provide amendments to this law which
they were successful in doing, only to this degree.
Any organization which now has list
suppression capability is exempt from the law. Otherwise,
all charities raising money in Hawaii after July of 1995
must have the donor's permission, in advance, to raise
money.
The state attorney general in Kentucky
has just announced that he is going to attempt to challenge
the Riley decision by drafting legislation which will
overturn the First Amendment protection provided by the
court in fundraising solicitations.
There are seven cases right now, six of
them dealing with higher education institutions and one with
a public broadcasting station in which state regulators are
attempting to have, in Michigan, West Virginia, South
Carolina, Ohio and Indiana, university donor lists to be
available as a public record and, therefore, open to public
access. These attempts succeeded in South Carolina and Ohio
but they failed in Michigan, West Virginia and Indiana,
although the state has just announced that they are going to
appeal this decision.
In the public broadcasting station's case
in Jacksonville, Florida, an attorney who happened to be a
contributor apparently has been keeping up in his reading
and read these cases that I just previously cited to you in
which there was one common theme.
The states argued that, if a non-profit
organization accepts any government subsidy or money, it is
therefore, subject to Sunshine Laws and that includes donor
lists as well as the name, address, the amount of gifts, the
frequency and the dates on which the gifts were made.
The courts in Florida dismissed this case
on a technicality but this disgruntled donor who, actually
is trying to open the PBS station's donor fund so that he
can solicit contributors to help him in getting a program
that was canceled back on the air has announced that he
intends to appeal this decision.
So, in essence, you have state regulators
who are looking at, not only the extent and support that
their individual, local and state governments are providing
to non-profits, but are now insisting that if they take
state money they must do what the state says. In New Jersey,
for instance, there is a consumer protection law that is now
being passed.
It's in the House and the Senate is
expected to adopt the measure in which there was very little
outcry from New Jersey non-profit organizations over a
licensing fee that the state wants to set up which is a fee
based on contributed income going from $10 for organizations
that raise less than $100,000 to $25 for organizations
raising more than $50 million.
Most non-profits decided that that was a
very small amount of money and at a hearing, somebody stood
up and said, if you're looking at the law, even though the
fees are small, the state has reserved its right to audit
the books to make sure that you're paying the right amount
of fees to the contributed income.
An executive director of one of the
largest hospitals stood up and said, in a stunning
announcement, do you mean that the state would really do
that?
(Laughter)
The other issue that needs to be
addressed and hopefully, the Free Speech Coalition which has
been an advocate and a passionate one for the voice of
non-profits, has been a lack of board involvement in
protecting the integrity of organizations.
If you look at the largest charities over
the last five years that have been embroiled in the public
scams that have fueled many of the regulators' concerns --
PTL, Covenant House, Morehouse College, Students Against
Drunk Driving, Boston University and, of course, the
infamous United Way, you come to realize that despite having
boards of governors or trustees comprised of the titans of
industry who have some of the biggest Big Eight accounting
firms issuing squeaky clean audit reports, executives are
permitted or allowed to move millions of dollars
around.
As a matter of fact, I don't know how
many of you are aware. You probably have read in the paper
about the 182 page, 71 count indictment that the U.S.
Attorney of Virginia has issued against William (inaudible),
charging him with, among other things, tax evasion and money
laundering and moving about $16 million in funds from one
spinoff for-profit to another.
The issue that concerns me terribly is
that in all of these scandals, the board seems to have taken
a hands-off, we are victims of rogue operators attitude. I
only hope and implore that each of you, though you are a
student passionate and advocates for free speech, will go
back and encourage your boards who also have their spheres
of influence, to try and attempt to protect the rights and
integrity of non-profits, which I hope through these cases
will indicate to you are increasingly under assault every
day. Thank you.
(Applause)
MS. LEDBETTER: Thank you very much.
Well, if nothing else I think maybe we've
proved to Hawaii that charities are not islands. I'm glad
that Laura Murphy is here with us today. I'm going to switch
the order and give you a chance to catch your breath for
just a minute.
I'd like to next introduce Dr. Tom
DiLorenzo, who is Professor of Economics at Salinger School
of Business and Management, at Loyola College in
Baltimore.
As you can see from your agenda, he is
the author of "Unhealthy Charities" which many of you have
already read. He is an adjunct scholar at Cato Institute,
with the Center for Study of American Business and is a
senior fellow with the Capitol Research Center in
Washington. He has held faculty institutions in a number of
institutions in this area, at Whittenburg (phonetic)
University, the University of Tennessee at Chattanooga and
the State University of New York.
