The Intimidation Game (2 page)

When the Kiwanis Club of Canoga Park didn't have enough people to hold portraits honoring dead veterans on Memorial Day, SFVP sent twenty-five members to do the job. They adopted a charity, the West Valley Food Pantry, run by a local church (
We do legitimate—nothing out of the back of a van
), and held flash-mob food drives, at which people spontaneously appeared with bags of donations. They joined Fourth of July rallies, holding “Warrior Flags” to honor the military. They held movie nights featuring documentaries about history or the Constitution. They stood on sidewalks handing out Constitutions. They sat at malls, signing up people (anyone, of any party) to vote.

SFVP attended some events that the media might cast as partisan, though members notably didn't see it that way. When the chief operating officer of Chick-fil-A in June 2012 made public comments opposing same-sex marriage, inspiring protests and counterprotests at Chick-fil-A franchises across the country, the press cast it as a showdown between gays and antigays. When Kenney's group showed up at a local Chick-fil-A, their interest was in backing the First Amendment, standing up for the right of corporate officers to have an opinion, and the right of chicken lovers to eat where they please.

Membership grew so much in the 2010 election year that Coco's became a tight squeeze. The group upped sticks to a local Denny's, with a meeting room large enough that Kenney had to invest in speakers and a microphone so all ninety regulars could hear. (
It was easier than watching half the audience try to turn up their hearing aids.
) The growing pains were almost humorous. One of Kenney's first stabs at an SFVP business card featured a glimpse of a flag. The banner was billowing, stirring—and also French. (
Definitely patriotic. Definitely the wrong country.
) They started advertising on a local radio station, running little thirty-second clips featuring tributes to important moments in history. Only after a time did it occur to the group that it might want to include its name and a contact number, so that people would know how to join or give support.

Kenney and Cronn spent hours designing a website, one with a patriotic and historical theme, and getting the group on social media. They started a regular newsletter—the
Patriots Almanac
. Every issue features prominently a statement that is a point of pride with the group: “No elephants. No donkeys. Just patriots.” The publication always features little stories about history (Paul Revere's ride; American Indians in the Revolution), recipes for patriotic holidays (a presidential ice cream; an apple cake), celebrations of institutions and history (Christmas in the White House). Most issues contain at least one political feature, though these tend toward the broad: “Americans work longer to pay taxes,” ran the title of one. “Big Government is enslaving us to debt,” ran another. Kenney was so wary of getting dragged into the partisan minefield that she resisted calls from some members to get the words “Tea Party” into the group's official name. (
Didn't need that nail in that cross!
)

It was in fact civics, as it happens, not politics, that inspired Kenney to turn to the IRS. The Tea Party had popped up overnight, and networked just as quickly. Tens of thousands of grassroots activists plugged into each other's websites and joined weekly national conference calls. Kenney did, too, and in mid-2010 got word that an anonymous millionaire intended to dole out $1 million in grants to groups that worked to get out the vote.

Kenney loved the concept, and had an inspired idea for a grant. She designed a dramatic poster featuring at its center a big, rippling U.S. flag. (
Yeah, yeah, not French this time.
) Above it, in old-fashioned, Constitution-looking type, ran the words “We the People.” Under the flag, in bold letters, was this simple plea: “Keep the promise. Vote.” At the bottom was SFVP's name, its website, and its telephone number. The posters contained not a hint of party or partisan ideology, and Kenney's idea was to blow them up to ad size and pay to have them hung in twenty bus shelters along a main thoroughfare of her voting district. Cost: $17,000. It was far, far more than her little group could contemplate, but a grant might make it happen.

The hitch? Groups had to be “official” to apply. They needed to be incorporated and control a bank account. Kenney had up until this point operated SFVP as an informal club. Getting official meant getting into bed with the IRS.

Most Americans would be surprised to discover that even the smallest of groups, if they take in or spend even the smallest of dollars, are required to go to the IRS. To avoid paying taxes on those dollars—and to be in a position to really fund-raise, or apply for grants—a group needs special IRS recognition. An entire section of the tax code exists to confer precisely such “nonprofit” recognition on Americans who want to engage in civic life. Eye-glazingly known as Section 501(c) of the U.S. tax code, it contains twenty-nine different categories of organizations that qualify to avoid most federal taxes. Each category gets its own little number: 501(c)(3) groups are charities and religious and educational outfits; 501(c)(5) groups are labor unions; 501(c)(6) groups are industry associations; 501(c)(13) groups are cemetery companies.

