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NAACP tax status questioned
By Steve Miller and Jerry Seper

     The National Association for the Advancement of Colored People claims to be nonpartisan, but it uses its millions of dollars to promote the Democrat's agenda.
     Conservative critics question its claim to nonprofit status, arguing that the exemption shelters its $14 million annual budget from being taxed, and note that in the most recent presidential campaign the NAACP, which once derided big money as a corrupting influence, established two independent fund-raising organizations to conduct the kind of political warfare it once denounced.
     The NAACP National Voter Fund and Americans for Equality drew on a combined $10 million to finance get-out-the-vote efforts and issue ads that energized Democratic voters.
     "This is a group that, because of its politics, has become far removed from its constituents," says Phyllis Berry Myers, executive director of the Center for New Black Leadership, which leans Republican. "It survives through teachers unions, labor unions. . . . They allow themselves to be the sole subsidiary of the Democratic Party, and it has done a great disservice to black voters. It makes us politically impotent."


Forbidden endorsements

     The NAACP leaders declined numerous requests for interviews. The organization's communications director, John White, agreed only to respond to questions in writing. "The NAACP takes positions on public policy issues that further its goal of achieving the political, educational, social and economic equality of minority group citizens of the United States," Mr. White wrote, and takes positions "regardless of whether such positions are associated" with either party.
     Mr. White says the NAACP's 500,000 members are drawn from both parties, and the board of directors is bipartisan. Further, "NAACP national and local staffs are strictly forbidden from endorsing candidates for public office."
     Some members dispute this. Shannon Reeves, a Republican and chairman of the Oakland, Calif., chapter of the NAACP, is one of them. "Just because you're a Democrat doesn't make you any blacker than me," he said in a dispute last year. "For decades, black leadership has been compensated for how they deliver black voters to Democratic candidates."
     In Virginia last year, the NAACP's national leadership suspended Paul C. Gillis as president of the association's Suffolk, Va., branch after he endorsed Republican George F. Allen for the U.S. Senate.
     Mr. Gillis was later reinstated after he was told to "serve the larger goals and policies of the NAACP in a manner that will not require us to revisit this issue." The national NAACP, which ran radio ads criticizing Mr. Allen, said Mr. Gillis had engaged in partisan practices that violated NAACP policies.
     NAACP Chairman Julian Bond, a former Democratic member of the Georgia legislature, stoutly defends the NAACP claim of nonpartisanship, but in a speech to the NAACP national convention last year disparaged Republican politicians across the board. He tried to link Senate Majority Leader Trent Lott to the Ku Klux Klan and referred to opponents of affirmative action as "neo-fascists."
     In 1999, Mr. Bond said that "Republicans remade themselves as the white people's party." He, too, declined to be interviewed.
     But the NAACP remains the most vital civil rights organization in the country, said Gary Orfield, co-director of the Civil Rights Project at Harvard. "It is essential to the life of many black communities," Mr. Orfield said. "The basic problem that they face right now is that there is not much sympathy among the white population. But under this current leadership . . . that is the most powerful they have been since the 1960s."


An octopus of activism

     Accusations of partisanship —and in some cases support of the Democratic Party — have never been challenged by the Internal Revenue Service, which has the authority to revoke tax-exempt status if it finds evidence of partisan lobbying.
     "The NAACP has always had a legislative agenda," says David Woodford, who was chief financial officer for the association from 1994 to 1999. "But it did not fit the definition of lobbying as outlined by the IRS. I wouldn't want to comment on anything they do now."
     With 500,000 members nationwide, the NAACP, based in a multistory, red-brick building in the northern suburbs of Baltimore, was established in 1909 under the leadership of W.E.B. DuBois. It receives funds from membership fees and private donations.
     With 75 employees at its Baltimore headquarters, the NAACP maintains a legislative bureau in the District and a network of 2,200 branch offices in 50 states, Japan and Germany, which are divided into seven regions and governed by a national board of directors.
     The NAACP's Legal Defense and Educational Fund, which has been an independent organization since 1957, is based in New York City and declared net assets of $39.2 million on its 1999 tax form. The fund spends much of its resources on civil rights-related lawsuits.
     The association's Special Contribution Fund is a separate trust created in 1964 to collect tax-deductible contributions for the organization. The fund's tax-deductible grants and contributions support a variety of NAACP programs.
     NAACP President Kweisi Mfume, a former Democratic congressman from Baltimore, was unanimously elected by the 64-member board of directors in December 1995. At the time, the NAACP was struggling against revelations of financial mismanagement and accusations of sexual harassment.
     Mr. Mfume promised changes and said the "focus of this new agenda must be increased political power [for minorities] by energizing voters in every congressional district in the country, emphasizing educational excellence and individual responsibility" and achieving "economic parity."
     "The extreme ultraconservative policies of the far right are Draconian and punitive" and hurt the elderly, "restrict the poor and deny opportunities for our children," he said.


