December 3, 2013; The Guardian

The Guardian has issued a remarkably interesting piece on the inside deliberations of the American Legislative Exchange Council (ALEC) as the lobbying entity tries to regain its footing after years of defections by corporations and legislators. As we have written, a number of big corporations have shed their affiliations with ALEC in the wake of ALEC’s support for stand-your-ground gun laws and restrictive voter identification laws (here and here and here). ALEC obviously wasn’t going to stand still for this rapid organizational entropy. The Guardian somehow got a look at ALEC’s 50-page August 6th board packet, which outlines the organization’s plans to turn the tide.

The document itself is truly fascinating reading, but the Guardian’s summary hits on the big points:

  • ALEC has launched a new effort called, appropriately, the “Prodigal Son Project,” to get big firms such as Amazon, Coca-Cola, General Electric, Kraft, McDonald’s, and Walmart back into the fold. According to ALEC’s senior director of public affairs, Bill Meierling, the strategy to re-attract prodigal corporate members will be based on “transparency and engagement.”
  • As a result of the loss of more than 60 corporate members (from a peak of 280 corporate members in 2011 to 214 now), ALEC’s funding in the first six months of the year was one-third less than projected. In addition to other departures such as Home Depot and WellPoint, ALEC indicates that it has had a particular problem in retaining corporate financial services members.
  • Almost 400 state legislators have also left ALEC, but despite that, ALEC still counts 1,810 state legislators as members.
  • Although a 501(c)(3), ALEC has created a related 501(c)(4) called the Jeffersonian Project, so that if criticisms of its (c)(3) lobbying start to threaten its tax-exempt status, it can shift lobbying to that entity. In the board materials is a letter from ALEC attorney Alan Dye indicating that some donors are prepared to make big donations, but want their donations to go to a (c)(4), rather than a (c)(3).
  • To gain new corporate members and revenue, ALEC is looking to expand its scope to include issues of gaming, especially online gambling. Meierling says that the board meeting didn’t approve the gambling strategy. Given the politics of some of the players in the casino sector, such as Sheldon Adelson at the Las Vegas Sands, one might suspect that the August board meeting won’t be ALEC’s only consideration of that option.
  • Apparently also not approved by the ALEC board was a draft “loyalty oath” for ALEC state chairs that required them to put the interests of ALEC ahead of all other interests. Since many of the state chairs are state legislators, that obviously would violate the oath of service they made to the electorate upon being sworn in. As a columnist for the Kansas City Star noted, “the very suggestion demonstrates ALEC’s eagerness to control these lawmakers,” important to the two states (Missouri and Kansas) in the Star’s coverage where ALEC counts state legislators as members, including Kansas House Speaker Ray Merrick.

It may appear that ALEC is reeling due to losses of corporations and legislators in its membership, with financial consequences, but it would be wildly premature to prepare its organizational obituary. The board documents reference ALEC’s strategic effort to reposition itself out of the stand-your-ground issue in the wake of the Zimmerman trial, pulling itself out of the issue that alienated a number of corporate players. Its list of “prodigal son” prospects, including Pepsi, Intuit, Mars, Blue Cross Blue Shield, Procter & Gamble, Johnson & Johnson, MillerCoors, CVS Caremark, GlaxoSmithKline, Unilever, ConocoPhilips, and others, indicates a healthy list of potentially ideologically aligned corporations. Add in the list of new potential 2013 donors and members, including Boeing, Capella Education, Microsoft, Pearson Higher Education, White Hat Management, Comcast, the Financial Services Roundtable, the National Association of Manufacturers, and the National Association of Home Builders, and it should be obvious that whatever ALEC’s problems with stumbling into gun rights and voter ID issues, the organization has plenty of potential corporate supporters to draw on based on their support for privatizing education and other government factors, their opposition to government regulation, and their efforts to oppose the Affordable Care Act.

In the offing are more ALEC “model bills” on topics of interest to conservative corporations. For example, the Guardian reports that ALEC in cooperation with corporations and conservative activists is preparing a campaign to penalize homeowners who install their own solar panels. Elements of the ALEC agenda being discussed at its annual policy summit this week are model bills for anti-union right-to-work laws, school privatization, reducing efforts aiming at climate change, and undermining aspects of the coverage of the Affordable Care Act. It is not difficult to see the potential agreement between those issues and many of the corporations on the ALEC prospects list.

The ALEC agenda inadvertently highlights the importance of invigorating IRS oversight functions. ALEC has long claimed to be something other than a lobbying entity, thus insulating its 501(c)(3) public charity status from charges that its model bills are really no more than tools of conservative, largely Republican state legislators. Its creation of an affiliated 501(c)(4), the Jeffersonian Project, affirms the point that we have raised about the proposed IRS regulations. To the extent that 501(c)(4)s operate in networks with 501(c)(3)s and other tax-exempt entities, with the ability to move money and functions among them in order to circumvent government scrutiny, effective regulation and oversight are effectively thwarted, especially for the big entities like ALEC that have the resources to do so.

The Guardian exposé reveals how a large political nonprofit, in trouble because of strategic missteps, thinks about righting its ship in order to continue its core functions. Don’t look for ALEC’s obit just yet.—Rick Cohen