CMD Files IRS Whistleblower Complaint Against ALEC for Illegal In-Kind Campaign Contributions Worth More Than $6 Million

The American Legislative Exchange Council (ALEC) is illegally providing its state legislative members with sophisticated voter management and campaign software deeply tied to the Republican Party and worth more than $6 million per election cycle, the Center for Media and Democracy (CMD) charged in a submission to the IRS Whistleblower Office today.

In its whistleblower complaint filed with the Internal Revenue Service (IRS), CMD details ALEC's extensive and ongoing violations of its 501(c)(3) charitable tax-status, which prohibits engaging in any electoral activity, based on information gathered from ALEC's legislative members and other documents obtained through its investigations and open records requests.

The software, dubbed "ALEC CARE" and valued by ALEC at $3,000 per legislator, is owned and operated by VoterGravity, a Republican voter data company conceived and run by Ned Ryun. Ryun, is the founder and president of a right-wing candidate training operation, American Majority, and its voter mobilization affiliate, American Majority Action, which are closely allied with the Tea Party. American Majority Action's latest available IRS filing shows that it owns 84 percent of Voter Gravity, and both list a post office box in Purcellville, Virginia as their address.

"CMD has obtained conclusive evidence that ALEC has been providing sophisticated voter management and campaign software, run by partisan political operatives and linked to the Republican National Committee's voter file, to its legislative members since at least 2016 in continuing violation of its 501(c)(3) status," the complaint states. "By ALEC's own admission, and other evidence provided below, those unreported in-kind campaign contributions to ALEC's 2,000-plus members, almost all of whom are Republicans, have a total value of more than $6 million per election cycle."

CMD and Common Cause are also filing campaign finance complaints with the appropriate oversight agencies in 15 states.

"It is crystal clear from CMD's investigation and internal ALEC sources that the CARE program provided by ALEC is just a repackaging of VoterGravity's highly partisan campaign software, designed to help Republicans win and retain elected office," said Arn Pearson, CMD's executive director. "ALEC CARE is a brazen scheme to help ALEC's overwhelmingly Republican members win reelection."

"ALEC has abused its tax exempt status for a decade or more," said Eric Havian, a prominent whistleblower attorney at Constantine Cannon who filed the IRS claim on CMD's behalf. "I can only hope that we have not become too accustomed to fraud in plain sight, and that the IRS will finally take action to stop taxpayers from subsidizing ALEC's partisan electioneering and lobbying."

Marcus Owens, former Director of the Exempt Organizations Division of the Internal Revenue Service, told CMD, "The fact that ALEC's constituent management program typically costs 'thousands of dollars,' but it is being provided free of charge to selected legislators, would constitute a contribution to the legislator."

"The fact that there may well be sub rosa links between databases created by the management program and organizations engaged in partisan political activity suggests another potential electioneering event," Owens said.

ALEC's disclaimers and transparent repackaging of a powerful campaign tool as "constituent communications" do nothing to reduce its campaign value. The RNC-integrated software comes fully loaded with all campaign data and functions, and data entered by ALEC members get added to the RNC's database, thereby directly benefiting the Republican Party. ALEC's promotional pitch that, "With the opportunities afforded by CARE, our members can be ahead of their colleagues," is just coded language for what VoterGravity says to its users at its demo page: "Ready to win?"

ALEC has abused its non-profit status for many years. Common Cause filed a separate whistleblower submission to the IRS in collaboration with CMD in 2012--and supplemented in 2013, 2015, and 2016--detailing ALEC's extensive underreporting of lobbying activity and activities to promote the private interests of its corporate sponsors, including ExxonMobil, in violation of its 501(c)(3) status.