ALEC Must Square its "No Lobbying" Claim with its President's Recent Remark

WASHINGTON - Common Cause is calling on the American Legislative Exchange Council (ALEC) to square longstanding claims that it does not lobby with its president’s apparent admission last week that it does just that.

“Through President David Frizzell, ALEC is now acknowledging the obvious – that the organization has long engaged in profit-driven lobbying while claiming to operate as a charity,” said Common Cause President Bob Edgar. “It’s curious that a group that touts its devotion to private enterprise expects the public to subsidize its lobbying with a tax exemption.”

In an interview with Advertising Age magazine, Frizzell last week criticized a tax “whistleblower” complaint filed against ALEC in April by Common Cause. The ALEC leader appeared to back away from years of tax filings – submitted under oath – asserting that ALEC does not lobby; instead Frizzell said the group operates under a section of tax law, 501(h), that he claimed would permit it to spend up to $1 million annually on lobbying.

“Mr. Frizzell has some explaining to do to the IRS,” Edgar said. “For years, ALEC has tried to justify its tax exemption by arguing that it does not lobby; now it claims an exemption under a section of the law that permits it to lobby but which it spurned as recently as 2010.”

Common Cause is asking ALEC to “set the record straight” on its tax claims. An attorney for Common Cause, Eric R. Havian of the San Francisco-based firm Phillips & Cohen, sent a letter Tuesday to Ron Scheberle, ALEC’s executive director, noting that “on its Form 990 for 2010, ALEC checked the box ‘No’ to the question: ‘Did the organization engage in lobbying activities or have a section 501(h) election in effect during that tax year.’”

Havian also asked ALEC to resolve an apparent conflict between its reported income and Frizzell’s claim that as a Section 501(h) organization it would be entitled to spend up to $1 million annually on lobbying.

The letter notes that ALEC reported income of around $6 million in 2010, a figure that would put a $450,000 cap on its lobbying expenditures. To legally spend up to $1 million into lobbying under 501(h), ALEC would need to have receipts of about $17 million, far more than the total it reported – also under oath – to the IRS.

ALEC is the force behind hundreds of bills, including “Stand Your Ground” gun laws modeled after the Florida law at issue in the tragic death of Trayvon Martin, introduced in state legislatures across the country. Many of its bills are drafted by corporate lobbyists and then endorsed as “model” legislation by ALEC task forces in which corporate representatives and elected officials vote as equals.

The Common Cause letter came as Johnson & Johnson announced that it is joining a growing list of companies that have decided to end their affiliation with ALEC. The health care giant had been one of ALEC’s most prominent members, serving on its corporate board.

“Johnson & Johnson joins Coca-Cola, PepsiCo., Yum Brands, Walmart, and more than a dozen other major companies that have cut ties with ALEC,” Edgar said. “Thanks to the efforts of Common Cause and groups including the Center for Media and Democracy, Color of Change and People for the American Way, more executives are concluding that their involvement in ALEC runs counter to the interests of their shareholders.”