FOR IMMEDIATE RELEASE

CONTACT:
Jay Stewart, Executive Director (312) 427-8330
Dan Sprehe, Chief Investigator (312) 427-8330

BGA Investigation Finds Questionable Campaign Contributions by Non-profits

Churches and other groups could compromise tax-exmpt status

A lengthy investigation by the Better Government Association (“BGA”) has uncovered what appear to be more than 400 illegal campaign contributions collected by politicians and campaign committees over the past five years. Records from the Illinois Elections Board, the Illinois Secretary of State’s Office, and the United States Internal Revenue Service show that candidates and committees from all over the state have taken contributions from charitable organizations that are tax exempt under IRS Code 501(c)(3).

Although some types of non-profits are allowed to make campaign contributions, federal tax laws clearly prohibit 501(c)(3) non-profits from contributing money to campaign committees or endorsing a particular candidate in any way.

A rudimentary search of state and federal databases turned up approximately 420 questionable campaign contributions since 1999. By in large, the vast majority of organizations were listed as 501(c)(3) tax-exempt organizations by the IRS or considered ‘non-profit’ by the State of Illinois.

The BGA investigation was conducted using basic search terms in the State of Illinois’ database of campaign contributions. Words that often appear in the names of tax-exempt organizations such as “foundation,” “alliance,” and “church” were entered, turning up large numbers of contributions. Each finding was then crosschecked with other databases to confirm whether the organization was considered either a 501(c)(3) tax-exempt organization by the IRS or non-profit by the state.

Contributions were taken by Republicans, Democrats, and Independents in virtually all parts of the state. Donations were accepted by those running for and serving in such offices as Chicago Alderman, State Representative, and State Senator. Records show that other recipients of these contributions include the campaign committees of Chicago Mayor Richard M. Daley and Governor Rod Blagojevich.

“501(c)(3) non-profits risk serious consequences for making these contributions,” said BGA Executive Director Jay Stewart. “A 501(c)(3) could have its tax-exempt status taken away if they’re found to be violating the law.” “In addition,” said Stewart, “campaign committees should be aware of the potentially harmful situation they are putting non-profits in when they solicit them for campaign contributions.” The BGA itself has been solicited three different times for campaign contributions since it began the investigation.

Therefore, The Better Government Association is calling on the State of Illinois to do the following:

• Education for Non-Profits: The Attorney General’s Charitable Trust Division works with thousands of non-profits in Illinois, many which enjoy tax-exempt status. This agency can better educate the organizations it regulates on the restrictions they must adhere to and the serious consequences of violating them. The Attorney General’s office can provide guidance and ensure they do not run afoul of the law.
• Education for Campaign Committees: The only ones who stand to benefit from these illegal contributions are campaigns, while the only parties who stand to suffer are the charities and non-profits. The Internal Revenue Service and other entities furnish online databases of tax-exempt organizations, free of charge. The Illinois Board of Elections should make Campaigns should verify their contributions are coming from groups that are legally allowed to give them, as their constituents could lose the valuable services these churches and philanthropic organizations provide.
• Vigilance on the part of campaign committees: Campaigns have a responsibility to ensure that they stop soliciting 501(c)(3) non-profits and refuse to take their contributions. “While a non-profit organization might not be aware that it is breaking the law in supporting a candidate for office, the campaigns themselves have the responsibility to ensure they take contributions from those legally allowed to give them,” said Jay Stewart, the BGA’s Executive Director.

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