WASHINGTON — Colorado Republican officials created the Abraham Lincoln Opportunity Foundation in 1984 to assist the needy and organize speech contests for poor inner-city teenagers.
But the nonprofit group eventually pursued an entirely different agenda: to help House Speaker Newt Gingrich and his political action committee, GOPAC, "recruit activists all across America to become involved in the Republican Party," as Gingrich wrote in a 1990 fund-raising letter.
As an Internal Revenue Service-approved public charity, the Lincoln Foundation advised donors that their contributions were tax-deductible in the same way that gifts to museums, churches and soup kitchens qualify as tax write-offs. Federal tax law requires these exempt organizations to operate exclusively for charitable purposes and prohibits any form of partisan conduct, including promoting the interests of a particular party or candidate.
The Lincoln Foundation was not unique. From 1984 to 1994, Gingrich and his cadre of key advisors used no fewer than six nonprofit groups to extend the reach of GOPAC, the partisan committee that fueled the successful 1994 Republican drive to gain control of Congress.
Together the foundations were part of a loose network of Gingrich-related enterprises dubbed "Newt's World" in a GOPAC strategy memo. They formed an innovative approach to political organization that, in the view of many tax experts, stretched the rules governing charitable groups.
"The pattern is unusual, perhaps even unprecedented in American politics," said Frances Hill, a University of Miami law professor who has written extensively about tax-exempt law, including one of the foundations associated with Gingrich. "Newt was just more flamboyant. He pushed the envelope further" than other politicians.
All six nonprofit groups shared a direct connection to GOPAC between 1985 and 1995, when Gingrich was its chairman, records show. They were run by GOPAC officers and consultants, Gingrich campaign advisors and congressional staffers. Some even worked directly out of GOPAC headquarters. The foundations generated at least $6 million combined in tax-deductible contributions that were outside the purview of federal election law.
Two of the organizations--the Kennesaw State College Foundation and the Progress & Freedom Foundation--are under the scrutiny of special counsel James M. Cole, who was hired in December by the bipartisan House Ethics Committee. He is investigating allegations that the speaker improperly used charitable funds by advancing Republican causes through his nationally televised college course.
Records examined by The Times raise similar questions about the Abraham Lincoln Opportunity Foundation, the West Georgia College Foundation and the American Opportunity Foundation. The work of a sixth nonprofit organization, the American Campaign Academy, was so blatantly partisan that the IRS and a federal judge ultimately refused to approve its application for tax-exempt status.
Gingrich, who declined to be interviewed, has denied misusing any foundations.
"Newt Gingrich's support of any organization, nonprofit or otherwise, has always been conducted properly and lawfully," said his spokeswoman Lauren Sims.
To be sure, Gingrich is not the first elected official to use tax-exempt foundations. These groups appeal to politicians because, unlike normal campaign contributions, there is no limit to the amount of money they can collect from businesses and individuals. There also is no requirement to disclose publicly the identities of financial donors. Nor are nonprofit groups obligated to reveal expenditures in detail.
In 1987, the House Ways and Means subcommittee on oversight sought to curtail what it described as "the alarming use of tax-exempt organizations to further the political ambitions of a particular candidate." Congress passed a law that toughened sanctions and defined a prohibited political expenditure by a tax-exempt group as any "expense which has the primary effect of promoting public recognition" of a political candidate.
The federal ban on improper political activity is "absolute" and prohibits even "subtle" or "inadvertent" acts of partisanship, according to an IRS technical advice memorandum released in December.
Chief among the potential tax problems confronting Gingrich is whether he has run afoul of this ban.
Some of the foundations, tax experts who were consulted for this story said, appear to have been used as conduits to sponsor political activity.
"This practice amounts to a form of charitable money laundering," said Gregory L. Colvin, an attorney with the San Francisco law firm of Silk, Adler & Colvin and a widely recognized expert. "Tax-exempt foundations are intended for programs like delivering meals to people who have AIDS, not to providing cover for a political project."
The Abraham Lincoln Opportunity Foundation