For nearly two decades, Community Solutions Fund (CSF), one of the nation’s 50 or so “social action funds” raising money through workplace fundraising campaigns for progressive, non-United Way nonprofits, had been a part of the charitable payroll deductions made by state government employees in Minnesota. In May of 2004, virtually out of the blue, the state government managers of the charitable giving campaign decided that CSF and its 47 member groups were suddenly ineligible. They had concluded that CSF and its members—groups like Minnesota Senior Federation’s Metro Region, the Minnesota Coalition for Battered Women, Missing Children Minnesota, the Greater Minneapolis Day Care Association, and Jewish Community Action—were advocacy groups, and advocacy didn’t really equate to charity.
Blindsided hardly describes the impact on CSF. How did “advocacy” slip out of the definitions of “nonprofit” and “charity?” Although eventually the state reversed itself—for the moment—on the CSF decision, advocacy organizations should not be so surprised to find critics aiming at their funding as a means of silencing progressive nonprofit voices. Efforts at the federal level to smother nonprofit advocacy and dissent have occurred—and been staved off for the most part—for the last 15 years. Remember Oklahoma Congressman Ernest Istook’s effort in the mid-1990s to ban “political activity” by nonprofits receiving any federal funds? How about the letter from the Department of Health and Human Services in 2003 to Head Start agencies indicating that lobbying constituted illegal political activity? Or Delaware Congressman Michael Castle’s proposed amendment to the reauthorization of the Individuals with Disabilities Education Act, which would have made parent centers ineligible for IDEA funding if they or their board members personally engaged in so-called “federal relations”?
While the Istook Amendment and other federal efforts to gag nonprofit free speech have generally been defeated, opponents of nonprofit public policy advocacy and lobbying have established some footholds in state government policies, like Minnesota’s state employees charitable campaign regulations. These efforts often receive little attention, but potentially impact the fundraising of many nonprofit advocacy groups. In recent years, there have been two types of attacks on the right of activist charities to participate in state government-level, public sector–
employee giving campaigns:
• So-called “paycheck protection” ballot initiatives and legislation
• Efforts to reinterpret or amend public sector charitable campaign guidelines in order to specifically make “activist” and environmental charities ineligible to participate in state employee payroll deduction drives
For the most part, these emanate from politically motivated attacks by right-wing ideologues on the ability of activists, both labor unions and 501(c)(3) advocacy organizations, to raise resources for their work from the personal charitable giving of state government employees—strategies that seek to limit the free speech rights of these groups by attacking their resources. These restrictions occur and get fought out in venues not on the radar screens of most nonprofit leadership organizations, much less the pages of the nonprofit and philanthropic media. If over the long run they succeed, they will serve to chip away at the rights and resources of nonprofit public policy advocacy.
Right-wing ideologue Grover Norquist of Americans for Tax Reform attributes the start of the paycheck protection movement to “three guys in California” who had been pushing an election referendum in favor of school vouchers and lost—in their minds due to the effective mobilization and advocacy of unions like the American Federation of Teachers and the National Education Association. Ticked off at having lost, these “three guys”—with the help of Norquist and other advisors to then House Majority Leader Newt Gingrich—decided to aim at the unions’ money, particularly their ability to use union dues collected through payroll deductions for the unions’ lobbying and political activities.
Paycheck protection started as an anti-union strategy advanced by politically conservative interests to undercut the ability of labor unions to raise money from their members for legitimate political and legislative activity. Paycheck protection measures typically prohibit the use of any state resources (such as the state payroll system) to raise money from employees for any “political” activity, or create onerous reporting and administrative burdens on unions to document that they have received the explicit permission of their members to use their money for legitimate political activity and that they have not commingled political money with other union funds. In these measures, “political” is broadly defined to include a wide range of activities: direct support for candidates, ballot initiatives, issue education, lobbying, and in some cases grassroots lobbying.
While primarily aimed at organized labor, some of these measures have been so broadly written (in order to survive probable court review) that they also could have been applied to other nonprofits that receive money from public sector employees through payroll deduction charitable giving campaigns. The door that slams shut on the free speech rights of labor unions can easily be closed on 501(c)(3) nonprofits as well. Not only might the broad “political” restrictions chill nonprofit advocacy, the administrative rigmarole of certifications and approvals might dissuade public sector workplaces from conducting charitable giving campaigns completely—or discourage nonprofits from participating in campaigns laden with administrative hurdles intended by their conservative sponsors to chase progressive advocates out of public sector workplace solicitations.
