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Gag Rule

Republicans Seek to Muzzle Those Pesky Not-For-Profits

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The Leadership Council for Metropolitan Open Communities was born almost 30 years ago, in the aftermath of Martin Luther King's crusade for open housing and integration in Chicago.

If it dies, its blood will stain the hands of House Speaker Newt Gingrich and his congressional acolytes, who are pushing for legislation that could force not-for-profits like the council out of business.

In August the House passed a bill that prohibits not-for-profit federal grant recipients from lobbying, suing, or doing advocacy work. Under the legislation, the American Red Cross could not, for instance, testify about the harmful effects of teenage drinking. Closer to home, the Leadership Council could not sue landlords or towns that discriminate.

The proposal, known as the "nonprofit gag rule," is currently lodged in a House-Senate conference committee, where it will soon become the focus of a bitter ideological struggle between moderates and extremists. President Clinton says he'll veto the gag rule if and when it emerges. But Republicans, who call the measure the most important item on their agenda, vow to vote against all appropriations, bringing government to a halt, unless the gag rule's passed. The outcome of this fight will determine the future of not-for-profits all over Chicago.

"We take the gag rule very seriously....The intent is to disable not-for-profit organizations and make us dysfunctional," says Aurie Pennick, president of the Leadership Council. "It's aimed at people who can least afford it."

The legislation was proposed by three Republicans (David McIntosh of Indiana and freshmen Ernest Istook of Oklahoma and Robert Ehrlich of Maryland). As they see it, not-for-profits have little purpose other than self-preservation, spending what money they get to lobby for more, thus bleeding dry the public coffers. "In essence, our tax dollars are paying lobbyists to walk the halls of Congress," McIntosh told New York Times reporter Karen Arenson in an interview over the summer.

Their solution is to slap not-for-profits with a strict code of conduct. In other words, provide your services and keep your mouths shut. The bill tells grantees what they can and cannot do (they can't, for instance, write letters to editors), and who they can and cannot do business with (they can't buy supplies from a supplier that spends 15 percent of its budget on advocacy work). It requires them to submit volumes of paperwork (including annual financial statements), and offers bounties to snitches who tattle on alleged violators. In short, it creates the very things Gingrich promised to cut back: new regulations and more litigation.

"The bounty-hunter provision licenses anyone to sue a not-for-profit to determine if they're in violation of the law," says Gary Bass, executive director of OMB Watch, a Washington-based public policy group. "The result is that a not-for-profit can be penalized $5,000 to $10,000, plus up to three times the amount of the grant. The bounty hunter can then collect up to 25 to 30 percent of the cost recovery."

The proposal swept through the house with the backing of a wide range of conservative and corporate special interests, including Pat Robertson's Christian Coalition. These interests make no attempt to shield their ideological intent. According to a Tribune editorial, a GOP strategist vowed to use the new law to "hunt these liberal groups down one by one and extinguish their funding sources."

"The issue becomes one of forcing taxpayers to fund issues with which they disagree," Marshall Wittman, a senior fellow at the Heritage Foundation, told the Times. "Our view is that they should make a choice whether they are service providers or advocacy organizations."

The bill's also backed by trade associations, which see it as their chance to wound their long-standing public-interest adversaries. The president of the National Beer Wholesalers Association testified that groups such as the Center for Substance Abuse Prevention should not be allowed to use federal tax dollars to oppose his business, according to the Times.

"Let's see--the cigarette industry can advocate for their interests but a public health group can't. That doesn't make sense," says John Kirkwood, executive director of the American Lung Association of Metropolitan Chicago. "This is all a political effort to intimidate not-for-profits. In our case, we're interested in air quality to shield people with asthma from all of this crud they have to breathe. If that's bad, tough luck."

According to Kirkwood, there are already laws prohibiting not-for-profits from using federal money to lobby. Moreover, they already have to file annual reports with the Internal Revenue Service. "It costs us more to take a government contract [than to take private funding], with all the paperwork requirements they already have," says Laurina Uribe, executive director of the Midwest Women's Center. "The problem is, no one else funds the kind of job training we do. It's the only way we can do what we do."

