Originally published on Forbes.com June 26th, 2013
Jameson Cunningham of Shirley & Banister Public Affairs is doing a cracker job representing Tea Party Patriots, Inc. He is a very patient guy bearing with me as I view TPP Inc with an eye almost as jaundiced as the one with which TPP Inc views the IRS. My laundry list of issues with TPP Inc is lack of transparency, being only pseudo grass roots, spending an awful lot on fundraising and being, in fact, quite deserving of IRS inquiry into the extent of their political activity. You can scan my posts for the last couple of weeks if you want the gory details. Mr. Cunningham has kindly provided me with some responses.
On TPP Inc’s 990 And The IRS
Here is what Jenny Beth Martin, Co-Founder and National Coordinator for Tea Party Patriots has to say:
The reason our tax documents aren’t on file online (via Guidestar.org) is because we are still waiting to hear back from the IRS about our tax-exempt status—that’s the large issue. The IRS targeted our groups and many others like us—many of whom are local affiliates of Tea Party Patriots—because of our speech. They delayed, harassed us and applied the law unfairly against liberty-loving groups.
“Our ‘Audit the IRS’ Rally on Wednesday was a huge success, drawing the biggest crowds to Washington, D.C. in years. It’s clear Americans are incensed that their liberties are being taken away by an abusive government. Ten thousand demonstrated peacefully but forcefully against the IRS’ abuse of power and demanded a full reckoning from the IRS and the Obama Administration. Government is meant to serve us, not the other way around.
Frankly, I don’t know the exact procedure that Guidestar follow to post 990s. What I do still wonder is what is preventing TPP Inc from posting its 990 on its own website.
On TPP Inc’s Fund Raising Costs
Here is what Richard Norman, Finance Director for Tea Party Patriots has to say:
During the time period of June 1, 2011 – May 30, 2012, Tea Party Patriots was in its first full year of fundraising. We were aggressively prospecting to grow our donor base of grassroots Americans. During this time our donor file grew from 90,000 to more than 275,000 donors. Most organizations lose money when they are aggressively building their donor base but Tea Party Patriots kept its overall cost of fundraising at approximately 50 percent during this time, which is quite remarkable. The average gift for Tea Party Patriots is $44. Our “major donors” can be counted on two hands and they have contributed less than 5 percent of our total funds raised. We depend almost entirely upon small dollar gifts of grassroots activists.
Essentially Mr. Norman and Cleta Mitchell, whom I will get to next, educated me on the realities of direct mail and telemarketing fund raising. You have to spend a lot up front to build the donor list. TPP Inc breaking even early with lots of small donations is evidence of them tapping into real grassroots sentiment and executing pretty well. Mr. Norman’s knowledge and experience in this area is deep. For example:
In 1994, Richard took a one-year sabbatical from his Agency to design and administer the fundraising program for Lt. Col. Oliver L. North’s U.S. Senate campaign. The result was over 277,000 contributors who gave more than $24 million. The number of donors and total dollars raised set new records for political fundraising. He also served as Finance Director for former Vice President Dan Quayle’s PAC, Campaign America, and Mr. Quayle’s brief campaign for President in 1999.
In 2001, Richard founded Patriot Data Services, a computer service bureau catering to the direct marketing community. In 2009 Richard founded ActiveEngagement, a digital communications and fundraising agency.
The Brenda Larry Call And Political Activity
The one item that I have really latched onto is what I have come to call the Brenda Larry call. Campaign HQ, one of TPP Inc’s telemarketers had it up on their website as a sample of the good work that they do. The link to the call does not appear to give the audio anymore and I am not enough of a geek to have preserved it. Maybe somebody more skilled than I with the wayback machine will rescue it from oblivion. Nonetheless, here is the lead-in:
Hi. This is Brenda calling with an action alert from the Tea Party Patriots. Well Larry, I know you are busy so I will get right to the point. This election is our last chance to stop Obamacare and stop our country from becoming a cradle-to-grave welfare state. Right now are just $50,000 short of the amount we need to finish our door-to-door voter outreach and carry out our plan to stop left-wing voter fraud.
The rest of the call is mostly Brenda nicely badgering Larry who can’t spare a hundred bucks. She ends up getting him to cough up fifteen. Given that TPP Inc did not seem to be netting much from the calls, my theory was that the whole enterprise was a bit like the Charlie Wilson story where he drove people to the polls, told them he did not want to influence their votes and that, incidentally, Mr. Hazard killed his dog.
Cleta Mitchell Sets Me Straight
Mr. Cunningham suggested that many of my questions were about the definition of political expenditures and suggested that I speak with Cleta Mitchell, who counsels TPP Inc on such matters.
Cleta Mitchell is:
a partner in the Washington, D.C. office of Foley & Lardner LLP and a member of the firm’s Political Law Practice. With more than 40 years of experience in law, politics and public policy, Ms. Mitchell advises nonprofit and issue organizations, corporations, candidates, campaigns, and individuals on state and federal campaign finance law, election law, and compliance issues related to lobbying, ethics and financial disclosure. Ms. Mitchell practices before the Federal Election Commission, the ethics committees of the US House and Senate and similar state and local enforcement bodies and agencies.
Ms. Mitchell explained to me why the Brenda Larry call was not political. Brenda was asking Larry for money to support their cause not telling him how to vote. Brenda was not mentioning any candidate or political party. I asked if maybe “Obamacare” was not, kind of sort of, mentioning a candidate. She said absolutely not. Obamacare is shorthand for the Affordable Care Act and you can’t expect people opposed to ACA to call it that, since, to them, the term is Orwellian. They think it should be called the Unaffordable Care Act.
Ms. Mitchell believes that Tea Party groups (She represents several) were specifically targeted due to their opposition to Obamacare. I asked her why it was that the organizations were applying for 501(c)(4) since the status does not seem to get you much. She indicated that you have to pick something and that seemed the most accurate. I asked her about the notion that an organization does not need IRS approval to claim 501(c)(4) status (unlike 501(c)(3) status). She told me the IRS itself has contradicted this position with Ogden Utah rejecting 990s that did not have associated determination letters. In addition, state regulators expect to see a determination letter.
Conclusion
It is pretty clear that Tea Party Patriots Inc was hoping to influence the outcome of the 2012 election. Whether that is enough to derail its 501(c)(4) status is a legal question and I can understand why the guys in Cincinnati would want to boot that upstairs. On the other hand, it is clear that TPP Inc is not some sort of dark money operation given that it made its way to $20,0000,000 forty dollars at a time. It is also clear that TPP Inc is expressive of a certain strain of grassroots sentiment. Obamacare is one big grievance and immigration is another. I find the passion about Obamacare puzzling as it does not extend to Medicare. We don’t want a cradle to grave welfare state, but 65 to grave is OK ? At 61, I’m almost to the promised land myself and maybe then I too will want to keep the government out of my Medicare.
You can follow me on twitter @peterreillycpa.