Whistleblower Says Conservative Nonprofit Engaged In Illegal Politicking

New federal complaint suggests the American Legislative Exchange Council violated its tax-exempt status by providing political software to Republicans.
Whistleblower Says Conservative Nonprofit Engaged In Illegal Politicking
Republican politician Scott Walker speaks at an American Legislative Exchange Council meeting. (Photo credit: AP Photo/Denis Poroy)

ALEC, or the American Legislative Exchange Council, is one of the cornerstones of the Republican party’s strategy to win and shape state legislatures. ALEC provides a number of services to local politicians, including drafting  model legislation behind closed doors on conservative causes like opposing gun control, weakening environmental rules, and increasing voter suppression, then propagating the bills to state governments across the country.

ALEC is also funded partially by American tax dollars. Donations to ALEC are tax exempt, thanks to its status as a 501(c)(3) charity. As part of its charitable status, ALEC is barred from explicitly helping particular political candidates and campaigns.

But according to a new whistleblower complaint filed with the IRS by the progressive watchdog group Center for Media and Democracy (CMD), ALEC’s activities extend beyond efforts like writing legislation. The complaint alleges that ALEC has been freely providing campaign software programs valued at $3,000 each to its members, who are almost exclusively Republicans. The software, the complaint alleges, was linked up to the Republican National Committee voter database.

“If you donate money to a political campaign, you can't deduct that because the government and taxpayers don't want to subsidize making political contributions to candidates,” said Eric Havian, one of the attorneys who filed the whistleblower complaint. “That's not what taxes ought to be subsidizing.”

In a statement, ALEC claimed that software was used by the politicians as a “constituent management tool.” But the complaint could put ALEC’s tax-exempt status in jeopardy.

“You hand that to a politician and say they're not going to use it for political purposes? Give me a break,” Havian told The Daily Poster. “What do you think a politician is going to do when you hand them a tool and tout it as an election-winning tool?”

“This Software is to Win Elections”

The whistleblower complaint faces an uphill battle. During the 2012 presidential election, the IRS was accused of deliberately targeting conservative groups when it gave extra scrutiny to organizations that used terms “tea party” or “patriot” in their tax-exempt status applications. While it later emerged that liberal groups had also been subject to scrutiny, in 2017 the IRS apologized for targeting conservative groups.

These circumstances, along with the persistent underfunding of the IRS’ enforcement capabilities, could make the IRS more reluctant to take on organizations like ALEC.

“Historically, the IRS has done a really poor job of enforcing these rules,” said Havian, who works at the whistleblower law firm Constantine Cannon LLP. “When the IRS did become more aggressive during the Obama administration, various members of congress really went after them. They went after the IRS's funding, and they made all kinds of threats against the IRS. The one time the IRS did try to be more aggressive about policing these kinds of charities, they got burned.”

Complaints that ALEC has violated its nonprofit status are not new. ALEC has frequently been accused of lobbying on behalf of corporate clients, which a 2012 complaint described as “fundamentally inconsistent with ALEC's claimed tax-exempt status as a charitable organization."

But until recently, ALEC was primarily understood to be a vehicle to help pass legislation and promote conservative priorities in state government such as gerrymandering. The group’s conferences and events were largely held behind closed doors, limiting the ability of the public to understand the group’s role in pushing state politics to the right.

The whistleblower complaint suggests that ALEC was also engaged directly in campaign activities. The software ALEC provided for free to select legislators, which it called “ALEC CARE.” The software is from a firm called VoterGravity, which also produces software explicitly designed to manage political campaigns.

“It's the same software,” said Havian. “It's the same interface, it has the same buttons, it has the same labels, it has the same function.

The software contains sophisticated features that allow legislators to see the voting history of their constituents. The program can tell legislators what views specific individuals have about issues such gun control, the income of specific voters, and whether specific voters have donated to political campaigns. The software also contains unique features like a “turnout score” to predict how likely an individual is to vote.

The software is linked to the Republican National Campaign voter database, the complaint alleges, suggesting that the software is partisan in nature and its use would benefit the Republican party. If legislators add voter data to ALEC’s software, that data could then be added to the Republican database, giving the Republican party an electoral advantage courtesy of a nominally nonpartisan organization.

Since ALEC’s membership is almost exclusively Republican, the software effectively represents a tool given to one party and one party only.

According to the complaint, use of ALEC CARE had a total value of $6 million per election cycle, but was distributed by ALEC for free. And because ALEC is a tax-exempt organization, the software was effectively subsidized by the federal government, which would not have been the case had the legislators purchased the software themselves.

CMD’s complaint was sparked by an unnamed state legislator and ALEC member who, according to a CMD press release, “recognized the illegality of the ALEC scheme” and provided screen captures of ALEC training videos and other materials to the watchdog group. According to CMD, the whistleblower’s claims were bolstered through documents obtained through open records requests.

CMD’s petition, filed last week with the IRS Whistleblower Office, asks the government to strip ALEC of its tax-exempt status and pay fines for violating non-profit regulations.

“VoterGravity’s website is crystal clear,” said Havian. “This software is to win elections.”


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