Right-wing group’s tax-free status challenged

The Stand

TACOMA (Oct. 30, 2014) — The tax-exempt status of the Freedom Foundation is being challenged by a Tacoma attorney, who accuses the right-wing think tank of conducting attacks exclusively on Democratic politicians, intervening in political campaigns and conducting excessive partisan political activity, including supporting Republican candidates for public office. The complaint includes Public Disclosure Commission reports that show multiple Republican Party groups and candidates are helping fund the Foundation.

“It has become clear that the Foundation is operating far outside the scope of activities permitted a 501(c)(3) organization — and has been for some time,” writes attorney Brooke Johnson in a complaint filed Oct. 24 with the Internal Revenue Service. “The most grievous of these activities is the Foundation’s repeated willingness to engage in sharply partisan activities, which have included intervention in a number of political campaigns… The law clearly demonstrates that the Foundation’s activities are not only inappropriate, but have led to exempt status denials or revocations for similar organizations in the past.”

As a 501(c)(3) charitable organization enjoying exemption from federal taxes, Internal Revenue Service rules say that the Freedom Foundation is “absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office.”

Johnson has been retained by mystic JZ Knight and JZK Inc., owners of Ramtha’s School of Enlightenment (RSE) in Yelm. Knight was first attacked by the Foundation in the 2012 election cycle after she made donations to the Washington State Democratic Party, along with state and local candidates. In a campaign to embarrass Democrats into returning those campaign contributions, the Foundation disseminated excerpts of pirated RSE videos in which Knight channels Ramtha, a 35,000-year-old Lemurian warrior turned spiritual teacher.

“Concerns over the Foundation’s exempt status initially came to my client’s attention after the Foundation violated their intellectual property rights to achieve the goal of requiring Democratic candidates for office — and only Democratic candidates — to return certain campaign contributions,” Johnson writes. “The Foundation has consistently shown an extremely strong conservative bias; and from its emotional attacks ranging from those on unions to Democratic politicians, it is clear that the Foundation is not providing the ‘bipartisan communications’ it promised” in its initial IRS application for 501(c)(3) tax-exempt status.

The IRS complaint notes that the Freedom Foundation has received contributions from the Yakima County Republican Central Committee, Kittitas County Republican Party, Kitsap County Republican Party, Mason County Republicans, Klickitat County Republican Central Committee, Grant County Republican Central Committee, 32nd District Republicans, and dozens of candidates for public office, all of whom are Republicans.

Freedom Foundation officials say their tax-exempt status has faced similar IRS challenges in the past and they have always prevailed. In response to the latest allegations, Freedom Foundation attorney David Dewhirst told the Nisqually Valley News this week that his organization supports no candidates from either political party.

“We never have, we never will,” he said. “We just don’t do that. We’re about ideas and advancing ideas.”

But this year’s hiring of longtime Republican Party operative Tom McCabe as the Foundation’s new CEO has freshly blurred the lines of what’s educational and what’s political. For example, last month McCabe was “advancing ideas” as the headline speaker at a campaign fundraiser for Republican Rep. Matt Shea in Colbert, Wash.

The ideas the Foundation is allowed to advance may include “voter education,” according to IRS rules. However, if those activities “have the effect of favoring a candidate or group of candidates, (it) will constitute prohibited participation or intervention.”

As reported here at The Stand, the Freedom Foundation has openly bragged on its website and in its fundraising emails that its goal is to “defund and discredit the union political machine” and to “take on unions and their political allies” via lawsuits. Attempting to “defund… the union political machine” would certainly have the effect of favoring a candidate or group of candidates — specifically, any candidate(s) opposed by unions — and would therefore be a prohibited activity for a legitimate 501(c)(3) organization.

Since The Stand’s original report in June, the Litigation Attorney job announcement on the Foundation’s website has been edited to replace the phrase “defund and discredit the union political machine” (see the screenshot from June below) with “remove the stranglehold public-sector unions have on our government.” That change suggests that the Freedom Foundation’s attorneys may have realized such political rhetoric runs afoul of IRS regulations.

McCabe has also sent fundraising emails urging recipients to “click here to donate to our effort to defund the union political machine.”

In addition to costly litigation against specific unions, those Foundation efforts to defund unions politically have included advancing cookie-cutter propositions that seek to impose so-called “right-to-work” collective bargaining restrictions on city governments and to open all bargaining sessions to the public. To date, the Freedom Foundation’s propositions have been unanimously rejected as illegal by all four Washington cities that have considered them: Blaine, Chelan, Sequim and Shelton.

The Foundation has filed lawsuits in Sequim and Shelton to try to force the cities to put the propositions to a public vote.

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