January 7, 2020; Argus Leader (Sioux Falls, SD)
These are not simple times for nonprofits; maybe especially for those that receive funding from government organizations. With political races being run at all levels from dogcatcher to mayor and from state representative to president, the use of taxpayer dollars may be scrutinized in the course and aftermath of political races to be sure there are no political entanglements. As NPQ has pointed out, it is critically important to advocate for the issues to which you are committed, but there are rules that govern what’s permissible and what isn’t when it comes to elections, candidates, and the issues for which they advocate.
It’s in this arena where a dispute arose at the city council level in Sioux Falls, South Dakota. Councilor Theresa Stehly accused the Sioux Falls Development Foundation, a nonprofit and recipient of hundreds of thousands of dollars from the city of Sioux Falls, of crossing the line between remaining nonpartisan and playing into the hands of someone who is running for her elected office. Did they? The issue is complicated.
The Sioux Falls Development Foundation is charged with spotlighting area businesses and entrepreneurs. They did this by contracting with the website SiouxFalls.Business to place a series of articles about these businesses and their leaders. While that sounds all well and good, it turns out that one of those leaders, Matt Paulson, is the campaign treasurer for the person running for Stehly’s seat.
That fact was mentioned in the article, and that one brief mention was all it took. For Stehly, this was tantamount to political activity by a nonprofit organization, specifically the Forward Sioux Falls (FSF) component of the Sioux Falls Development Foundation.
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“Big business would like to have someone else sitting in my seat,” she said. “Business is Forward Sioux Falls in my opinion. That gives the appearance that Forward Sioux Falls is participating in political activity.”
This seemed to split the City Council between Stehly’s supporters and opponents. The CEO of the Development Foundation indicated the articles weren’t meant to support political candidates. Jumping to his defense, some councilors called her accusations inappropriate, stating they amounted to censorship of online speech—one even cited the First Amendment. Not to be outdone, others, including a public watchdog, countered this by saying that as long as the Sioux Falls Development Foundation receives public funds, it should be held to a higher standard around political speech.
Paulson defended himself and his actions related to his involvement in political campaigns. He indicated that the article was about his business skills, not his politics, and called Stehly’s actions an “attack” and “bullying.” Paulson also promised to be more forward in confronting Stehly and others than he had in the past because of this.
There’s a lot to ponder here. Does mentioning someone’s involvement in a political campaign as a part of a nonprofit’s article about that person’s professional work count as a political action? Does it push the limits of nonprofit boundaries? If this were reported to the IRS, would the nonprofit status of the Sioux Falls Development Foundation be at risk? It’s hard to know, and even the Council itself seemed split. Might this be a case of internal, not partisan, politics?
Since Stehly has not declared if she will run again, and no one has asked the IRS to investigate, it may be moot. Then again, it may raise some valuable cautions for nonprofits to consider when going about their “normal” work.—Carole Levine
