March 12, 2010
Lessons from the Coffee Party
Desperate to glamorize any cause that's contrapuntal to the hugely popular Tea Party Movement, the mainstream media have made much noise for the Coffee Party. But for the free publicity given by its allies in the media, the Coffee Party is pure boredom. Its statist mission combined with its slogan, "Wake Up and Stand Up," puts all but the most dedicated progressives to sleep.
Some conservative bloggers have wondered whether the Coffee Party is Astroturf. Regardless of how one defines Astroturf, I personally don't care. Activists should be free to start causes. It's the message that matters, and the Coffee Party's is empty, bordering on nonexistent. (Sound familiar?)
The organizations that I have problems with are those financed by politicians using taxpayer money. Private funding of causes, regardless of the native sources, is quite American. Some of the best causes have been started with that combination of activists financed with private money. Let the marketplace of ideas blossom, I say.
I've recorded a training class on the legalities of how activist and Tea Party entities may be formed and financed. The Coffee Party is a good example of how the left does it. The left, which often thinks of itself as a partner with government, is far more advanced in these matters than conservatives because they have an array of networks for those purposes.
The Coffee Party website says its 501(c)(4) tax-exempt status is pending with the IRS, which must approve some, but not all, tax-exempt activist entities. Any 501(c)(4) may engage in lobbying, so contributions to them are not deductible. The contribution landing page for the Coffee Party says that it partners with Democracyinaction.org, a 501(c)(3) organization, meaning contributions to the latter are tax-deductible.
The About Page for Democracyinaction.org states that it gets funding from Open Society Institute, George Soros's organization. Because contributions to 501(c)(3)s are tax-deductible, those funds may not be transferred to 501(c)(4)s, which are allowed to lobby.
Democracyinaction.org offers professional services the same or similar to what many for-profit companies provide and is described at Guidestar.com as follows:
DemocracyInAction is a nonprofit dedicated to leveraging the unique power of online communications for invigorating those committed to ecology, social justice and human rights. To a broad swath of these social change leaders, we provide cutting-edge e-advocacy tools for pennies on the dollar relative to the fees demanded by the private sector. In a word, we democratize e-activism, freeing practitioners to pour resources into mission and strategy.
The most recent tax return for Democracyinaction.org (its IRS Form 990) shows it gets far less in grants than it earns in program service revenue, which I believe are fees it charges to its progressive clients.
Democracyinaction.org is affiliated with for-profits Salsa Enterprise and Wired for Change. Wired for Change lists its "political organization" clients to include the Democratic Senatorial Campaign Committee, the Democratic Congressional Campaign Committee, and ACORN (and we thought ACORN wasn't a political organization). Its candidate clients include Chuck Schumer and Jerry Brown.
In other words, these organizations are consultants playing in the big leagues. Democracyinaction.org lists its address as 1700 Connecticut Ave, Washington, D.C., which is a high-rent district. That, however, does not convince me that the Coffee Party is Astroturf.
What strikes me about Democracyinaction.org and its affiliation with for-profit consultants is that 501(c)(3)s are not only supposed to be engaging in a tax-exempt mission, but are also not supposed to use tax-deductible funds for lobbying or political purposes. Democracyinaction.org is tax-exempt, while its affiliates are for-profit. That doesn't bother me, since I happen to believe that the First Amendment trumps the tax code. The IRS, however, does not typically withhold actions based on that same belief.
None of the entanglements I've described convince me the Coffee Party is Astroturf, but all of them merely demonstrate how the left has a vast network already in place to enable the formation and financing of tens of thousands of start-up causes. It merely means that Coffee Party's founders knew the progressive network and knew to rely on skilled consultants. I could be wrong.
Many conservative start-up causes encounter some difficulty in establishing tax-exempt organizations. It may cost $2,500 to $5,000 and up to get a favorable determination from the IRS (527s and political action committees, which are also tax-exempt, do not need such approval).
The bigger problem, however, may be in the financing of start-ups. To finance a start-up grassroots cause requires seed money. But before soliciting contributions, start-ups must first register with most states under what are called charitable solicitation laws.
It's impossible at this stage to tell whether the Coffee Party was financed by one or more benefactors, but it does solicit contributions through its website. Under what are called the Charleston Principles, even fundraising via the internet requires licensing to solicit contributions. This chicken-and-egg regulatory scheme requires start-ups to pay licensing fees and related costs before they solicit contributions so that they may solicit contributions. It's a prior restraint on grassroots activism, and many a good cause have never gotten off the ground as a result.
Conservative, Tea Party, and other small-government causes need not duplicate how the left has created these networks for start-up activist causes, but the model is there. If progressive 501(c)(3)s may provide professional consulting services to 501(c)(4)s, perhaps at discounted rates, then conservatives should at least entertain the idea of creating their own.
Besides the mainstream media's obsession with trying to take down small-government activists, there are legal barriers created by big-government politicians who want to silence dissent. Sadly, start-up causes may never get off the ground by relying on just passion and patriotism.