In 1997 and 1998, paycheck protection ballot initiatives were defeated in California, Oregon, and Colorado, all prompting the active involvement of nonprofits that read the definitions and language to potentially include nonprofits as well as labor unions in the prohibitions. The unsuccessful paycheck protection initiative in California was notable for the confusing reaction of the United Way of America (UWA). While the UWA officially took no position, the former head of the UWA at that time, now Secretary of Labor Elaine Chao in the Bush Administration, indicated some measure of support for the California paycheck protection effort, causing great consternation among other nonprofits and organized labor, and never fully repudiated by the UWA.
An additional spate of paycheck protection measures popped up in 2000, 2001, and 2002 in the Dakotas, Montana, Oregon, and Utah, all rejected by voters at the polls. However, at least five states, and there may be others, have had paycheck protection laws enacted. In Wyoming, Idaho, Washington, and Michigan, the applicability seems strictly targeted to labor unions. Ohio’s statute is more problematic, stating: “No public employer shall deduct from the wages and salaries of its employees any amounts for the support of any candidate, separate segregated fund, political action committee, legislative campaign fund, political party, or ballot issue.” The inclusion of “ballot issue” can easily be construed as related to the public policy advocacy work of nonprofits, but no one from the right seems to have tried to apply it in this way.
For the moment, paycheck protection as a legislative tool of conservative political interests to clamp down on labor and nonprofit advocacy rights is not receiving much attention, though with Elaine Chao in the cabinet, it’s no surprise that the Bush Administration has occasionally promoted the idea. Paycheck protection was actually part of the Bush/Cheney campaign platform in 2000 and subsequently suggested by Vice President Cheney as the quid pro quo—or poison pill—the Bush Administration might want to get in exchange for the president’s signature on the McCain-Feingold campaign finance legislation. Ultimately, President Bush signed the bill without a paycheck protection provision. Nonetheless, with Federal Elections Commission (FEC) attention to the political activities of “527 organizations” and 501(c)(4) nonprofits, paycheck protection aimed at labor unions and eventually 501(c)(3) organizations could reappear unless state and federal legislators are attentive.
If losing at the polls has stopped right-wing ideologues from restricting the access of advocacy groups to state employee charitable campaigns, the alternative strategy has been through the issuance or reinterpretation of rules or guidelines for how state employee charitable giving campaigns are to be conducted. Conservative politicians in Texas and Minnesota have used government campaign guidelines—usually by executive fiat, sometimes followed by legislation—to eject advocacy and environmental groups from state employee giving campaigns.
The Texas Story
The Texas State Employees Combined Campaign (SECC) was opened for charitable fundraising by diverse nonprofits as a result of legislative action in 1995 during Democratic Governor Anne Richards’ administration. This bipartisan legislation was the product of two years of work by a coalition of local and national workplace fundraising federations, including Earth Share of Texas, Another Way Texas Shares, Community Health Charities of Texas, America’s Charities, Earth Share, and Global Impact.
The legislation and the resulting Texas SECC rules were drafted with the intent of assuring that charities that engage in advocacy, community organizing, social justice, or environmental work could not be barred solely on the basis of their advocacy activities. Use of funds generated by the state campaign for litigation and lobbying was forbidden, but this standard was not interpreted to mean that charities that engaged in litigation lobbying were de facto ineligible for participating in the campaign. Under these rules Earth Share of Texas and Another Way Texas Shares, both federations of progressive advocacy nonprofits, met the local presence and fiscal standards requirements to be eligible in the SECC from 1995 through 2000.
The Texas state employees campaign is managed by a campaign committee comprised of representatives of the Governor, Lt. Governor, Comptroller, Speaker of the House, and President of the Senate, with all but the Senate in Republican hands in 2001. That year, the three members appointed by the Comptroller led the campaign committee to interpret the existing regulations to disallow Earth Share of Texas, a substantial number of Earth Share’s members, and several of Another Way Texas Shares members. Both Earth Share and Another Way Texas Shares, the two major social justice workplace federations, first learned of the committee’s decisions—without any forewarning—in the public meeting where eligibility decisions were announced.
The committee’s attack on Earth Share centered on a provision of the regulations that specified that federations cannot be organized solely for the purpose of taking part in the state campaign. Committee members took information from the Earth Share Web site out of context to allege that it had been formed for that purpose, despite the fact that Earth Share had actually been established before the SECC even existed. Earth Share members were also disallowed based on the provision that prohibits SECC funds from being used for lobbying or litigation. The committee, ignoring legislative intent and committee precedent, chose to interpret this rule to mean that no organization that exceeds a threshold amount of lobbying or litigation, which the committee would not define, should not be a part of the campaign. Another Way Texas Shares was not disallowed itself, but six of its more-activist members were disallowed for the same lobbying rationale applied to the Earth Share members.
