BOISE, Idaho — One of Idaho's most influential political groups operates in a legal gray area, lawmakers and a tax expert said. Crossing - or at least blurring - the lines between their charitable nonprofit operation and their lobbying arm.
The Idaho Freedom Foundation, which bills itself as a conservative think tank devoted to "exposing, defeating, and replacing the state's socialist public policies," wields tremendous influence in the Republican-majority Idaho Legislature, even dictating to some legislators what bills should be brought forward during the session and how they should vote on individual measures.
Those who deviate from the IFF's directions often find themselves labeled as anti-liberty and anti-freedom, and targeted with attack campaigns.
But as a registered 501(c)(3) nonprofit, tax and campaign finance laws put constraints on the amount of political activity and lobbying in which the group can engage.
That is where Idaho Freedom Action, an IFF-created lobbying organization, comes in.
As a 501(c)(4) or “social welfare” nonprofit, the Idaho Freedom Action affiliate is not beholden to the same federal lobbying limits and is allowed to engage in some political campaigns as long as that is not the group's primary activity. The IFF and IFA share the same offices in downtown Boise, the same staff, and, according to Secretary of State records, the same lobbyists at the Idaho Capitol.
That's not illegal, says public policy attorney and lobbyist Roy Eiguren. Other nonprofits, including the ACLU, Planned Parenthood, and The Sierra Club have 501(c)(4)s, and the federal government allows some staff and physical resources to be "intermingled" between attached 501(c)(3) and 501(c)(4)s.
But the IRS requires rigorous accounting to show operations and the pools of donated money are kept separate; for example, the charity can't finance the lobbying arm's activities to get around regulations.
Tax Form 990s do not show IFF is financing IFA; however, IFA reimbursed IFF about $43,000 in 2020.
Beyond tax Form 990s, 7Investigates does not have deep insight into the organizations' accounting. A tax audit by the IRS would reveal more information, but those investigations are not often made public unless the nonprofit's tax-exempt status is revoked.
"It's no secret that the Idaho Freedom Action, and the foundation itself, have a very significant impact on the processes that go on," Eiguren said. "The law is very clear in that regard in terms of what the demarcation lines are between what constitutes political activity by way of endorsement and support versus education."
The IFF brought in more than $1 million in revenue in 2020, in the form of contributions and grants, investment income and, ironically for an organization that wants less government, a PPP Forgiveness Loan. Meanwhile, the IFA made more than $63,000 in contributions and grants compared to about $20,000 in 2019.
Despite being politically active and influencing policy, neither nonprofit is required to disclose where their funding or donations comes from under federal tax law. Because of Idaho Sunshine Laws the 501(c)(4), however, must disclose any "electioneering communication" through the Idaho Secretary of State prior to an election and those contributions and expenditures are public.
According to the IRS, tax-exempt 501(c)(3) nonprofits like the Freedom Foundation are not allowed to make campaign contributions or campaign for or against political candidates.
Hurst told 7Investigates that IFA and IFF don't give money to campaigns "unlike the special interests that seek to exterminate the freedom agenda".
But after scouring campaign finance reports, 7Investigates found some of the Freedom Foundation's directors do.
Just one example of many: Doyle Beck, Bryan Smith and Brent Regan - all on the IFF Board of Directors - donated to Branden Durst, a candidate for Idaho State Superintendent.
Federal Election Commission (FEC) records show Wayne Hoffman, President of the IFF, donates to many campaigns and causes, too - namely Bryan Smith for Idaho Inc. Smith, the vice chair of IFF, is running against Republican incumbent Mike Simpson for Congress.
Under federal tax law, these charities can educate legislators on issues but they are not supposed to influence legislation, contact lawmakers, or encourage voters to contact lawmakers as a "substantial" part of their activities.
Senate President Pro Tempore Chuck Winder, R-Boise, and Republican former senator Bob Geddes, who held the pro tempore position in the early 2000s, say the Idaho Freedom Foundation crosses that line.
"They have stretched beyond just public information and public involvement," Geddes said. "I certainly believe that their influence is more dangerous."
Winder and Geddes say the group's leaders, Wayne Hoffman and Fred Birnbaum, coordinate with representatives and instruct them on how to vote even while lawmakers are on the House floor, pressuring them privately and publicly in a manner, unlike any other organization.
"If you don't think the way they think, then they're going to bully you, and they're going to target you," Winder said.
In January, Sen. Jim Woodward, R-Sagle, voted along with three other committee members not to introduce a measure that would fine schools thousands of dollars if they did not allow parents to opt their children out of any lesson plan or textbook, as well as any vaccine or mask requirement. The measure also would have allowed parents to enter their child's classroom unannounced and without prior notice at any time during the school day.
Within weeks, Idaho Freedom Action tweeted out a paid video condemning the vote.
"Critical Race Theory! Grammar school sex lessons! Parents are waking up to outrageous leftist classroom indoctrination," the video intones, blaming Woodward for the routing slip's failure to advance. "Tell Woodward to stop covering for woke teachers unions and put children first."
Idaho Freedom Foundation Vice President Dustin Hurst wrote in an email to KTVB that neither IFF nor IFA endorse or oppose candidates, but said that the IFA occasionally opts to "educate voters about incumbents' and candidates' records," arguing that such messaging was not intended to indicate support or opposition.
Former Pro Tem Geddes had a different opinion on the groups' tactics.
"I know of other organizations who keep score, for example, on bills that are important to their members. And I don't think that that's significantly bad, but I think it is if it's carried too far," he said. "It's basically extortion. You either support us, or we'll blacklist you."
According to public records, lawmakers aren't the only ones concerned about the IFF's activities. Concerned Idaho residents have filed at least four complaints against the IFF with the state in the last four years. According to reporting by the Idaho Capital Sun, the IRS also received at least three complaints accusing the group of breaking federal tax laws and Idaho campaign finance rules.
One of the state-level complaints led to Idaho fining IFF VP Dustin Hurst $250 for lobbying on the state's higher education budget without registering as an IFA lobbyist.
It's up to the IRS to audit groups to fully examine the truthfulness of a tax-exempt organization's mission and determine whether a nonprofit has engaged in excessive lobbying. But Eiguren said traditionally, the agency has done little on that front, due in part to inadequate funding over the last several decades.
"You can make a fairly strong case from a public standpoint, public policy standpoint, as well as a transparency standpoint, that in fact, there should be a more clearly defined line between the types of activities a 501(c)(3) versus a 501(c)(4) engage in," he said.
Former Idaho Supreme Court Justice Jim Jones says there is little variance between the two groups.
"There's an awful lot of lobbying going on by the Freedom Foundation," he said.
Jones pointed to the IFF's Freedom Index practice of rating bills and assigning scores to lawmakers based on how they voted on bills the nonprofit backed as an example of putting pressure on the legislative process.
"It's hard to see where one stops and the other starts, and I think they've had a tremendous impact on the electoral process," Jones said. "There's a lot of crossover between what the Freedom Foundation does in scoring the bills and in what Idaho Freedom Action does in supporting or opposing candidates."
Without a lot of government oversight and a lack of transparency, there's room for potential abuses in the nonprofit world.
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