Presence in election 2000

     With his appointment, Mr. Mfume entered the nonprofit, tax-exempt world, a maze of alliances, related organizations, fronts and foundations. Directors of one enterprise often serve as directors of another. For example, when the National Voter Fund was established last summer to rally the black vote, it was Mr. Mfume who was named to chair the group's board of directors.
     Tax returns for 1998 reveal that Mr. Mfume received a salary of $238,364, and the top five officers received a total of $410,639 in salary. Overall, the NAACP in 1998 spent $6.3 million for wages and benefits with direct public income of $21.9 million.
     The National Voter Fund and Americans for Equality sought to register and rally black voters around several core issues: racial profiling, affirmative action, hate crimes legislation and prospective Supreme Court nominations.
     The NAACP maintains that these are separate organizations that act independently of the NAACP and the NAACP says it does not provide funding to either the National Voter Fund or Americans for Equality. Targeting states where "black voters may be a deciding bloc," the NAACP authorized expenditures through the two organizations for the get-out-the-vote effort. The result was that Vice President Al Gore won 91.3 percent of the black vote in those targeted states.
     In an internal memorandum, the NAACP said the number of black voters had declined, leaving elections to be determined by "wealthier, better educated and mostly white voters." The memo said elections were decided "as much by who did not vote as by those who actually voted."
     "The NAACP will take steps to prepare its constituency to speak loudly, in a way that politicians will hear."
     The memo noted that while the NAACP's long-standing policies prohibited the endorsement of specific candidates or parties, a review of Internal Revenue Service tax codes showed it could participate in nonpartisan voter activities without jeopardizing its tax-exempt status.
     The NAACP's board of directors initiated the National Voter Fund to carry out large-scale voter registration programs, an extension of the Democratic "motor voter" plan, which automatically registers voters when they renew their driver's licenses. The fund in turn created Americans for Equality as a lobbying arm.
     The National Voter Fund was organized under Section 501(c)4 of the federal tax code, which gives tax protection to organizations whose revenue is used solely for charity, education or recreation. Americans for Equality is called a 527 committee, named for a part of the federal tax code that defines a political organization as one that exists to accept contributions or make expenditures to influence an election at any level.
     Together, the two political arms of the NAACP make a formidable force. NAACP officials said that $7 million in seed money came mostly from an unnamed, single donor.
     While the effort to bring down these "mostly white voters," in Mr. Mfume's words, did not work for Mr. Gore, the NAACP's tight hold on its donor list has been successful.
     Several groups have tried to identify NAACP donors. Except for corporations that make their contributions public, the list of benefactors has been kept from public view. "People have been trying to do this for a long time," says David Almasi, a spokesman for Project 21, a black conservative group. "It has been a big question that arose recently with the Jesse Jackson thing. Where did he get that money to pay off the mother of his [illegitimate] child? That was presumably money that people intended to go towards civil rights."
     Groups that have attempted to identify donors include several Southern heritage organizations, which have clashed with black activists over the display of the Confederate battle flag on public property. "We have tried to get a list, and they don't want you to know where their money is coming from," says John C. Hall Jr., an accountant and member of the Southern Party of Georgia. "But I do know that most of their money is coming from corporations who think they are helping race relations."
     He accuses the NAACP of violating the reporting requirement of the 990 tax return, the form used by nonprofits to report their earnings. "They lobbied in South Carolina to get that flag removed from the statehouse," Mr. Hall says. "They attempted to influence legislation. And they refuse, on their tax return, to disclose how much money they spent doing that. This is to me a flagrant violation of the reporting requirements."
     The NAACP insists it keeps the donor list confidential to protect privacy. The Supreme Court ruled in a 1950s case that forcing disclosure would infringe the NAACP's First Amendment rights.
     Some of the contributors are known, prominently including the Ford Foundation, which has bestowed millions of dollars in grants over the years, and the Bell Atlantic Foundation, which last year gave $500,000 to improve the NAACP's Internet-based communications system. But many others are not.
     Miss Myers, of the Center for New Black Leadership, argues that conservative blacks are often cited for partisanship when the NAACP is not. She cites the experience of the Rev. Herbert Lusk, a black pastor in North Philadelphia who endorsed George W. Bush from his pulpit during the Republican National Convention in July. Mr. Lusk was chastised by the Americans for Separation of Church and State, a watchdog group that sent a letter to the IRS in protest.
     Said Mr. Lusk: "There is definitely a double standard as far as nonprofit status is concerned."