Public Interest Watch

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This article is part of the Center for Media & Democracy's spotlight on front groups and corporate spin.

Public Interest Watch (PIW) is a front group heavily funded by ExxonMobil. [1]. It was established in September 2002 by Mike Hardiman, the principal of the public relations and lobbying company Hardiman Consulting. Hardiman is a veteran of the Wise Use Movement and property rights movement. The PIW website states that the group was created "in response to the growing misuse of charitable funds by nonprofit organizations and the lack of effort by government agencies to deal with the problem."

PIW has close links to PR company Dezenhall Resources [2]

History

PIW claims that it "works to fight charitable trust abuse by exposing individual cases of abuse and advocating for stronger governmental oversight, including requirements for greater financial disclosure by charitable organizations". [3]

In one of its early forays into public debate Hardiman cited a presentation to a public relations conference by a non-profit hospital as the basis to challenge the tax-exempt status of the entire non-profit hospital sector. "PIW also plans to advocate for legislative reforms that would require improved financial disclosure by such groups," the PIW media release foreshadowed. [4]

In comments to the IRS on possible changes to information required to be disclosed on Form 990 for non-profit groups, PIW flagged some changes it wanted. US citizens, taxpayers and shareholders "are entitled to know as much about the tax-exempt entities to which the federal government provides tax subsidies, contracts or access to policy debates as they do about publicly traded corporations," they wrote. Key changes they sought to achieve this included:

  • requiring non-profits to submit with their annual return copies of all fundraising materials as a way of potentially facilitating early legal actions - such as for misleading promotion, libel, trade libel or 'tortious interference';
  • provide a list of individual financial contributors and the total annual contributions;
  • disclose grants to overseas organizations or individuals;
  • publish decision making processes; and
  • file quarterly financial returns.

PIW's proposals echo the views advanced by Gary Johns from the Australian corporate think-tank, the Institute of Public Affairs at an American Enterprise Institute seminar. In particular, PIW proposed tax-empt organizations disclose the "(i) the nature and extent of its claims to expertise, other than membership interest; (ii) the qualifications of those who will speak or act on behalf of the organization; (iii) the research undertaken by the tax-exempt organization; and (iv) whether the research has been assessed by independent peer review."

While adopting the rhethoric that it wanted to align non-profit standards with those of the corporate world, PIW in fact wanted stricter standards imposed on non-profit groups. "No matter what, we propose that any governmental agency receiving information from a tax-exempt organization require that a tax-exempt organization have its research assessed by an independent peer review for reasonableness before being presented to a government agency in a public forum," they submitted. [5]

PIW Campaign Against Greenpeace

In September 2003 PIW complained to the Internal Revenue Service claiming that Greenpeace USA tax returns were inaccurate and breached the law. PIW wanted the IRS to investigate the complaint. Greenpeace rejected the claims and challenged PIW to disclose its funders. The request was rejected by the then PIW Executive Director, Mike Hardiman because contributions to Greenpeace were tax deductible, whereas contributions to PIW were not. [6]

In a column filed with the Copley News Service Doug Bandow, a senior fellow at the Cato Institute and James Madison Scholar with the American Legislative Exchange Council, while conceding that Greenpeace had a right to advocate its beliefs, railed against non-profit groups having tax-deductible a 501c(3) entity that can transfer funds to a non-deductible 501 c (4) entity. "What they shouldn't be able to do is manipulate the tax system to advance their agenda," Bandow complained.

Bandow endorsed PIW's claim that foundations that provided grants should verify how funds were spent. Bandow also complained that PIW's claims only prompted a dozen stories but found some soalce in the conservative media. "The only thorough rendering was written by tireless columnist Deroy Murdock at National Review Online," he wrote. As with most of the other media coverage, Murdock's column largely rehashed PIW's claims, took PIW's claim to be a legitimate non-profit group at face value and relegated Greenpeace's comments to the bottom of the story. [7]

PIW's attack on Greenpeace was also taken up by Californian Republican Assemblyman Ray Haynes, who urged that State Attorney-General Lockyer prosecute Greenpeace under various laws, including the state's unfair-business-practice law.

The Public Interest Watch report was also seized upon by Marc Levin, a lawyer and president of the American Freedom Center. After reviewing a number of incidents of damage to property attributed to the Animal Liberation Front and Earth Liberation Front, Levin sought to smear Greenpeace with the ecoterrorism tag. "While these acts of ecoterror are clearly illegal, few people realize that the money used to commit many of these crimes may have been illegally laundered through tax-exempt organizations whose donors - individuals and nonprofit foundations unaware of the laundering - receive tax deductions," he wrote in the New Jersey Law Journal.

Levin flagged the move by the U.S. Department of Justice to sue Greenpeace for the April 2002 boarding of a cargo ship approaching Miami that was laden with timber from the Brazilian rainforests. Without skipping a beat, Levin conflated Greenpeace's peaceful protest with ecoterrorism which, he argued, justified an IRS crackdown. "Prosecuting ecoterrorists has proved difficult; they have a "cell" structure and lack centralized leaderships or membership rosters. But this is precisely why it is critically important that the IRS does its part to immobilize ecoterror groups by investigating how moneys flow through tax-exempt organizations to affiliates," he wrote.

