According to figures from ALEC’s own IRS filings from 2007 through 2009, made public by CMD, the organization collected more than $21.6 million from corporations (with members including Exxon Mobil, Altria, GlaxoSmithKline and Pfizer), foundations like the Charles G. Koch Charitable Foundation and nonprofits including the NRA, Goldwater Institute and Family Research Council. In all, private-sector contributions account for nearly 98 percent of ALEC’s funding, while the dues paid by member lawmakers, pegged at about $50, came to just more than $250,000, or about 1 percent of its haul during the same time period.
In exchange for these hefty— though tax-deductible donations— ALEC’s private-sector members get to ensure that individual pieces of ALEC legislation, by and large, serve a narrow band of very specific corporate interests: education measures benefit for-profit education firms and harm unions; healthcare measures benefit insurance companies and drug manufacturers; tort reforms benefit corporations in general by limiting their liability to consumers.
More “insidious,” as Graves put it, is ALEC’s drive against voting rights.
“It’s deeply cynical and quite sinister—an outlandish effort by ALEC and others to make it harder for Americans to vote,” she said. “At the end of the day, depending on which analysis you’re looking at… it’s possible that these measures remove maybe 1 percent from the pool of votes that would be part of the election. You still have an election, but you’ve shaved off this percentage; you have the appearance that you have an election.”
Analysis by News21 found that more than half of the 62 strict ID bills introduced in legislatures since 2009 were based on (or copied from) ALEC’s sample voter-ID bill, which was ratified by the group’s membership that same year.
These measures serve no particular business master; rather, they strike at the final weapon the public possesses to stem the tide of corporate-crafted legislation: access to the ballot box.
“The essence of a democracy, and the essence of a representative democracy in the United States, is that we elect people to represent people,” Graves said. “The question is whether our representatives are going to represent us, or if they’re going to represent the interests of global corporations and, in some cases with ALEC, foreign corporations.”
As for why big business would support limiting participation, the equation breaks down pretty simply: Corporations want to bring down barriers to doing business, and Republicans are more than happy to oblige. If Republicans don’t win elections, then corporations don’t see those barriers lifted. The solution: Eliminate the competition. If voting rights get in the way, well, like the notorious mob accountant Otto Berman once said, “Nothing personal. It’s just business.”
“I think it is a little more class-oriented,” said Alexander Keyssar, professor of history and social policy at the Harvard Kennedy School and a frequent speaker and writer on voting-rights issues.
“The core interest in the suppression that’s going on is partisan; it’s not racial,” he said. “If African-Americans voted predominately Republican, or 50/50 Republican, I don’t think their neighborhoods would be targeted for suppressive efforts. I think that it’s a community that now votes 95-percent Democrat, and if you want to knock out Democrat interests, that’s a good place to start.”
Most important, though, is that suppressing voting rights doesn’t hurt the bottom line.
“You can be a customer who votes or a customer who doesn’t vote,” Keyssar said. “It doesn’t cost them [corporate interests] anything.”
With increasing media scrutiny and public outrage, ALEC’s operations—and specifically its voter-ID push— may well hurt both its bottom line and the bottom lines of its corporate members.
In the wake of the Trayvon Martin shooting in Florida earlier this year, nonprofit civil-rights group Color of Change leveled criticism directly at ALEC for crafting the “stand your ground” law and called on its members to urge corporations to drop their support for ALEC. To date, 41 corporate ALEC members have stopped funding the group, including big names like Walmart, Coca-Cola, Kraft, Amazon, Johnson & Johnson and General Motors.
Following exposés by CMD, Common Cause, The Nation magazine and others highlighting ALEC’s involvement with voter-ID laws, the organization shut down its voting and elections task force, “and I don’t think that happened by accident,” said Spaulding of Common Cause. “That happened after a sustained spotlight was put on them.”
Losing corporate members and disbanding task forces is one thing, but ALEC may have an even bigger problem on its hands. Common Cause in April filed a whistleblower complaint with the IRS alleging that ALEC’s lobbying activities make it ineligible for 501c3 status. Based on 4,000 pages of internal ALEC documents—some obtained through public-records requests and others from inside sources— Common Cause maintains that “the evidence shows ALEC has an agenda, that they track where their model bills are introduced, that they send out ‘issue alerts,’ which include updates that go to state legislators where ALEC bills or ALEC-related bills are being introduced, sometimes targeting committees or task force members and including talking points, press releases,” said Nick Surgey, Madison, Wisc.-based general counsel for Common Cause.
“It’s remarkable. Essentially, ALEC says that they do not lobby. They are a 501c3, which means that they’re a charity, and, as a charity, they’re able to do some lobbying, but it’s limited and you have to disclose it,” Surgey said. “We have 990s going back many years for ALEC, and consistently they tell the IRS that nothing they do is lobbying. They put a zero or they don’t check the box that says, ‘Do you do any lobbying, yes or no?’ … They’re clearly trying to influence legislation.”
If the IRS agrees, and ALEC is found to be in breach of the rules, the organization would have to reincorporate as a 501c4 and fully report its activities as lobbying. What’s more, Surgey said, there’s the possibility that if ALEC is found to have improperly reported to the IRS, tax revenue lost when donations were recorded as tax deductible may be recouped from individual donors— an action that Common Cause included in its complaint.
“It’s unlikely that the IRS would go after individual donors, but there’s nothing statutorily to say they cannot do that,” Surgey said. “They’d have to make a judgment that donors should have been aware. … Most of the responsibility is on ALEC, but we also believe the corporations should have been aware that ALEC was doing what they were doing, and that’s lobbying. … We believe that they have some liability.”
The whistleblower complaint is still working its way through the system, and Surgey said that these kinds of cases tend to take “quite awhile.” Still, he and others maintain that keeping pressure on ALEC is important for more reasons than just recouping tax revenue.
“It’s also about making sure that these really important, fundamental debates happen in the open,” Surgey said. “We got into looking at ALEC out of a concern that corporations have too powerful a role in our political system; they have a disproportionate power in the legislatures for a variety of reasons, and ALEC really seems to be the epitome of that.”