Legal Question Surrounds Calif. Nonprofit Tied to Politician

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August 9, 2012; Source: Los Angeles Times

As a 501(c)(4), the California Reform Institute is not allowed to devote more than half of its programming to electoral politics, but its strategic plan, never meant to be seen publicly, reportedly details an agenda that focuses largely on getting one potential candidate elected. A purportedly moderate Republican office-holder, State Sen. Sam Blakeslee of San Luis Obispo, Calif. announced he was giving up politics—or at least his own career in electoral politics—to run the California Reform Institute, a nonprofit that would “promote common-sense solutions to big policy problems vexing Sacramento.” The Institute, a 501(c)(4), is largely funded by one man, Charles Munger, Jr. The LA Times calls Munger “a wealthy California GOP activist who has been working to push the party in a more moderate direction,” but it doesn’t mention another important part of his identity.

Munger, Jr. is one of two very politically motivated children of the eight sired by Munger, Sr., the partner of one Warren Buffett at Berkshire Hathaway. Molly Munger is well known to progressive activists as the board president of the Advancement Project, one of the nation’s top civil rights litigation groups. Her brother, Charles Munger, Jr., has a somewhat different political temperament, leaning toward the right of the political spectrum. While certainly not aligned with the far right, some might take Munger, Jr.’s proposal to stop unions from spending union dues on political campaigns—with no comparable restriction on corporate political contributions—as somewhat less than moderate.

Regardless of his specific proposals, Munger seems to have been a pretty straightforward player, but the LA Times reports something that appears less than straightforward about the Munger-financed California Reform Institute. Reportedly, a year before Blakeslee resigned to join the Institute, the organization developed a strategic plan that laid out a specific agenda of making “Blakeslee a politically viable candidate for Republican statewide office in 2014.” The office? Governor of the State of California. The strategic plan laid out the blueprint for boosting Blakeslee’s future gubernatorial run, even describing how the state senator could “spend his final months in the Legislature grabbing the media spotlight with bills intended to provoke Democrats.”

Slight problem here. Even for a (c)(4) social welfare organization, it’s illegal for a nonprofit to work full-time on getting a particular candidate elected. Mightn’t the former minority leader of the state Senate have had some idea that a social welfare organization functioning to elevate him to the governor’s office isn’t anyone’s idea of social welfare? Perhaps—Blakeslee has said that the plan, which was never meant to be made public, was just “blue-sky thinking” which he and the Institute didn’t pursue.

Munger, Jr. started the California Reform Institute with an initial donation of $750,000. Perhaps someone should ask Munger about the “blue-sky thinking,” even if the plan wasn’t accepted for implementation. We imagine that Charles Sr. and his buddy Warren Buffett would never have plunged into a 501(c)(4) without considering legal questions.—Rick Cohen

CORRECTION: An earlier version of this article stated that it’s illegal for a 501(c)(4) to work on getting a particular candidate elected. The article should have noted that it’s illegal for a 501(c)(4) to devote more than half of its programming to electoral politics. NPQ regrets the error.