In May 2004 under interim Executive Director Lewis Fein, PIW were targeting Greenpeace once more claiming that they had found what they claimed was the 'secret' location of the Greenpeace actions warehouse in Washington, D.C. [8] The media release, which echoed around various conservative websites in the US and Canada, was picked up by the Washington Times.[9]

In a letter to the editor in the Washington Times, Greenpeace's operations manager, Bill Richardson, ridiculed PIW's claim that the warehouse location was secret. "What extraordinary detective skills it must have taken to notice the mailbox with the name "Greenpeace" on the front of the building. Thanks for the giggle," he wrote. [10]

The warehouse claims were made the same week that the attempt by the US Justice Department to sue Greenpeace over a 2002 protest against a ship carrying rainforest timber into Miami. In the media release, Executive Director of Public Interest Watch, Lewis Fein, candidly stated that it was the organisations' capacity for media-savvy civil diosobedience that prompted the government to act. "What has made Greenpeace such a high-profile target for the Justice Department is its ability to train and organize its activists and the attention-grabbing, creative props it uses in its stunts," he stated.

PIW sparks IRS Audit of Greenpeace

In 2003, PIW wrote to the Internal Revenue Service (IRS) tax audit of Greenpeace. In September 2005, the three-month long audit began that audit amid claims that it was influenced by PIW. According to Greenpeace USA executive director John Passacantando, the IRS auditor, Charles Walker, told him the investigation was in response to PIW's complaint. In March 2006 Greenpeace was informed that it retained its tax exempt status.

PIW sparks IRS Audit of the Dogwood Alliance

In August 2003, PIW wrote to the IRS, urging it to audit the Dogwood Alliance, a North Carolina forest-protection group that has campaigned against office-supply chains Staples and OfficeMax. In 2004 the IRS audited the Dogwood Alliance. Sarah Hodgdon, executive director of Dogwood Alliance, said the IRS audited the group in 2004 but didn't revoke its tax-exempt status. "I suspected that the audit followed the letter that Public Interest Watch sent," she says. [11]

Funding

In a January 2003 letter to the IRS - as well as on its website - PIW states that it "has been established as a 501(c)4 nonprofit organization, which means contributions to PIW are not tax-deductible." Asked whether PIW had filed an anuual return with the IRS since the organisation was formed Fein said "I believe so".

On its website PIW states that "initial funding for PIW has been provided by business organizations", but does not disclose the names of sponsors. [12] As with many of the conservative groups urging greater 'transparency' for non-profit advocacy groups, they claim that it doesn't apply to them and especially not to corporate donors.

In September 2003, the then PIW Executive Director, Mike Hardiman, rejected calls from Greenpeace that PIW disclose its funding sources. "I don't have to reveal my funding because I am not mooching off the taxpayer. Contributions to Public Interest Watch are not tax-deductible," he said. [13] In Hardiman's assessment, disclosure is warranted - not because of a public right to make an informed judgement based on all potentially relevant information - but based on the tax-status of the organisation.

While gifts from individuals to a 501c(4) non-profit group are not tax-deductible, it is not necessarily the same for companies. Companies can, for example, enter into a fee-for-service contract - such as a research consultancy - and claim it against taxable income. Alternatively contributions can be subsumed into a marketing, promotions or similar budget and claimed as a deduction against tax. In this way, a 501 c(4) could indeed engage in a little "mooching off the taxpayer".

It's a way of doing business that the pro-hunting non-profit group, the U.S. Sportsmen's Alliance understands. "Contributions to the U.S. Sportsmen's Alliance, a 501 (C) 4 organization, are not tax deductible unless you are in an outdoors related industry," it helpfully explains on its website.[14]

In March 2006 the Wall Street Journal reported that Public Interest Watch has been heavily funded by ExxonMobil. Steve Stecklow reports that PIW's "most recent federal tax filing, covering August 2003 to July 2004, states that $120,000 of the $124,094" came from the oil company. ExxonMobil confirmed that they had funded the group at that time but no longer do. PIW's Executive Director Lewis Fein has refused to disclose any of the groups current funders. [15]

(For more details on the Internal Revenue Service provisions for non-profits groups - including on the 501c(3) and 501c(4) provisions see The U.S. tax code and non profits.

Personnel

In an interview, Fein said he was unable to disclose who the members of the board of directors were. "With media inquiries when I have been called to discuss the board or the individual members themselves, many are with very well established biographies, I just need to clear it with them," he said.

The PIW website - which Ron Arnold's Center for the Defense of Free Enterprise website links to - states that it has offices in Washington, D.C. and California.

Nor could Fein comment on whether the street address listed on their website was in fact a residential address and not an office at all. "It is just standard policy that I have to apply. I'm not trying to be evasive or not answer your question. It's just that if the board say its OK to answer these questions then I can get back to you with the information," he said. To date there has been no further information forthcoming by email.

According to Philanthropic Research, Inc.'s GuideStar database, accessed March 22, 2006, PIW's 2003 IRS form 990, filed March 21, 2005, and the last one available, lists in addition to Lewis Fein as Executive Director, the following directors:

According to the form 990, none receive compensation from the group. [17]

Contact information

Public Interest Watch
1425 P Street, NW
Suite 706
Washington, DC 20005
http://www.publicinterestwatch.org/

Other Sourcewatch Resources

External links

Media Releases By PIW

General Articles