SFVP fell under the catchall category of 501(c)(4)—a “social welfare” organization. By long-standing IRS language, the definition of such a group is any “that operates primarily to further the common good and general welfare of the people of the community.” That's the catchall part. Since pretty much every Tom, Dick, or Harry has strong positions on what is “good” for a community, and since those ideas are entirely subjective, pretty much anybody can claim social-welfare recognition from the tax authority. If a group of ninety-year-old ladies claim that teaching four-year-olds to darn socks would benefit the country, the IRS would be hard pressed to deny them tax-exempt sock-darning status.

Kenney knew that going through the hoopla of IRS recognition was overkill. The group's fund-raising was skimpy. She thinks it insulting to ask an admission price to engage in democracy, so at each meeting she instead passes a hat, collecting $5 or $10 here or there. She holds a raffle at each event; six chances for $5. (
People do it because
they just want a chance to win! I love it. It's just so American!
) To fulfill her promise that prizes will always be worth two to three times the raffle tickets, Kenney is a catalog queen, hunting for deals on cookbooks, kitchen equipment, pet supplies, home tools. On her best raffle night ever, she pulled in a whole $150.

She has a few high rollers. One retired couple gives $100 every three months. (
This was a big deal for them!
) Carmen, an elderly woman, regularly gives $20 to help pay for patriot movie nights. Most attendees just volunteer their time and skills, or supplies: Greg the electrician; Aspen the sound guy; Dee, a beauty consultant, who paid to print some posters for rallies; Karnig, an Eastern European immigrant, who made four pairs of handmade clogs for the raffle. (
He does it in European sizes, so it is very confusing. We are now figuring out they run small.
) A friend of Kenney's, Carol, serves as the group's treasurer and keeps track of the money. Todd does the social media. Some people show up to set up chairs. Some hand out literature.

Not much comes in, so not much money goes out. She's made a few “big” investments. The box amplifier and mikes for the meetings ran $900. Radio advertising cost about $1,000 for eight months of weekly ads. Their candlelit 9/11 memorial—their most expensive event ever—ran about $850. The rest is tiny, sporadic: $130 for a website domain; a one-day rental van to deliver the food donations; a table hire for an event. Some of the outgoing checks are token but grateful recognition of volunteer time. No one in SFVP draws a salary, though Kenney insists on paying Cronn a tiny stipend for serving as webmaster and to reimburse him for expenses. In response to a 2011 e-mail from Cronn about a few things he'd bought to create their first newsletter, Kenney replied, “I'll send you a check for $150 to cover your expenses and an enormously ridiculous ‘bonus' of $50 to purchase aspirin, butt cushions and Pepto-Bismol.”

She's (unsurprisingly) scrupulous about documenting every dollar in and out. (
Do I sound OCD? Really, I'm not OCD! Well…maybe I'm a little OCD.
) Kenney estimates that the group's annual income averages about $3,300. And she acknowledges that over its five years she's kicked in about $14,000 of her own money—money she doesn't have to spare. By comparison, the largest liberal 501(c)(4), the League of Conservation Voters, spent $9.6 million on the 2012 election alone.

SFVP was, in short, poorer than a Revolutionary-era church mouse. Asking the IRS to officially recognize that fact hardly seemed worth the effort. Then again, Kenney really wanted to inspire her neighbors to vote. And she figured on a further upside or two. Scoring IRS tax-exempt status would give SFVP some official ownership over its name. Owning a 501(c)(4) badge also tended to make people a little more comfortable about donating.

Kenney knew nothing about the IRS application process, so she fired up her computer. The process was no small thing. She needed official officers—a secretary, a treasurer—so she recruited some SFVP regulars. And she needed articles of incorporation, so she wrote them. They rang true: “The specific purpose of this corporation is to promote the values of a Constitutionally limited government, fiscal responsibility and free-market enterprise under the rule of law through non-partisan, political action (i.e. rallies, e-mail campaigns) and public education (i.e. legislative information, meetings, distribution of literature on the Founders and founding documents of the United States, and voter registration).”

