Grover Norquist is the president of both Americans for Tax Reform (ATR) and its sister organization, the Americans for Tax Reform Foundation (ATRF). According to the ATR’s most recent tax filings, its primary purpose is to act as a national grassroots organization that is focused on increasing public awareness about the size and regulations of government as well as rallying support for lower taxes, smaller government, and Congressional accountability. On the other hand, ATRF was created to conduct economic research and fiscal policy analysis. Both are tax exempt organizations according to the IRS.
The IRS defines a 501(c)(4) tax exempt organization as one that is “operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the community.” On paper, increasing public awareness, research, and policy analysis fits the bill. Unfortunately, even the IRS concluded in 1981 that "social welfare is inherently an abstruse concept that continues to defy precise definition.”
Norquist, who claims that Americans for Tax Reform was the brain child of Ronald Reagan, started the organization in 1985. So what if Norquist took advantage of the abstruse concept of social welfare to create the world’s largest, most successful lobbying firm?
The IRS claims that it continues to make an effort to refine and clarify what a 501(c)(4) is and what it can do. In general, 501(c)(4)s can be classified by two main characteristics: they primarily promote the common good and general welfare of the people of the community as a whole and they don’t primarily benefit a private group of citizens.
In 1913, The Tariff Act declared that chambers of commerce were not 501(c)(4)s, as they benefitted too narrowly and exclusively one group – business owners – rather than the general public. In Erie Endowment v. United States, a district court ruled that "the organization must be a community movement designed to accomplish community ends." Yet by Norquist’s own words, it was a president of the United States and not the community who created Americans for Tax Reform.
In 1995, Congress declared that no one person or group of people can inure benefit from a 501(c)(3). The legal definition of inure is to result; to take effect; to be of use, benefit, or advantage to an individual. Yet Norquist, represented by All American Speakers, is paid as much as $10,000 per public appearance and his availability is advertised on the American's for Tax Reform website.
In short, if you have to be a part of an organization geographically, ideologically or professionally, it’s not a 501(c)(4). If the organization benefits you, as a member of the community without regard to your membership status of the organization, then it might be a 501(c)(4).
Parent-teacher associations, civic organization focused on community service, community-owned facilities such as parks or gun clubs, community-operated festivals, neighborhood associations, community beautification groups, and neighborhood watches are all examples of IRS-approved 501(c)(4)s. Even most veteran’s organizations don’t qualify as a 501(c)(4) unless they are focused not on benefiting the veteran, but on the public at large.
501(c)(4)s is not a charity, like a 501(c)(3). Unlike 501(c)(3)s, donations are not tax deductible and, unlike 501(c)(3)s, they have greater latitude in lobbying the government. It’s a grey area in which many organizations of both parties find shelter.
While the IRS is grey on the definition of social welfare, general public, and even the line between charity and social good; they are not grey on two things. According to the IRS, a 501(c)(3) must benefit the public and must not overly benefit a few. However, the ATR tax return clearly shows that the "national grassroots" organization has three voting members to oversee it - ne of whom is Grover Norquist. Norquist earns around $145,000 annually for a 24-hour work week.
Additionally, ATR granted money or contracted for business with three organizations. CPAC or Conservative Political Action Committee was the beneficiary of ATR’s generosity. CPAC has never endorsed a Democrat or an independent for office. HSP Direct, which contracted with ATR for $100,000 in direct mailing services, only represents conservative organizations and conservative candidates. They are also a member of CPAC.
Even the public circle is narrow. In the 112th Congress, of the 279 representatives and senators who signed the ATR pledge never to raise taxes, three Democrats signed the pledge. Of the 288 Republican members, 13 did not sign the pledge. The National Association for the Advancement of Colored People and AARP are both 501(c)(4)s. As such, they do not support or oppose candidates.
Citizens for Limited Taxation (CLTG) and the Alliance for America’s Future were also supported by ATR. CLTG supports the efforts of the Tea Party and the Alliance for America’s Future, a Liz Cheney-created organization that neither gave any funds to Democratic candidates nor spent any funds against Republican candidates.
The legal definition of “the general public” is the whole body politic, or the aggregate of the citizens of a state, nation, or municipality. The community at large, without reference to the geographical limits of any corporation like a city, town, or county; the people.” Clearly, Americans for Tax Reform’s definition of “general public” is the 30% of Americans registered as Republicans. The legal definition of “general welfare” is “ordinary people in society, rather than people who are considered to be important or who belong to a particular group.” Clearly, Americans for Tax Reform’s definition of “general welfare” narrowly includes a handful of powerful insiders; including Grover Norquist himself.
It is time to admit that opposing “all tax increases as a matter of principle" may be in the general public’s welfare but, especially in a time of two wars, it may not and, therefore, Grover Norquist is acting as a sole proprietor of a $12 million dollar lobbying corporation, which is, in fact, does not deserve to be exempted from paying its taxes.