Sunday, February 13, 2011

Exempt or Not Exempt - That is the Question

Thomas Westgard has filed a complaint with the Internal Revenue Service, my old boss, claiming that A Just Harvest is in violation of its 501(c)3 status.  This is due to its alleged engagement in prohibited lobbying activity via Northside POWER and NsP's actions on behalf of the TIF/RIF.  He has notified the leadership of this action, and their response was not unexpected - "ain't so."  The law and rules covering lobbying activities are pretty specific.  A non-profit wishing to engage in lobbying activity must make an election and then file a Form 990 Schedule C with their annual Form 990.  The election must be made the year of, or the year prior to, the lobbying activity.  A review of A Just Harvest's Form 990s over at Guidestar shows no evidence of a Form 990 Schedule C in 2009, which is when the TIF/RIF activity fired up.

The crucial point here is the relationship of Northside POWER to A Just Harvest.  For Brian White the TIF/RIF issue is one he feels strongly about as it is a part of his campaign for alderman.  Northside POWER has been crystal clear that this is an issue they are fully behind and they drove the point home at their website and the Martin Luther King Day celebration.  Brian was featured on the program and Northside was not about to allow any opposing views to be expressed.  It was their party after all.  Was that a prohibited activity?  Depends on what the relationship is with A Just Harvest and what the IRS has to say about it.

If Northside POWER is seen as an extension of A Just Harvest, and not just a guest at the former's website, it is possible that A Just Harvest may find itself on the receiving end of sanctions.  If any expenditures delineated in the Form 990 are for Northside POWER activities, and if those activities fall into the category of lobbying, then I think A Just Harvest may have backed itself into a corner.  Lakeside Community Development Corporation may also find itself in the target zone if the IRS elects to open an investigation.  Under Brian White's leadership it was engaged in the initial effort to obtain Joe Moore's support and is also a 501(c)3 non-profit.  Lakeside's site has information about the RIF posted but I don't know to what extent it is pushing for legislation.  There is an eligibility study yet to be done.

Westgard has also raised the issue of finances at A Just Harvest.  He suggests that the organization is woefully inefficient in delivering services and meals.  Just doing the math suggests a fairly high cost of doing business if the food is indeed free.  Nothing in their program statement or accomplishments suggests that they are working at helping people become self sufficient or obtain access to services, including food stamps.  We are once again contemplating what is being paid for aside from the provisioning of meals, and whether those activities are within the scope of A Just Harvest's tax exempt status.

Of course this is an academic exercise unless and until the IRS conducts an investigation of Westgard's allegations, which is by no means a certainty.  Agency priorities and resource availability will drive that decision.  If Westgard's allegations result in the IRS opening an investigation and determining that a violation has occurred, then A Just Harvest may lose its designation as a non-profit.  Until there is reason to think otherwise, they will soldier on alongside Northside POWER.  

No comments: