NLPC is helping to expose a highly questionable deal between a for-profit website called Grassroots. com and several liberal activist groups that stand to reap massive financial rewards despite their status as non-profits.
Grassroots.com bills itself as a "nonpartisan company that is creating the Internet's premier political action destination." It has attracted $30 million in investments from venture capitalists and plans to go public.
On April 10, NLPC filed a formal Complaint with the Federal Election Commission (FEC) alleging that Grassroots.com is violating federal election law. Also named in the Complaint were the League of Women Voters, the League of Women Voters Educational Fund, Democracy Network and Center for Governmental Studies.
Federal law prohibits corporations from providing "anything of value" to candidates for federal office. Grassroots.com offers candidates a variety of benefits and services free of charge, including space on the website, email links and the opportunity receive contributions from the public.
Bait and Switch
On September 1 of last year, a website called DNet asked the FEC for an Advisory Opinion as to whether it could provide free space to candidates for federal office on its site. DNet already maintained a large database of candidates for various offices that visitors to the site could access.
DNet is a joint project of the League's Educational Fund and another non-profit called the Center for Governmental Studies. DNet's funders read like a "who's who" of left-wing foundations, including the Ford Foundation, Rockefeller Family Fund, Carnegie Corporation and George Soros' Open Society Institute.
On October 29, the FEC told DNet is was permissible to provide candidate information on a "nonpartisan" and "noncommercial" basis. Within 75 days, DNet announced that it had been "acquired" by Grassroots.com. As the Complaint pointed out, "Even measured in 'Internet' years, this is a very quick turn of events." It is highly unlikely that discussions were not already underway at the time DNet successfully sought the Advisory Opinion from the FEC.
The attorney who sought the opinion was Trevor Potter, the former Chairman of the FEC. NLPC President Peter Flaherty commented, "The League of Women Voters likes to condemn the buying of influence in Washington. It looks like they are pretty good at it themselves."
In return for "acquiring" DNet, the LWV received 4 million shares of stock in Grassroots.com and a seat on the Board of Directors. The real payoff will be if and when Grassroots.com goes public. Craig Johnson, Grassroots.com's acting CEO, has bragged that the League of Women Voters would be able to fund its operations for the "next 100 to 200 years."
NLPC Exposes Deal
NLPC's Complaint has received excellent media coverage. Articles have already appeared in the Washington Times, Boston Globe, New York Times on-line edition and the Wall Street Journal.
Furthermore, there is evidence that the investment community is paying attention to the issues raised in the FEC Complaint. One of the first analyses done on the for-profit political websites by a leading equity research firm, details our Complaint and states that it "should be of concern to investors."
Liberal League
In recent years, the League of Women Voters has sponsored the Presidential debates. It takes pains to cultivate a "non-partisan" image. The positions it takes on issues, however, shows it to be a very liberal group. The League opposes the Balanced Budget Amendment, supports taxpayer financing of elections, and supports a government-dominated health care system. One of its newest members is Hillary Rodham Clinton who joined a chapter near her new "home" in Chappaqua, New York.
Wayward Email
Soon after the Complaint was filed, an internal Grassroots.com email
was sent to a journalist, apparently by mistake, who promptly posted it
on his website.
The email made reference to a "informal discussion" with the FEC in February "confirming the October 1999 ruling." On April 13, NLPC made a formal request of the FEC Inspector General to investigate this "informal discussion" and that any information related to it be made part of the public record. Any such informal communication with FEC Commissioners or staff would have been completely inappropriate.
The email also revealed a hope that must have been quickly dashed. It read,"We may issue a press release if the story gains any traction in the press. If it doesn't we'd rather not create waves where there are none." The email concluded,"On both legal and PR fronts we are working hand in hand with the League of Women Voters to coordinate our response."
FEC Double Standard
The FEC Complaint is not only important for making the League obey the law but also to confront the FEC for its bias against conservative groups.
In recent years, the FEC has cracked down on groups producing "voter guides" and comparative advertising. Although the FEC has investigated groups of all persuasions, it has moved more aggressively against conservative groups. Although the FEC always loses in court and the First Amendment is upheld, a number of groups have been put through a lengthy and expensive investigations.
According to Flaherty, "I would prefer that the FEC get out of regulating political speech completely. After all, the First Amendment has not been repealed. But I do believe that if the FEC goes after some groups, it should go after all groups engaged in similar activities."
A copy of the Complaint may be found at www.nlpc.org.
EW