He, himself, is a graduate of Westminster
College and has a Ph.D. in economics from VPI and State
University.
Thank you very much for being
here.
DR. THOMAS DILORENZO
AUTHOR UNHEALTHY CHARITIES
Thank you.
I'd like to thank the Coalition for
inviting me to speak for ten minutes. I assume they asked me
to speak about chapter eight of my book, which is about
so-called look-alikes, which really aren't look-alikes. What
I thought I would do is start out by mentioning a little
anecdote.
There is a small charity in California
called the "Cancer Federation." It was started 20 years ago
by a man named John Steinbacher (phonetic). They sent out a
fundraising letter to New Jersey. They provided services all
around the country. They subsidized medical students,
medical researchers and so they fund raise all around the
country and they raised about 500 bucks in New
Jersey.
He told me over the phone -- I never met
him, but he read my book and he's been on the phone -- that
the day after the fundraising letter arrived in New Jersey,
he received a certified letter for the state attorney
general saying, cut it out.
He found out that, of course, it was the
American Cancer Society that was outraged that he raised 500
bucks in the State of New Jersey and they wanted to put an
end to that right away.
This is the sort of thing that we discuss
in this one chapter of our book you might call non-profit
sector protectionism, which is pervasive. Some of the bigger
charities in the health field that we've looked at seem to
have devoted a lot of time cultivating contacts in state
legislatures and the State Attorney's General to keep the
competition out.
Another anecdote or example is how -- and
I'm sort of beating up on the American Cancer Society --
they got the Attorney General of Pennsylvania to sue another
small charity called the Cancer Fund of America and five
other smaller ones, not for doing anything illegal. They
actually came out and said there is nothing illegal here.
What they sued them over was confusion. They were going
door-to-door soliciting money and it was confusion that they
were guilty of.
Pete Marwick accounting firm gave this
group a clean bill of health but as we just mentioned, they
gave Covenant House a clean bill of health and United Way,
too, different accounting firms. But, anyway, they weren't
accused of any hanky-panky in an accounting sense.
The law suit was filed, nevertheless and
it ended with a consent agreement which, of course, a lot of
times is a gun at the table agreement, where the Cancer Fund
of America and five other smaller charities agreed to pay
$50,000 each in fines and the fines did not go to the state
treasury in Pennsylvania. They went to the American Cancer
Society. That's nice work if you can find it.
(Laughter)
I haven't done a lot of research on this
but I keep getting letters after the book came out from
people like John Steinbacher telling me this is what is
going on. I even had a letter from one man in the mid-West
claiming -- he is a lawyer.
He's been litigating these kinds of
cases, defending the smaller charities for years and years.
He offered to send me all the tax returns of the American
Cancer Society that lists how much money they have been
spending on this sort of predatory litigation. I haven't
received them yet. I guess they are in the mail.
It gives me the impression a lot of this
type of thing must be going on and not just by that
particular large charity but by others. In 1989, what we
call the big three health charities in our book, the
American Cancer Society, the American Heart Association and
American Lung Association, convinced members of Congress to
hold hearings on what they call the look-alike issue.
The chairman of the ACS said,
"Fundraising by the look-alike organizations should be
stopped by the government. The best interests of the public
are not being served by what look-alikes do and, therefore,
some legislation ought to be in order."
As an economist, the first thing I think
of is, well, what if Lee Iacocca, the former Chairman of
Chrysler, said, selling cars by these look-alike automobile
organizations should be stopped. The best interests of the
public are not being served by what they do. It seems to me
that they are just simply saying, we need a federal law to
keep all our competition out.
And, the so-called look-alikes from what
I've learned are [in fact] not look-alikes. They're
called look-alikes by the big charities but in most
instances, the reasons why they were created is that there
were gaps that they fill; gaps that were not being filled by
the big charities.
How could you raise money out there,
anyway? If you just think about it, by saying, well, you
know, the American Cancer Society with half a billion net
worth is doing this. The two of us would like to do this,
too; give us money. That would be a tough thing to do. You
know, why should I give money to the two of us if this 70
year old, well-established organization is doing the same
exact thing? Why is there a need to give us, with an
unproven track record, money to do this?
That is not generally what these
organizations are. They perceive a need that is not being
filled and they try to fill it and they raise money to do
this.
Another quote, by the way, a good one is
the Attorney General of Pennsylvania that I mentioned. He
said: "I am delighted to be used by the American Cancer
Society."
(Laughter)
He was accused in the newspaper of being
used by them and he's delighted to be used.
Another statement by Keith Greener, the
ACS Chairman. He said, he was complaining at a Congressional
hearing. Look-alikes typically use a topic like cancer that
gets the public very excited and they raise money like
this.
I can't figure out how that is different
from what his organization does at all. He thinks it should
be illegal for the small charities, but okay for his.
The American Lung Association complained
-- this is what Joyce Waites (phonetic), the spokesman said.
"Our country's entire system and spirit of volunteerism is
at stake." That's a pretty shocking kind of statement. When
she was asked why, she said there were several organizations
which she did not name at the hearing, anyway, that were
using "slogans or fundraising methods similar to the
American Lung Association's." So, they apparently have a
copyright or patent on door to door fundraising, they think.
That's all that was in the hearings.
The other member of the big three, the
American Heart Association's Chairman of the Board, William
Benthoff (phonetic), called for a "national solution,"
federal regulation for this. The reason why is that he
claimed that there were organizations that raise funds to
assist heart disease patients and the use the words heart
and fund in their solicitations and there should be a
federal law against that.
(Laughter)
I was only asked to speak for ten
minutes. From my research, it seems as though these are
clear cut instances of protectionism, of larger, more
established charities throwing their weight around through
politics, to try to use politics, to keep smaller and
oftentimes more innovative charities out of the market. This
is bad for the recipients of charity because it's often the
smaller, more entrepreneurial upstart organizations that are
more effective than the larger, older, ossified,
bureaucratic charities.
So, it's not in the best interest of the
public, I would think, to eliminate competition in
fundraising. None of us likes competition, I suppose, but
from the public interest point of view, as an economist, I
have to say competition is a good idea for charities as well
as corporations.
I think that's all the time I'll
take.
Thanks.
MS. LEDBETTER: Laura, I'm going to have to allow you to come
up and introduce yourself or do it from that place, either
one. I can tell you only that she is the Washington Office
Director for the American Civil Liberties Union.
Thank you very much.
LAURA MURPHY LEE
WASHINGTON OFFICE DIRECTOR, AMERICAN CIVIL LIBERTIES
UNION
Thank you.
This is an occasion that I look forward
to because I just came from the Senate floor where we
defeated a cloture petition by a vote of 52 to 46 on
lobbying disclosure. I'm happy about that because the ACLU
took a close look at a conference report which just came out
last week, where substantial changes were made that would
have a great impact on all non-profit organizations.
Before I get into that, I guess I should
say a little about myself. I have been the ACLU Washington
Office Director since February of 1993 and this is my third
professional position with the ACLU.
I was a lobbyist here in the Washington
Office from 1979 to 1982 and then Director of Development
and Planning, for the ACLU of southern California and I have
served on two boards of the ACLU and one in southern
California and one in Chicago. So, I have a longstanding
relationship with this institution. I started 18 years ago
working on Capitol Hill.
I worked for two Members of Congress.
When I was in California after I left the ACLU, I worked for
the Assembly Speaker there, Willie Brown. I have worked on
national presidential campaigns as well.
But going back to the lobbying disclosure
legislation, as we began to review the conference report on
lobbying disclosure, we saw a lot of problems. I think the
chief problem is that it would affect non-profits in
arbitrary matters.
For example, if you were a non-profit in
California and you wanted to send a representative to
Washington to meet with your delegation because the cost of
air fare is higher than if you were situated in Northern
Virginia, you would meet the threshold of what constitutes
lobbying and what expenditures constitute lobbying much more
quickly than someone based in Northern Virginia and you
could be lobbying on the same issue.
I think that is rather arbitrary and I
think it is a shame that the United States Congress didn't
include any kind of adjustment formula so that people from
all parts of the country would be treated equally. The other
issue, that was an issue for the ACLU is that religious
organizations and religiously-affiliated organizations were
totally exempt from the disclosure requirements. Now,
whether you are with the National Council of Churches,
(inaudible), the Nation of Islam, the Catholic Conference or
the Christian Coalition, I think the American public wants
to know if any of these organizations have lobbyists or are
influencing Congress. We don't feel that it's a violation of
these organizations free exercise of religion to have to
report, along with other non- profits.
