WASHINGTON -- What are the biggest charity abuses in America? The answers coming from witnesses testifying at a Senate hearing last Tuesday pointed to practices by nonprofit, tax-exempt groups that are technically legal but violate the spirit of private charity. Those answers are wrong. The biggest abuse is nonprofits that deliberately and habitually break the law.
The Senate Finance Committee is currently investigating practices of groups that enjoy exemption from taxation under section 501(c)(3) of the IRS Code. In the past few years, more and more news stories have detailed the questionable practices of nonprofits, from huge CEO compensation packages to shady land donations. On the day of the hearing the Washington Post ran a front-page story about big game hunters who take hefty tax deductions by donating their stuffed trophies to a dubious nonprofit museum. Such practices merit scrutiny. But in its pursuit of racketeers and con artists Congress is likely to indulge its unfortunate habit of regulatory overkill. As Heather R. Higgins of the Alliance for Charitable Reform wrote in the Wall Street Journal, the Senate Finance Committee "will consider draft proposals that would inflict broad new reporting and regulatory requirements on every charity operating in the U.S."
The Senate Finance Committee is overlooking a far more serious problem: nonprofits that habitually engage in so-called "civil disobedience." The term is intended to evoke images of nonviolent resistance to racial injustice by historic figures like the Rev. Martin Luther King, Jr. But increasingly it has become a euphemism for the disruptive tactics of radical groups that are trying to intimidate corporations into adopting policies they favor. Indeed, as practiced today, civil disobedience is better understood as illegal conduct that violates the rights of others.
Such behavior is grounds for losing tax-exempt status. The Internal Revenue Service's website states, "A section 501(c)(3) organization... may not have purposes or activities that are illegal or violate fundamental public policy." The IRS doesn't need to have Congress pass new legislation to deal with these nonprofits. All it has to do is enforce existing laws.
THE RAINFOREST ACTION NETWORK and the Ruckus Society are two of the biggest practitioners of so-called civil disobedience. For instance, in its campaign to stop Home Depot from selling lumber from old growth forests, Rainforest Action Network has had disloyal Home Depot employees rig their stores' intercom systems to announce "Old-growth wood for sale on aisle number 3." At one event a Rainforest Action Network activist dressed as a black bear chained himself to the store's rafters and used a bullhorn to assail employees and customers with loud denunciations of store policies. In 1999 Rainforest Action Network proclaimed May 25 a day of "ethical shoplifting"; activists stole lumber from Home Depot stores, which they later handed over to the FBI. The San Francisco Chronicle recently noted that Rainforest Action Network activists wear their arrest records like badges of honor. Rainforest Action Network executive director Michael Brune has been arrested a dozen times for offenses like trespassing and disorderly conduct; the arrest record of Rainforest Action Network founder Randy Hayes reports 18 arrests for similar offenses. Rainforest Action Network is unashamed that its illegal actions violate the rights of Home Depot's employees to make a living and its customers' rights to purchase legal products.
The Ruckus Society is even more brazen. Several times each year it hosts an "Action Camp" where, according to the Society's website, "participants split their time between theoretical and strategic workshops focusing on a wide array of advanced campaign skills and hands-on technical training in tactics for nonviolent actions." Those nonviolent actions include illegal ones. One camp provided "training to perform illegal acts, such as using bicycle locks to join activists into human blockades," according to an article in California's Contra Costa Times. A Baltimore Sun article recounts an exercise in how to handle police arrests. After arrestees are put into a van, the participants are instructed to blockade the van by lying down around it and locking arms.
Ruckus Society director John Sellers claims that much of his group's training is for legal activities protected by the First Amendment, such as "constructing giant props and holding protests." He insists that the training "isn't intrinsically designed to break the law." But after he described various climbing techniques, I asked, "Is this just for climbing trees?" Sellers replied, "It includes urban climbing techniques to hang banners from buildings." "So it is activity that can potentially get you arrested?" I inquired. "Yes," he responded.
Climbing is a common Ruckus Society activity that leads to the arrest of its members. During the 2000 Democratic Convention in Los Angeles, four Ruckus members were arrested for rappelling from the top of hotel near the Staples Center to hang one of their banners. Ruckus activists helped kick off the violent 1999 Seattle riots against the World Trade Organization by hanging a banner from a construction crane, a stunt that led to their arrest. They had help from members of the Rainforest Action Network.
When asked who funds the camp, Sellers told me that it was sometimes sponsored by other nonprofits like the Rainforest Action Network, Greenpeace, and the Robert F. Kennedy Foundation. One philanthropic grantmaker, the left-leaning Larson Legacy, gave money to Ruckus Society for "providing training in the skills of nonviolent civil disobedience." In other words, the Larson Legacy gives tax-exempt money to teach people how to break the law. The Larson Legacy did not return phone calls seeking comment.
When I asked Sellers if he worries that the Ruckus Society could lose its tax-exempt status, he replied, "You could say the same thing about corporations that violate the law all the time. The IRS needs to enforce the law equitably across the board." Yet neither Rainforest Action Network nor the Ruckus Society has ever had the IRS sanction them. Corporations should be so lucky.
It should also be noted that the Rainforest Action Network and the Ruckus Society have received substantial funding from a host of liberal foundations. In 2002 the Ford Foundation gave $290,000 to the Rainforest Action Network. In 2000 the Rockefeller Brothers Fund gave Rainforest Action Network $200,000. Since 2000, the Ben and Jerry's Foundation has given the Ruckus Society about $300,000 and the Tides Foundation has given it about $34,000. Since 1999 Ted Turner's foundation has given $200,000 to Rainforest Action Network and $50,000 to Ruckus. While none of this money was earmarked for "civil disobedience," the groups' reputations were well established at the time.
If the Senate Finance Committee really wants to serve the public interest, it should start looking into how the IRS can enforce the law against nonprofits that break the law. And it should investigate the foundations that give money to nonprofits with a long history of lawlessness.
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