Thursday, January 10, 2013

Several of the groups opposing Senator Hagel are charitable organizations entitled to solicit tax-deductible donations under the U.S. tax code.

One of the groups that has been quite active lobbying behind-the-scenes against Senator Chuck Hagel's confirmation as Secretary of Defense is the well-heeled American Jewish Committee (AJC).  In 2010 and 2011, the AJC reported donations and grants of about $40 million annually. Only one donor is listed in the published AJC documentation, but we may assume that many donors to the AJC benefited from tax deductions when filing U.S. tax returns.  

It is striking that the AJC reported less than half a million dollars in lobbying expenses in 2011, yet given the high salaries paid to AJC employees the reported lobbying expenses seem quite low.  For instance, the President of the AJC is David Harris, who earns an annual salary of $500,000.  Harris has been particularly active in organizing opposition to Hagel's appointment.  He was also quite exercised by a NYTimes OPED that chastised groups like the AJC for submitting to the pressure tactics of far-right pro-Israel "zealots" (see M.J. Rosenberg illuminating commentary).  

For the record, it is timely to review the rules of the game for 501(c)(3) charitable organizations, such as the AJC.  Internal Revenue Service rules state the limits on lobbying activities by charitable organizations (which are entitled to accept tax-deductible donations). 

"In general, no organization may qualify for section 501(c)(3) status if a substantial part of its activities is attempting to influence legislation (commonly known as lobbying).  A 501(c)(3) organization may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status.
"Legislation includes action by Congress, any state legislature, any local council, or similar governing body, with respect to acts, bills, resolutions, or similar items (such as legislative confirmation of appointive office [emphasis added]), or by the public in referendum, ballot initiative, constitutional amendment, or similar procedure.  It does not include actions by executive, judicial, or administrative bodies.
"An organization will be regarded as attempting to influence legislation if it contacts, or urges the public to contact, members or employees of a legislative body for the purpose of proposing, supporting, or opposing legislation, or if the organization advocates the adoption or rejection of legislation."

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