I mean, this creates such a broad
loophole in terms of the recording requirements that, I was
thinking about if this thing passed, leaving the ACLU and
starting the church of What is Happening Now and developing
my own tax exemption so that I wouldn't have to
disclose.
The disclosure requirements are so
burdensome. Right now, non-profits have to comply with 47
pages of regulations from the IRS. This lobbying disclosure
legislation would create additional burdens and who knows
how many pages of regulations and yet, a new office would be
created. I think that that creates a burden, especially for
the smaller organizations.
I estimated in the Washington Office of
the ACLU, where we have seven registered lobbyists, that the
cost of complying with the lobbying disclosure legislation
would cost me at least three-fourths of the salary of one
lobbyist. So, that means my ability to influence the process
in a substantive manner would be depleted because our income
is flat, like those of many other organizations.
So, unless I get a new infusion of
non-tax deductible contributions through our membership,
we're not going to have the growth to compensate for the
loss of income that will affect our administrative costs,
and, therefore, our lobbying costs.
I also think that there is a very, very
big problem in this legislation with regard to disclosing
contributor lists.
One of the issues that the ACLU was
involved in many years ago in 1958 is NAACP v. Alabama,
where the Supreme Court ruled that it was not necessary for
the NAACP to turn over its membership list to the state.
Senator Levin has repeatedly said this would not happen in
the lobbying disclosure legislation before us. It may not be
before us for much longer but I'm sure this will come back
next year. Let me give you a hypothetical example where I
think membership and contributor information will
overlap.
Let's say you live in a small town and
the Federal Government is thinking about putting a toxic
waste site in your community and a group of you gather at a
church. It's not a church-sponsored activity. You are just
using the church as a meeting place. Let's say 500 people
get together and you want to send someone to Washington to
lobby on their behalf to fight the placement of this toxic
waste site.
You then take up a collection. Everybody
gives $10 to get the local lawyer to represent them for a
couple of weeks in Washington. This will compensate him for
the salary he loses in his law practice. It will give him
air fare, it will give him hotel and he doesn't even have to
be in Washington for three weeks but he has to spend three
weeks' worth of his time in any six-month period on
lobbying.
At that point, you would have to submit
the names of every contributor to this effort, to the Office
of Lobbying Disclosure. The problem I have with that is,
let's say, that there is a big company in town that wants
this toxic waste site, that wants to get the contract from
the Federal Government to build the site and 100 of those
500 people are employees of this site. Maybe they don't want
the company that they work for to know that they are
contributing to an effort to keep their community
environmentally safe.
I think this raises the specter of
intimidation and there are no privacy protection in this
law. That's our other problem with it. Who has access to
this list? How is an investigation triggered? Suppose the
IRS wants copies of the contributor information. Suppose the
FBI wants copies of the contributor information.
I think this has a tremendous chilling
effect on the fundamental right to petition one's government
and I think we need to have -- insist that the Congress
reject this. They are going to try to bring it back
tomorrow. I understand that they're going to try to get rid
of the lobbying disclosure part and bring up the gift tax,
but I don't trust it. I think we need to make our voices
known on this.
I want to give you another hypothetical
situation. Let's say, that in Pensacola, Florida where there
has been a lot of violence associated with the abortion
clinics, a group of people who are against violence want to
pay for an attorney to go meet with the Justice Department
and to take their concerns to provide the Justice Department
with information that may assist them in investigating the
violence at these clinics.
Everyone who contributes to that effort
will have to give their name, address, place of business,
the nature of their business to the Office of Lobbying
Disclosure. In this environment of violence, do you think
people are going to be willing to step forward and make
those kinds of contributions if they feel that there is an
environment of retaliation in their own communities?
I mean, this cuts across all lines,
whether you're pro-choice, anti-choice, pro-big business,
anti-big business environmental, anything. I think we've got
to proceed very, very carefully when we look at lobbying
disclosure legislation and ensure that in our laudable
efforts to fight corruption we don't unduly hamper people
who want to assemble.
That is the purest kind of lobbying that
goes on, people who assemble around a need or particular
issue. I'm not talking about the problems that the ACLU is
going to have or the National Right to Life Committee is
going to have. We will find a way. I'm talking about that
wonderful spirit that develops in communities across the
nation where they feel that they have the right to go to
Congress but because of this kind of legislation they're
going to be a little intimidated by it. The civil fines for
not complying go into $200,000. Yet, the irony is -- the
more I read this, the more I even want to get into the whole
gift tax issue.