On initial appeal, the committee acknowledged that Earth Share was not formed solely to participate in the SECC and could participate, but it disallowed 26 of Earth Share’s 51 members either because they failed in their applications to specify in which counties they provided service, an issue not raised in the original rejections, or because they engaged in some undefined level of lobbying. Another Way’s appeal of its six disallowed members was denied. Earth Share filed an FOIA request to get information from the committee on how it reached its decision, discovering a file of articles from conservative critics of nonprofit advocacy, such as writers for the National Review and the Texas Report, and numerous factual errors and sweeping generalizations about the “plethora of left-wing activist groups” among the Earth Share and Another Way memberships. The committee’s motivations were obvious: the exclusion of advocacy organizations had a distinct overtone of exclusion of specific political viewpoints, that is, “left-wing.”
Both federations took to lobbying Republican legislators with pro-environment track records. The result was a quiet agreement between the state and the two federations, not to rescind the new SECC rules interpretations, but to have Earth Share and Another Way Texas Shares submit appeals for each rejected member organization, which the committee would approve without comment.
In 2002 and 2003, the battleground for this issue shifted to the state legislature. In the final hours of the 2002 legislative session, someone, apparently a junior staff person for the Senate Leadership, added language to an omnibus budget bill that amended the SECC standards to accomplish legislatively what the Comptroller’s people had tried to accomplish through administrative rules. The bill passed both houses without anyone noticing the language was included. Again, neither of the progressive workplace fundraising federations knew about the amendment until after the bills were passed. Efforts to get the Governor, a conservative Republican, to line item veto the language were futile, and the bill was signed in June 2003.
The key changes in the SECC rules were a disaster for advocacy organizations, explicitly limiting participation in the state campaign to direct service providers, excluding any nonprofit engaged in advocacy through litigation, and eliminating participation of international charities.
As in 2001, Earth Share and Another Way, joined by other federations such as Global Impact affected by the broadened exclusions, used contacts in the state legislature to determine what could be done to overturn the new rules. Probably everyone remembers the Texas legislative standoff over Congressional redistricting prompted by U.S. Congressman Tom DeLay, resulting in the departure of Democrats for other states. When the legislature finally came back to Austin for the third and final special session in 2003, Earth Share took the lead in getting corrective language attached to the Congressional redistricting bill, passed and signed by the Governor in October.
The story wasn’t over, however. The corrective language that Republican leaders were willing to insert did not overturn the new restrictions, but simply “grandfathered” in federations and charities that had participated under the old rules. New applicants will have to meet the new restrictive standards, which basically limit the SECC to human service providers. Earth Share’s and Another Way’s members were saved, but the legislation reaffirmed the dangerous principle that advocacy somehow ranks lower than direct service as a legitimate nonprofit function for charitable donations.
The Minnesota Story
The State of Minnesota has had an open charitable campaign for state employees since 1982. The Community Solutions Fund (CSF), formerly the Cooperating Fund Drive, filed a lawsuit in 1981 to force the state to open up and then helped draft the legislation covering public sector workplace solicitations, with the clear intent that advocacy and social justice charities would be eligible just like health and human service providers. In 1993, the United Way tried to line up DFL (Democratic-Farmer-Labor Party) leaders in the state assembly to turn over campaign management to the United Way, with a likely human service delivery cast, but that was defeated. In 1995, the legislature did pass a bill requiring a “local presence,” effectively eliminating national and international charities from the state employees campaign, but the eligibility of advocacy organizations remained intact.
As in Texas, the effort to toss out advocacy groups was proceeded by a shift in state politics. In November 2002 a conservative Republican won the Governor’s office and State Assembly was taken over by the GOP. Again, as in Texas, the attack on advocacy groups came as a surprise to the local federations, initiated by the newly appointed Commissioner of the Department of Employee Relations (DER), whose office oversees the state campaign. The Commissioner, a Republican well known for his conservative political views, concluded that CSF did not fit the campaign criteria that “(e)ach recipient institution devotes substantially all of its activities directly to providing health, welfare, social, or other human services to individuals.”
