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When John Edwards pursued his crusade against poverty in 2005, he created a nonprofit center that allowed him to maintain a high profile â€” and avoid the legal scrutiny aimed at presidential candidates.
Not that Edwards was running for the White House at that point. Fresh from his loss as Democratic nominee John Kerry’s running mate in 2004, he would not declare himself a candidate for president until late in 2006.
However, the nonprofit Center for Promise and Opportunity offered distinct advantages to Edwards, its honorary chairman. The center’s five officers all had worked for his previous presidential campaign, for example, and it appears to have paid for his travel to New Hampshire and several delegate-rich states.
The center wasn’t subject to the limits imposed by federal election laws on a presidential exploratory committee, the first major step in raising money toward a bid. Meanwhile, it may have stretched the limits of tax law, which prohibits political nonprofits from having a primary purpose of supporting or opposing candidates.
“It’s possible that the ‘opportunity’ the center was promoting was only John Edwards’ opportunity â€” his opportunity to run for president,” said Massie Ritsch, a spokesman for the nonpartisan Center for Responsive Politics, a Washington-based research group that tracks money in politics.
The Edwards campaign describes his activities back then in a different light.
“Edwards led these efforts to raise awareness about poverty and other obstacles to equal opportunity, explore ideas to meet those challenges and test some of them in the real world,” said Eric Schultz, his spokesman. “One of the ways he did that was through the Center for Promise and Opportunity.”
With the nonprofit, though, there were no limits on the amount of money Edwards could raise, either from individual donors or overall.
Compared to exploratory committees and political action committees regulated by the Federal Election Commission, the center didn’t have to disclose nearly as much information about how it was spending the money or where it came from. It has been able to keep that limited amount of information under wraps for much longer.
PACs must update the FEC on their finances every quarter, and an exploratory committee must document its fundraising and spending with federal regulators not long after a potential candidate formally enters the race. Edwards’ nonprofit filed its 2005 annual report with the Internal Revenue Service in November 2006 and has yet to file its 2006 report, having asked for an extension beyond the May deadline.
The campaign declined to release the figures that will be in the 2006 report to The Associated Press.
The center raised and spent $1.3 million in 2005, according to the IRS report, and it employed several staff members who now work for Edwards’ 2008 campaign. The center also appears to have paid for some of Edwards’ travels across the country that year.
Scott Thomas, a former FEC chairman who works as an attorney in Washington, said there’s nothing wrong with the approach Edwards took â€” so long as he did not conduct any campaign-like activities, such as disproportionate travel to early voting states or using funds to maintain a political staff.
“The FEC may take issue with Edwards if he had already made up his mind to run as a candidate and there was an intentional effort to utilize an outside nonprofit to float the campaign for a while,” Thomas said.
In 2005, the nonprofit paid for Edwards’ “Opportunity Rocks” tour of college campuses nationwide, where he worked to mobilize students to address poverty â€” the signature issue of his presidential campaign. Stops included Arizona, North Carolina Missouri, Connecticut, Massachusetts, New Hampshire, Texas, California, Wisconsin, Florida and Michigan.
The nonprofit also hosted seminars to discuss foreign policy and Iraq. In November 2005, Edwards wrote in The Washington Post that he was wrong to have voted in favor of the war, a key turning point in his foreign policy stance and one that continues to drive his current position.
The nonprofit had five officers in 2005: Miles Lackey, a senior Edwards adviser; Peter Scher, an Edwards adviser and former campaign manager; David Ginsberg, a senior campaign adviser; Ed Turlington, Edwards’ former campaign chairman and current adviser; and Alexis Bar, Edwards’ former scheduling director.
All worked for the Edwards campaign in 2004, and all but Bar now work for his 2008 campaign. About 20 percent of the nonprofit’s budget went to unnamed consultants, according to IRS filings. Another 37 percent went to salaries and wages.
Tax laws, however, raise different issues.
“The tax definition for ‘candidate’ is a lot fuzzier than the campaign definition of a candidate,” said Lloyd Mayer, a Notre Dame law professor and nonprofit tax expert who has represented major advocacy groups, including the NAACP National Voter Fund.
“For tax law, it’s more of a ‘walk like a duck, talk like a duck’ rule,” he said. “If you look like a candidate and act like one, the IRS may consider that the nonprofit is doing too much political advocacy.”
Edwards did have a political action committee. But unlike the nonprofit, his One America Committee was subject to the FEC’s strict transparency and oversight rules that require the disclosure of expenditures and the source of donations.
“Since it does appear that candidate Edwards was using his nonprofit to build his national profile up to his presidential campaign, it would be nice to know who was backing and who was financing that,” Ritsch said.
Edwards also had his personal fortune at hand. Last month, he and his wife, Elizabeth, reported $29.5 million in assets.
In explaining Edwards’ activities, Schultz also pointed to the work of a second nonprofit, the similarly named Center for Promise and Opportunity Foundation, which raised $70,000 in 2005 to help coordinate Edwards’ College for Everyone scholarship program at a rural and impoverished high school in Greene County, N.C.
Bradley Smith, a former FEC chairman appointed in 2000 by President Clinton, said Edwards shouldn’t face any trouble from federal regulators unless he was explicitly campaigning for the Democratic nomination.
Edwards traveled to Iowa and New Hampshire at least four times each in 2005.
He took care not to say he was running until late 2006, after a year in which he spent much of his time traveling in early primary states, particularly Iowa. He visited the Hawkeye State more than a dozen times before announcing his candidacy.
Because the nonprofit has yet to file its IRS report for 2006, its not clear how much it supported Edwards or his staff that year. Much of his travel was funded by the One America Committee, a political action committee that spent $1.56 million to fund travel officially aimed at supporting Democratic candidates in the months leading up to the 2006 election.
It wasn’t until Jan. 3 that Edwards, almost a week after kicking off his second bid for the White House from the front yard of a Hurricane Katrina-ravaged home in New Orleans, filed the paperwork to open “John Edwards for President,” his official campaign committee, with the FEC.
“We all know that he was a candidate for president, but if he wasn’t going around saying, ‘I’m running for president,’ he’s probably all right,” Smith said.