The Congress faces no such fines for
violating this law. I'll give you an example.
I started working on the Hill 18 years
ago and I have some longstanding personal friends there. I
go to the Hill as a lobbyist and I see a friend and I say,
let me buy you lunch. I'm not buying them lunch necessarily
to lobby them but let's say I forget to report this.
Someone sees me having lunch, calls the
Senate Ethics Committee, opens an investigation. I have to
hire a lawyer. I have to defend it. I have to document why I
didn't do it and the staff person could encounter reprisals
for this.
I don't think it's well thought out and I
think that when you put something in the Senate Ethics
Committee, they already have punishments. They have a right
to censure, reprimand, do any number of things to members of
Congress and their staff. I think to have one set of rules
governing members of Congress and your staff and another set
of rules governing lobbyists and the disparity in the
sentences or in the fines being so great, I think that's
also unfair.
We didn't get into that in the letter to
the Senate. We were doing everything to slow this thing down
but we only have, I guess, a day and a half left of Congress
in this session. I brought extra copies of the ACLU's letter
and I hope you take a serious look at it and if you have any
questions or concerns please call me.
MS. LEDBETTER: Laura, thank you very much.
I want to just leave an opportunity --
we're running a little bit late -- for one question and
then, probably be able to take a break. We may be able to
squeeze in two. It depends on the question and the length of
the answers.
Would someone want to come forward with a
question at this time? Will you come up and speak?
PARTICIPANT: I am Joy Terrelll of the
Independent Sector. I have heard this gentleman refer to us
as not supportive of some legislation. I was just trying to
get some clarification as to what that legislation was that
you were referring to that we do not support.
MR. MCILLQUHAM: I was referring to a law
which was passed in Hawaii essentially introducing a
positive option requiring residents to be notified ahead of
time that they can receive a solicitation. My point was,
that there was no formal action by any of the trade
associations representing non-profit interests to try to
reverse this.
PARTICIPANT: It is up to the nationals to
have their affiliates participate in advocacy. It's not up
to the Independent Sector to get their nationals to make
their affiliates. I just wanted some clarification of
this.
MR. MCILLQUHAM: Agreed.
MR. SEGERMARK: The Free Speech Coalition
didn't lobby in Hawaii either and I needed a couple of weeks
in Hawaii.
MS. LEDBETTER: There is another question
in the back of the room.
PARTICIPANT: One of the important things,
I think, is to figure out what we can do about some of these
reprehensible state laws. With respect to disclosure of
contributor lists, wouldn't it be a good idea, since there
is not a college in America that doesn't accept federal
money -- to simply start in those states that require full
disclosure of their lists, to make a demand for full
disclosure of every one of those colleges whether they are
private or states lists. The way to break these laws is to
actually put them to use. Those people will run to their
legislatures and say, what is going on here. This isn't what
you meant, is it?
I'm asking you whether you think that is
a plausible attack.
MR. SEGERMARK: I think it is a good
idea.
I think in the same vein, we could
exploit in some way the fact that politicians depend on
people's gifts. What is sauce for the goose, is sauce for
the gander in that case. I think it is a fine idea.
MS. MURPHY: I just want to add though
that the ACLU is not against disclosure per se, but I think
we have to reach a point where we establish what kind of
disclosure serves what interests. If you look at the whole
history of lobbying disclosures, for example, it really came
on because of the Webb Tech (phonetic), the Keating Five,
the ABSCAM, where there were really strong corporate
interests at stake and big companies. But the net was cast
so wide in this legislation that we're all caught up in it
together.
PARTICIPANT: I'd like to make a point
that, interestingly enough on disclosure it's somewhat
surprising, at least to me, how few non-profits will be
willing to disclose the simplest request for information
about their own finances. A survey we did of about 25 of the
largest United Ways, 24 of them refused to provide a copy of
the Form 990. Half of them told us to go to the IRS to get
copies of it.
So, non-profits also draw the wrath of
regulators when they, themselves refuse to provide even the
minimum amount of information about salaries or the
biographies, who their executives are, how much money they
raise.
In a survey of 100 largest charities, 20
of them and I'm still struggling to find out what's going
on. Twenty 20 of them, when we faxed back their 990s,
changed the numbers on them. I'm not sure what that
means.
MS. LEDBETTER: I think with that, I'm
going to ask you to join with me in thanking the panelists
this morning.
(Applause)
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