Given only 10 days to appeal, CSF and its members, basically social action-organizing and advocacy nonprofits, were the only ones targeted. The Commissioner did not kick out others such as the Minnesota Environmental Fund and an arts fund, both of which have many members that should not be eligible under the proposed interpretation of the rules. DER staff responded to inquiries that CSF members “do not provide services, but instead … provide advocacy and therefore do not fit the criteria to be in the campaign.” Despite CSF’s 15 previous years in the campaign, the new Commissioner was changing the rules of the game. The impact on CSF would not be exclusively at the state level; eligibility for many county and municipal public employee charitable giving campaigns in Minnesota is predicated on eligibility for the state campaign.
Like its Texas counterparts, CSF took to lobbying, garnering the strong support of the Minnesota Council of Nonprofits (MCN), aware of the potentially chilling impact the state’s interpretation would have on nonprofit advocacy and free speech. However, other workplace funds and federations generally chose not to support CSF, with the exception of the Minnesota Environmental Fund, potentially because their activism in support of CSF might make them new targets to be excluded from the campaign. That’s the very definition of a “chill.”
CSF’s and MCN’s concerted lobbying efforts got the DER to reverse its position. CSF was able to recruit one of the senators who had worked on the original language establishing the state employees campaign in the early 1980s to clarify for the Department the legislative intent that participation was not meant to be limited to organizations devoting “substantially all of (their) activities directly to providing health, welfare, social, or other human services to individuals” as the Commissioner purportedly believed or advocated.
As in Texas, the story wasn’t yet over. In 2004, CSF and all of its members were again singled out for exclusion during the annual application process. The DER letter detailing the rejection went into greater detail than its 2003 rationale, but the reasoning was still the same: that CSF and a significant number of its affiliated agencies had as their stated purposes their functions as advocacy organizations. The Commissioner concluded that this failed to meet the state campaign requirement that eligible charities must provide “services to individuals,” and that the “statute demands that each agency devote all of its activities to” that purpose.
Again, with MCN’s effective assistance, CSF lobbied, this time with more support from other local federations, and with attention to reaching the public and using the media. Unlike 2003, CSF filed a formal appeal of the decision, and made it publicly known that it would file a lawsuit should the appeal be rejected. As in 2003, the Commissioner was forced to pull back. In addition to the media attention and pressure from various nonprofit and government leaders, a key issue was that the state singled out CSF, with the obvious interpretation that the content of CSF members’ advocacy, not simply their advocacy per se, motivated the Commissioner to reinterpret the state campaign rules yet again.
As in Texas, Minnesota may have backed off the exclusion of the progressive advocacy groups from the employee giving campaign, but not its interpretation of the regulations. The Commissioner’s communications with CSF suggested that he could accept the advocacy of the health and environmental charities, because their work somehow benefits individuals, but advocacy on nonviolence or community organizing didn’t. The leadership of CSF is pretty clear that this isn’t the last time they or other advocacy-oriented nonprofits in Minnesota are likely to encounter an effort to exclude them from the state employees charitable campaign.
Not necessarily intended as partisan efforts to limit the ability of advocacy and social justice groups to fundraise or exercise their rights of free speech, but having a similar effect, are other rules and regulations that have been written for many public sector charitable giving campaigns. The most common limitation requires provision of services in the state or community in which the money is raised. Others specify that a specific percentage of the money raised must be spent on services locally. This natural desire by officials to “keep the money local” can be a significant barrier for national charities, either in fact or in terms of documenting the local service provision.
There is also a substantial number of states that limit their campaigns to direct health and human service providers, sometimes specifically to the United Way only, not necessarily with the political animus displayed in Texas and Minnesota, but simply a preference for direct service (see chart). Nonetheless, these standards clearly limit the ability of advocacy and environmental charities to participate in state employee charitable campaigns.
Trends in State Employee Charitable Campaigns
For many large organizations, the charitable giving that occurs in public sector workplaces looks insignificant, even when it occurs in federal workplaces through the Combined Federal Campaign (see box). But for the many state and local nonprofits that don’t have the wherewithal to compete for national dollars or big foundation grants, the upwards of $80 million that donors give in charitable contributions in state employee campaigns means a lot and frequently leverages other funding in local government and corporate workplace giving campaigns.
There may be a more general trend in state employee charitable campaigns, not necessarily motivated by politically conservative ideologues, that will add to the paycheck protection and Minnesota-type campaign rules with the effort of excluding advocacy, social justice, and environmental groups. Some states, such as North Carolina, have increased the documentation that participating charities must provide to demonstrate eligibility. Other states such as Arizona and Florida are using stricter fiscal standards regarding fundraising, administrative expenses, or minimum fundraising thresholds to limit workplace campaign participation. These requirements or standards sometimes prove particularly difficult for smaller advocacy or social justice groups to meet.
