Reform Groups Seek IRS Rejection of DeLay Charity

Posted December 4, 2003 at 1:08pm

Two pro-campaign finance reform groups urged the Internal Revenue Service on Thursday to reject House Majority Leader Tom DeLay’s (Texas) effort to set up a new charity that could collect hundreds of thousands of dollars during next year’s GOP convention in New York.

In a 15-page letter to IRS Commissioner Mark Everson, Democracy 21 and the Campaign Legal Center referred to the proposed charity, Celebrations for Children, Inc., as “a scheme that has been organized by Representative DeLay and his agents to allow him to raise and spend unlimited ‘soft money’ funds for political activities to be conducted in conjunction with the Republican National Convention in New York City in late August and early September 2004.”

“Representative DeLay is using the nation’s charity tax laws and the pretext of helping children as a cynical cover to raise and spend huge amounts of prohibited soft money to finance political activities and provide political benefits for himself and his Republican colleagues,” said Democracy 21 President Fred Wertheimer. “It’s a scandalous attempt to misuse IRS tax exemptions and a brazen scheme for circumventing the new ban on soft money.”

The proposed charity, intended to reflect DeLay’s long-standing interest in assisting abused and disadvantaged children, was launched in September and has applied to the IRS for recognition under section 501(c)3 the tax code as a tax-exempt group. A DeLay political fundraiser and DeLay’s daughter, who also raises money for his political operations, serve on the group’s board.

The IRS has not yet ruled on CFC’s request for charitable status. But the group has already held a fundraising event in September and plans to raise money during the Super Bowl in Houston.

Stuart Roy, a spokesman for DeLay, defended the organization as a legitimate charity that will exceed donation standards practiced by other established tax-exempt groups. And he insisted that none of the money raised would benefit any candidate or political party.

“Absolutely none of this, in any way, benefits anyone’s re-election campaign or goes to the Republican Party or to anyone associated with the Republican Party. One hundred percent of the profit goes to the kids,” Roy said.

Roy also noted that holding charitable events during political conventions is not an unusual activity, pointing to fundraisers held during the 2000 Democratic National Convention that benefited former President Bill Clinton’s presidential library.

In their complaint to the IRS, the reform groups contend that DeLay is seeking to evade the recently enacted ban on soft money contributions. They noted that the type of fundraising activity planned by CFC during the convention mirrors the same sort of activity conducted by DeLay’s political groups during previous conventions when soft money was legal.

“Representative DeLay is using CFC to raise and spend soft money to finance convention-related political events; to provide multiple opportunities for politically beneficial networking among big donors, including corporate executives, lobbyists and others, and Representative DeLay and other Republican officeholders and candidates; and to pursue Representative DeLay’s longstanding political strategy of building loyalty and political support among his House Republican colleagues and Republican party officials by serving, in effect, as their ‘convention concierge,’” the complaint said.

Tax law requires that charities, which allow donors to take tax deductions for their contributions, be set up exclusively for charitable purposes and must not participate or intervene in political campaigns.