Kenney didn't have money for a lawyer, so she did the IRS application the new-fashioned, DIY-Internet way: LegalZoom. It was straightforward—at least for a group like Kenney's. You give your basic data, names of officers, and your stated articles of incorporation. You describe past and planned activities, explain where you got your money, attach any literature you handed out. You fill out a little chart on your revenue and expenses. You ignore all the questions about capital stock, and classes of membership and assets, because you don't have a pot to piss in. You hit send, mail a check, and assume you get your IRS letter in fewer than three months. Especially because you write a $400 check for expedited service. And even more especially because the IRS's only real job in evaluating 501(c)(4) applications is to ensure that you've filled everything out the right way, and that you haven't mistakenly misfiled as a cemetery company.

Kenney hit send on October 23, 2010. She'd heard nothing by Christmas. Nothing by March. She dutifully filed her requisite tax forms with the federal and state authorities, and waited some more. She'd heard nothing by Easter. Nothing by the Fourth of July. Nothing by Halloween. Nothing a full year after filing.

She wasn't too worried. (
It's the government! It's always backed up. And with the feds, no news is good news, right?
) She'd been advised that she could operate as if SFVP were already a nonprofit, and that's what she did. She carried on with the grant competition, making it through two rounds before getting cut. (
I
hate
losing
.) She kept on with the rallies, events, meetings. Christmas 2011 came and went. And then that fateful day in February, and the “oh shit” moment.

The questionnaire Kenney opened that day was almost a perfect expression of Orwellian bureaucracy—a mix of boring officialdom and sinister intrusiveness. The entire first sheet contained a bewildering list of instructions and caveats. “Mail or fax your response to each of the items requested.…Fax to the name and fax number shown at the top of page 1 of this letter. If your response is greater than 20 pages do not fax. Do not fax and mail your response.…Each piece of correspondence submitted, whether fax or mail, must be processed, assigned and reviewed.…Do not fax your response multiple times.”

What followed were six pages of close type, containing thirty-five broad questions and more than eighty subquestions. Some were redundant. Question 3 required Kenney to (re)submit her articles of incorporation. Some were straightforward: “How many members do you currently have? Provide details regarding all members' fees and benefits.”

Most, however, were insanely invasive (
Ever had a proctology exam done through your nose? That's how this felt.
):

• Provide a printout of each of your website's pages, including any pages with restricted access.
  
• Provide details regarding all of your activity on Facebook and Twitter. Also provide hard copies of all advertising you have conducted using social media outlets.
  
• Indicate if any of your current and former officers, directors, and key employees are related to each other (include family and business relationships) and describe the nature of the relationship.
  
• Provide minutes of all board meetings since your creation.
  
• Regarding your current and planned volunteers:
  
  •      How many volunteers do you have?
    
  •      How many volunteers are/were devoted to each activity of the organization throughout the year?
    
• Provide a list of all issues that are important to your organization. Indicate your position regarding each issue.
  
• Are you associated with any other IRC 501(c)(3), 501(c)(4), or 527 organizations? If yes:
  
  •       Provide the name, federal employer identification number, and address of each organization.
    
  •       Describe in detail the nature of the relationship(s).
    
  •       Describe the nature of all contacts with the organizations.
    
• Has any person or organization provided educational services to you? If yes, provide the following:
  
  •       The name of the person or organization.
    
  •       A full description of the services provided.
    
  •       The political affiliation of the person or organization.
    
• You attempt to influence the outcome of specific legislation. Please answer the following:
  
  •       Provide copies of all communications, pamphlets, advertisements, and other materials distributed by you regarding the legislation.
    
  •       Do you directly or indirectly communicate with members of legislative bodies? If so, explain the amount and nature of the communication.
    
• Have you conducted any protests? If yes, please answer the following regarding your protest activities:
  
  •       What percentage of your time and funds are spent protesting?
    
  •       Has your organization ever conducted or promoted any illegal activity? If yes, explain.
    
  •       Have any of your members been arrested by the police during a demonstration? If yes, explain.