While there does not appear to be a coordinated strategy afoot to eliminate advocacy and environmental charities from public sector workplace giving campaigns, we suspect that there are two significant factors to be aware of:
Opportunism on the right. In states where politically conservative ideologues are in positions of power, particularly recently acquired power, these political and government leaders appear eager and willing to come up with statutes and regulations to defund and silence their perceived and actual critics in the nonprofit advocacy community. The repeated paycheck protection ballot initiatives in Oregon and the targeted use of reinterpreted state campaign regulations in Minnesota and Texas point to strategies aimed at taking progressive public policy advocacy out of an important venue of charitable giving.
Using charity to pay for government services. The effort to restrict participation to human service delivery organizations or to restrict participation to local rather than national or international charities appears to be part of a legislative and bureaucratic effort of legislators and administrators to maximize charitable revenue for human services that are being cut from state government budgets. Although seemingly focused on helping people, the result is underscoring charity’s role in responding to people in need, potentially as a substitute for, rather than a supplement to governmental programs and expenditures.
Because these incidents have occurred “below the radar screen” and challenge some of the basic tenets of progressive government and social justice philanthropy, these issues merit additional research and the attention of state legislators from around the nation.
For nonprofit advocacy organizations, the watchword is vigilance. Many activists do not remember the Istook Amendment battles of the 1990s that roiled the nonprofit sector, much less the efforts of the Reagan Administration in the early 1980s to modify OMB Circular A-122 to radically limit the amount of lobbying that could be done by nonprofits receiving federal funds. The Minnesota and Texas state campaign restrictions, like the attempts to restrict advocacy in the IDEA and Head Start programs, demonstrate that the right-wing appetite for suppressing nonprofit free speech is still alive and well, just functioning in multiple and new arenas.
In an era of the Patriot Act and anti-terrorism Executive Orders, nonprofits should not be caught sleepwalking through their fundraising while their advocacy and free speech rights get chipped away. Sacrificing nonprofit free speech rights for continued access to state government charitable payroll deductions may maintain funding for some nonprofits in the short run. But over the long term, the success of adversaries in restricting 501(c)(3) advocacy and lobbying will lead to an ineffectual and debilitated nonprofit sector.
About the Authors
Rick Cohen is the executive director of the National Committee for Responsive Philanthropy (www.ncrp.org). Kevin Ronnie is NCRP’s field director.
Box: The ACLU and the Combined Federal Campaign
by Rick Cohen
Dwarfing the state employee charitable giving campaigns is the federal version—the Combined Federal Campaign (CFC). In the late 1940s and early 1950s, charitable solicitation in federal workplaces was a kind of “uncontrolled free-for-all,” according to the U.S. Office of Personnel Management, with problems such as supervisor- or agency-established quotas for giving or sometimes no charitable solicitation or giving whatsoever.1 When President Eisenhower established the first rules for federal workplace solicitations in 1958, the permitted agencies were service-providers—the predecessors of the United Way, the Community Health Charities, international service agencies, and the Red Cross.
Under President Johnson, the various approved charitable campaigns in federal workplaces were tested as “combined” campaigns, and in 1971 President Nixon established the CFC as the uniform method for charitable solicitations in the federal workplace.
An organization like the American Civil Liberties Union (ACLU), for example, would not have been included in the early CFCs, as participation was restricted to human service, health, and social welfare charities engaged in direct service, excluding advocacy organizations such as legal defense funds. Litigation in the early 1980s such as Natural Resources Defense Council v. Campbell found that the definition of health and welfare charity was too vague. Cornelius v. NAACP Legal Defense and Education Fund2 challenged whether the CFC could establish eligibility requirements on the participation of advocacy groups when the real intent was to conceal a bias against the specific viewpoints expressed by the advocacy groups themselves.
President Reagan entered the fray in the early 80s, issuing executive orders to restrict CFC participation to health and human service groups.3 However, Congress intervened in 1987 under the impetus of Maryland Congressman Steny Hoyer to undo this anti-advocacy restriction and permit the legal defense funds and other nontraditional charities in the CFC. Efforts by the Republican Congress of the mid-1990s to undo the CFC’s openness, led by Florida Republican John Mica,4 didn’t make it to legislation, as the conservatives realized that their attempt to eliminate groups in favor of reproductive rights from the CFC would also have ejected the right-to-life advocates.
Thus, the Combined Charitable Campaign allowed for organizations like the ACLU; other legal defense and litigation advocacy groups; and dozens of social action fun