Lookout RI’s endorsement of House Speaker Nicholas Mattiello through an advertisement in the Cranston Herald may violate an IRS ban on campaign activity by 501(c)(3) organizations.
According to the IRS, “all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity.”
Lookout RI is a 501(c)(3), according to its most recent available 990 filing, from 2014. The ad appearing in the Cranston Herald said it was “paid for by John Hazen White Jr.’s Lookout.”
Mattiello won the support of John Hazen White Jr. — who has a conservative, reform-oriented profile — as he faces a re-election challenge from Republican Steven Frias. The election is next Tuesday, November 8.
Hazen White said Lookout has never endorsed a candidate before, but decided to back Mattiello because of his record on business and economic issues. “He’s done what I think are some key initiatives for the business community — [raising the exemption on] the estate tax being primary in my mind,” the president and CEO of Cranston-based Taco said.
Lookout has for years raised attention about legislative decisions and public policy issues, following in the path of the “Red Alert” effort led by Hazen White’s father, John Hazen White Sr.
Hazen White said he didn’t realize the IRS regulation on 501(c)(3)s seemingly bans endorsements, “because I’ve never supported a candidate [publicly before].” Hazen White said he might respond by paying for the ad personally, rather than through Lookout RI, adding, “I would never do anything that I didn’t think was proper.”
Hazen White’s manufacturing company was the scene of a news conference last month in which Mattiello unveiled his plan to cut the state car tax. Hazen White said he decided to take out the ad in Wednesday’s edition of the Cranston Herald on his own initiative and was not asked to do by Mattiello’s campaign. He said the ad cost about $700.
Mattiello’s campaign said through spokewoman Patti Doyle it had nothing to do with the ad taken out by Hazen White and Lookout.
“We are thrilled to have the support of one of Rhode Island’s and Cranston’s most successful business owners,” Doyle said. “The real story here is that a conservative business leader endorsed Nick Mattiello because of his laser-focus on jobs and the economy. This is validation that our policies of tax relief and economic development are the change that Rhode Island needs.”
State Republican Chairman Brandon Bell questioned whether Mattiello’s campaign had a role in seeking Hazen White’s endorsement.
“John Hazen White Jr. Is great corporate citizen with a great manufacturing company in Rhode Island,” Bell said. “It would be a shame if he was dragged into yet another scandal created by Speaker Mattiello. I’m concerned that Mattiello coordinated with JHW. When responding to the Lawton debacle on [the] WPRO Gene Valicenti Show on Monday morning Mattiello said: ‘I expect John Hazen White’s endorsement later this week.’ …. If there was no coordination how would Mattiello know of this endorsement days ago?”
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Hazen White responded to Bell with a statement Wednesday evening.
“While the use of Lookout to endorse Speaker Mattiello for reelection was in error — I should have done that as a private citizen — I stand by my endorsement, and I want to respectfully refute the suggestion made by RI Republican Party Chairman Brandon Bell, as reported in Mr. Donnis’s article, that I coordinated my action with Speaker Mattiello,” Hazen White said. “I alone decided to take a public stance with regard to his reelection race, and I decided to do so with a paid ad in the Cranston Herald.”
“As a courtesy to the Speaker and with an eye to making sure my stated points of his economic legislative accomplishments were 100% factually correct, I shared the ad with his campaign prior to publication,” Hazen White continued. “Yes, the Speaker knew that I was going to take a public stance endorsing him — hence his comment to Gene Valicenti on WPRO on Monday — but neither he nor his campaign advised me in any way on what to say in the ad, and upon review they did not ask me for any changes.”
Hazen White added, “There were certainly no conversations of any kind on a return benefit to me or my company in exchange for my endorsement.”
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John Marion, executive director of Common Cause of Rhode Island, said the pertinent IRS regulation seems to ban 501(c)(3)s from supporting or opposing candidates.
“501(c)(3)s are allowed to do some activity in terms of lobbying, but in terms of electioneering, I don’t think they’re allowed to do much,” Marion said. “It doesn’t appear according to what the IRS has published that 501(c)(3)s are supposed to be used to support or oppose candidates.”
The National Council of Nonprofits summarizes the issue this way: “In return for its favored tax-status, a charitable nonprofit promises the federal government that it will not engage in ‘political campaign activity’ and if it does, IRS regulations mandate that the charitable nonprofit will lose its tax-exempt status. This prohibition against political campaign activity (defined as ‘supporting or opposing a candidate for public office’) is SEPARATE from lobbying or legislative activities, which charitable nonprofits ARE permitted to engage in, although knowing the rules is important, as limitations apply.”
According to Nonprofitvote.org, 501(c)(3)s can engage in various political activities, including raising voter awareness on issues, encouraging people to vote, and continuing issue advocacy during an election. The site said, however, that 501(c)(3)s can not endorse a candidate.
This post has been updated.
