Wednesday, January 23, 2013

Organizing for Action Already Bending IRS Rules

    As Obama for America, the reelection campaign organization of Barack Obama, morphs into Organizing for Action, many questions arise about the structure of the organization, its relationship to the president, and what his continuing relationship with OFA will be. The questions are not just coming from Republicans and other foes of the president, but as Buzzfeed reported recently, from Democrats as well. At least one of those questions was answered even before the crowd that had gathered to witness Barack Obama's second inauguration dispersed. The following email was sent to members of the BarackObama.com online community on Monday afternoon:

    Assuming that Organizing for Action doesn't just send out emails on anyone's behalf, the president exercised whatever authority he has in the new organization to deliver this message to perhaps millions of Americans. The link in the email is to a sign-up page for the new organization where users may entering an email address, after which the ubiquitous OFA Donations page appears.  And despite the fact that the email above says "paid for by Organizing for Action," the disclaimer at the bottom of the donations page says "Contributions or gifts to Obama Victory Fund 2012 are not tax deductible.
Contributions or gifts to Obama Victory Fund 2012 are not tax deductible. The first $2,500 from a contributor to Obama Victory Fund 2012 will be allocated to Obama for America, designated for general election debt retirement."  Therefore, Organizing for Action is in effect soliciting donations on behalf of the president's reelection campaign.

    This raises another question. Is it appropriate for the President of the United States to be soliciting donations for an organization that, as the Buzzfeed article says, does not have to reveal any of its donors and exists for the express purpose of promoting the president's agenda? Or is it actually the new 501(c)(4) that is soliciting donations on behalf of the president's campaign? The IRS rules for 501(c)(4) organizations state:
The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. However, a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity. However, any expenditure it makes for political activities may be subject to tax under section 527(f). 
    The email from the president represents not just a worrisome symbiosis between a sitting president's administration and a quasi-political tax exempt organization, but also a violation of, if not the letter, at least the spirit of the law prohibiting "direct or indirect participation ... in political campaigns on behalf of ... any candidate for public office," since the solicitation of funds is for the "Obama Victory Fund."

    Organizing for Action has inherited not only Obama for America's initials (OFA), but apparently the iconic Obama "O" symbol, much of OFA's staff, its website (BarackObama.com), its mailing lists and fund raising apparatus. The coming months and years will reveal how the president and this "new" organization will walk fine ethical line, but things appear to be off to a rocky start.

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