As Uribe points out, the legislation would not bar lobbying by contractors, such as munitions manufacturers, that receive billions of federal dollars. Trade associations such as the beer wholesalers get to write off their organizational dues--a form of federal subsidy. Why aren't they prohibited from lobbying for their cause?

"The way it works is that everybody can talk to Congress except for nonprofits," says Uribe. "Defense contractors can testify on defense issues because they're 'experts' but we can't 'cause we're 'special interest'? That's nuts and scary."

Not-for-profits are particularly concerned about the bounty-hunter provision. "It creates a bizarre dynamic of harassment," says Bass. "Already, pro-life groups say pro-choice groups will harass them, and vice versa. I did a radio show with a fellow from the Christian Coalition and I said, 'Would you support taking away tax-exempt status from church groups?' He said no. I said, 'Well, many churches use federal money to provide homeless centers. Does that mean churches can't speak out on public policy?' He had no answer because there is no answer. They're doing this to crack down on the left, but the fact is a lot of people will get clobbered."

The bill would be particularly detrimental to the Leadership Council, which spends a good chunk of its budget on lawsuits. "Our mission is to eliminate racial segregation, and the only way to do that effectively is through carrot-and-sticks," says Pennick. "We do direct service where we counsel families on moving choices. But if they move to a community and find resistance, we back that up with litigation."

The council, for instance, recently sued suburban Addison on the grounds that the village had discriminated against Hispanic residents. Under the proposed law, the council could not have filed its suit or even notified the Justice Department of the alleged violation.

Ironically, the Leadership Council has long been supported by corporate leaders and moderate Republicans, including former Housing and Urban Development secretary Jack Kemp. They're now hoping to rally those supporters against the legislation. "Congressman Istook would say we're somehow thwarting our charitable mission by filing this suit [against Addison]," says Pennick. "But that's absurd if you understand how we have always operated. Not all not-for-profits are service providers. Many of us have always done advocacy and public policy work. Maybe what really upsets them is we've done it too well."

Update

On October 6, State's Attorney Jack O'Malley had a chance for vindication in the case of the McCormick Place "attackers." You may remember the details: a beefy security guard accused a puny pacifist of attacking him during a protest against Newt Gingrich last June at McCormick Place (Neighborhood News, September 29).

Acting on the accusations of the security guards, and without any independent investigation, the state's attorney's office charged Tom Wilson with assault and Craig Segal with criminal trespassing. Wilson and Segal said they were innocent and that the guards had attacked them.

Their case was supposed to be heard August 28, but the prosecutor asked for more time to locate a CNN tape of the protest that would prove, beyond any doubt, that Wilson and Segal had attacked the two guards.

Well, on October 6 the case returned to court. "We were waiting for this big showdown," says Segal, a public school teacher. "We had witnesses there ready to testify and we had our supporters there to, you know, give us support. After all these weeks, I was really curious to see what they had on tape."

Alas, the videotape showed nothing of significance and the prosecutor dropped all charges. "They had no case," says Jeff Haas, the lawyer who represented Segal and Wilson. "In the end they wanted to save face."

The prosecutor asked for a protective order that would bar Segal and Wilson from McCormick Place--"like we were going to show up looking to beat up these guys or something, give me a break," says Segal. The judge said such an order would be illegal (McCormick Place is public land); but he did forbid Wilson and Segal from having any illegal contact with the guards. "It's a meaningless order--like saying I forbid you from assaulting somebody," says Haas.

Segal feels a mixture of relief and regret. "I'm happy it's over," he says. "But I'm disappointed that the state's attorney didn't seem to learn a lesson that you can't just harass citizens and waste the taxpayers' money on frivolous cases."

Art accompanying story in printed newspaper (not available in this archive): photo/Bruce Powell.

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