16th Oct 2012 at 16:58 | By Aaron Gardner
Breaking: New Era Colorado May Have Violated Tax Exempt Status
In what appears to be a violation of its tax exempt status as an organization governed under section 501(c)3 of the IRS code, New Era Colorado dropped campaign literature advocating the election of specific candidates. The “Voting Guide” provided by New Era Colorado lists Democratic candidates in state and federal elections who have received the “thumbs up” from New Era Colorado.
According to 26 USC § 501 of the IRS code, a (c)3 organization may not “participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.” As seen in the campaign literature obtained by Media Trackers, New Era Colorado has engaged in explicitly endorsing not only democratic candidates in state races, but also President Obama.
While organizations created under section 501(c)3 are prohibited from advocating directly for candidates, those created under section 501(c)4 may. The October 6 cached version of the New Era website states, “We also are affiliated with New Era Colorado, a 501(c)4 nonprofit organization.” Publicly available documents show a (c)4 being created for New Era Colorado on October 10 2012, just five days ago and four days after being on the New Era website.
Images of the voter guide do not make it clear whether they were produced by New Era Colorado’s (c)3 organization or New Era Colorado’s (c)4 organization.
Legal sources familiar with the laws pertaining to tax exempt organizations question the source of the voter guide and, in turn, the legality. “New Era Colorado Foundation, given the quickness with which it turned over its (c)4 probably has to worry. Did the (c)4 use its own resources or those of the (c)3?”, said Media Trackers’ legal source speaking on background. “Given the five day turn around, the organization is probably going to have a lot of paperwork it needs to show to make sure there was a real firewall between the organizations, something not easily done in that short time span.”
The organizational documents for New Era Colorado’s (c)4 arm were filed on October 10, 2012 according to TRACER, the Colorado Sect. of State’s campaign finance database. In New Era Colorado’s October 15 report of contributions and expenditures, there are no expenditures listed, making it highly likely the voter guides were produced and provided to voters using funds from New Era Colorado’s (c)3 organization.
The voter guide from New Era Colorado explains that candidates receive endorsement based on the 6 E’s: Education, Environment, Equal Rights, Economic Strength, Election Access, and “‘ealth Care.” The guide assures voters that they aren’t some “sketchy super pac” and directs them to NewEraVoterGuide.org for more information. When Media Trackers followed the link presented in the voter guide, the site appeared to exist in name only.
According to 2010 IRS filings, the latest filings available, New Era Colorado’s (c)3 organization received over $300,000 in donations in order to advocate for liberal policies in the state. New Era Colorado’s (c)4 was registered by Julie Wells, the registered agent of choice for liberal groups in Colorado.
On the front page of the New Era Colorado website, Paul Harstad, a pollster for President Obama, Sen. Udall, and Sen. Bennet, praised the work of New Era Colorado saying, ““New Era Colorado is one of the most exciting, innovative, and meaningful efforts in Colorado politics today. They give me faith in Colorado’s next generation of leaders.”
New Era Colorado Foundation is part of the liberal C3 Roundtable and has received a $25,000 grant from the Gill Foundation in 2012 as well as a $20,000 grant in 2011. Leslie Herod, who is listed on the New Era Colorado Foundation’s site as a board member, is also the program officer for the Gill Foundation.
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Discussion | 9 Comments
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Cathy Gardino said
Oct 17, 2012 at 9:00 AM
Democrats…cheat early…cheat often….
Way said
Oct 17, 2012 at 8:43 PM
Breaking: this seems like a bit of a hit-job.
If you’re interested in facts, or law, there doesn’t seem to be much of a story here. If you’re interested in traffic, I guess that’s working, but there’s better ways to earn your viewers.
It’s an org (two orgs, one a c3 and one a c4) working to get young people involved in the political process. It’s bipartisan, though of course young people generally care for our environment as well as jobs, and equal civil rights as well as the economy.
Seriously, this is the kind of org(s) that you should embrace and get involved with, instead of attacking—this is the next generation, and they’re here.
Aaron Gardner said
Oct 18, 2012 at 10:00 AM
Actually, you are wrong. This campaign lit drop violated the law, stay tuned and I will show you how. Also, activists involved with this group in Boulder brag about Marx and wanting to end Capitalism on FB.
COelectionLawyer said
Oct 17, 2012 at 10:42 AM
I am an election lawyer practicing in Colorado and who represents Republicans and right-leaning organizations, and unfortunately even I have to say there is less here than meets the eye. New Era Colorado (the 501(c)(4)) was incorporated and registered with the secretary of state as a Domestic Nonprofit Corporation in 2006. The organizational documents from 2006 indicate that it was to be a 501(c)(4). What registered on 10/10 was a political committee. Notably, the political committee is NOT New Era Colorado, the official name of the 501(c)(4), but New Era Colorado Political Committee, indicating a separate entity. This is likely intended to be a separate fund into which New Era Colorado Members may contribute and which in turn will contribute directly to candidates.
Importantly, under current SOS rules, an organization, including a 501(c)(4), may engage in political activities without registering as a political committee unless and until political activities become it’s major purpose (either a majority of spending, or listed as an organizational purposes in organizational documents). The registration of a separate political committee does not necessarily indicate that New Era Colorado has passed that threshold, but only that it wishes to allow members to contribute to a fund that will directly contribute to candidates. As noted, a 501(c)(4) may under IRS guideline engage in limited political activity without jeopardizing it’s status, and it’s not at all clear that it has done so.
I wish there were more, but sadly, there is not enough evidence here to suggest that it has violated either its exempt status requirements or CO campaign finance law. Any complaints based on this will likely get thrown out on a motion to dismiss.
Aaron Gardner said
Oct 17, 2012 at 11:42 AM
Sorry, this is slightly incorrect. The 501(c)(4) that was created in 2006 was dissolved in 2011. New Era Colorado is registered as a 501(c)(3). New Era created a new 501(c)(4) on October 10th of this year. The fact remains that the newly created (c)(4) would be the only New Era organization which would be allowed to specifically endorse candidates, and their contribution and expenditure report shows nothing being spent.
New Era Colorado will need to show that it put the proper firewalls in place to separate the (c)(3) and (c)(4) entities. The limited time between the creation of the new (c)(4) and the campaign lit drop suggests that those firewalls were not in place and the funding for, and production of, this lit drop likely came from the (c)(3) side.
sutherncon said
Oct 17, 2012 at 11:36 AM
So what else is new. With the examples provided by the top, they think they can get by with anything — and they probably will.
COelectionLawyer said
Oct 17, 2012 at 11:49 AM
No, New Era Colorado was not dissolved (look at business registration ID 20061338719), although an affiliated New Era Colorado Political Committee was dissolved in 2011, but that is business registration ID 20061343928). They are separate entities.
So what registered as political committee on 10/10 is an unincorporated association acting as a political committee, which is perfectly kosher.
COelectionLawyer said
Oct 17, 2012 at 11:51 AM
Or more likely, what registered as a political committee is a separate political fund. This is not an uncommon practice in Colorado.
COelectionLawyer said
Oct 17, 2012 at 12:17 PM
One last point, and I’ll shut up: It is not necessarily clear that no violation has occurred, and certainly if New Era Foundation (c3) funds paid for the endorsement of candidates there could be a serious problem. My only point is that it appeared they had a c4 arm in existence since 2006. There may still be additional avenues for investigation.