Part of the political arena?

COEUR d’ALENE — Since its inception in 2008, the charitable nonprofit Idaho Freedom Foundation has been criticized for what some say is questionable political activity, so this year the group formed a political advocacy nonprofit.

But the criticism hasn’t stopped, especially since the new nonprofit, Idaho Freedom Action, mailed out political fliers attacking two North Idaho lawmakers’ voting records. The mailer included at least one erroneous statement.

“Every other entity that is engaged in the political activity they are engaged in has to file with the state as a PAC,” said Sandy Patano, president of the Republican North Idaho Political Action Committee. “When we raise money we have to disclose our donors’ names and how we spent their money in very detailed reports.

“The Freedom Foundation’s donors can get a tax deduction for their anonymous donations with the promise of Idaho Freedom Foundation becoming their political arm,” Patano continued. “They are operating as something other than what they claim to be.”

Patano said no matter what legal form the group takes to conceal the identities of its donors and its spending, the Idaho Freedom Foundation is engaged in the same activity as any other political group that is subject to disclosure.

“They are picking winners and losers, and they grade their political performance,” she said, adding they are also targeting specific voter groups with political mailings. “They are trying to persuade voters. How is that any different from a PAC?”

Wayne Hoffman, president of the Idaho Freedom Foundation, is no stranger to the criticism, but he maintains his organization is in full compliance with federal and state election disclosure.

Hoffman said the foundation started out as an educational nonprofit designed to educate lawmakers on legislative issues that are important to the foundation.

“Our original intention was not to lobby at all,” Hoffman said. “We would tell folks that we don't lobby.”

However, after two legislative sessions, the foundation’s political activity was increasing, Hoffman said, so he went to his board and asked for permission to register as a lobbyist.

“Under Idaho law if you are paid to build good relations with legislators, you are a lobbyist,” Hoffman said. “On the one hand we were saying we are not lobbyists according to federal law, but under Idaho law we are lobbyists.”

Hoffman said the Freedom Foundation is a registered 501(c)3 nonprofit, a tax-exempt, charitable entity that is prohibited from most political activities.

“Most people think 501(c)3s can’t lobby, but they can,” Hoffman said, explaining there is a provision in federal law that allows him to file an “H-election,” which will allow him to engage in lobbying. “We just have to tell the IRS what we are up to.”

They filed their H-election paperwork in May of 2010, right after their second legislative session of educating state lawmakers. That allows them to spend up to roughly 20 percent of their budget on lobbying efforts. Hoffman said they haven’t spent anywhere near that amount.

“Our budget is around $700,000 and $800,000, and I can’t remember exactly what we spent, but it was less than six figures,” he said, adding that it is all reported to the state and federal tax commissions.

According to the Idaho Freedom Foundation’s 2014 IRS Form 990 — the annual federal tax form 501(c)3s are required to file — the Freedom Foundation reported $757,402 in total revenue, $731,027 in total expenses, $6,915 spending on grassroots lobbying (to influence public opinion) and $8,798 in direct lobbying (to influence a legislative body.)

While the foundation is allowed to lobby, it is not allowed to endorse or give money to candidates, and it cannot engage in electioneering activities.

“Where the Freedom Foundation is limited, we are allowed under state and federal law to do a number of things with a (c3),” Hoffman said. “As long as I have a pattern of critically talking about and writing about elected officials, I can do that clear up until election day.”

That is why Hoffman has spent the last seven years writing columns that are both critical and complimentary of various legislators across the state.

“We are allowed to do that,” he said. “What we can’t do is speak outside of our membership.

“So we do the freedom index and I can mail those to my members and supporters, but I can’t take that index and mail it out to 5,000 Kootenai County voters, thus the (c4),” he said. “The (c4) allows us to speak outside the membership.”

The new 501(c4), which can legally engage in political advocacy, is called Idaho Freedom Action. The articles of incorporation filed with the Secretary of State's office said the board consists of Vicki Keen, of Boise; Doyle Beck, chairman of the Bonneville County Republican Party; and Robert Rathbone, a Freedom Foundation board member. It also lists Hoffman as the incorporator and Frederic Birnbaum, vice president of the foundation. The staff of Idaho Freedom Foundation also staffs Idaho Freedom Action through a contractual agreement.

“IFF has a separate board from the IFA,” he said. “IFA elected to sign a joint services agreement with IFF so whenever IFA does any kind of business using IFF employees, IFA reimburses IFF for that work.”

He said they also keep separate books and bank accounts. He said they take great care to make sure their activities are kept completely separate. “You cannot take tax deductible money and put that into IFA accounts,” he said. “Wait, I stand corrected, I believe there is a mechanism where a (c4) can give money to a (c3), but we are not using it. We are keeping the money separately.”

Hoffman said the IFA can lobby infinitely.

“It can spend 100 percent of its resources to lobby,” he said, adding they have not elected to do that. “It can also endorse candidates, but it still cannot donate to candidates.”

Under Idaho law, Hoffman said IFA can engage in electioneering, such as mailing campaign literature that points out a candidate’s voting record.

“I can send to voters in Kootenai County a mailer that says here is a certain representative’s or senator’s voting record,” he said.

Hoffman said IFA has gathered voter information from various county clerks across Idaho to develop a mailing list of likely Republican voters.

They also began mailing out political literature in January with the last mailing going out at the beginning of April — avoiding the 30-day period before the primary elections where IFA would have to report who donated the money for the mailings and what was spent to print and mail them out.

Tim Hurst, chief deputy Secretary of State, said he has been talking with Hoffman about disclosure of IFA’s political activities.

Hurst said he believes IFA should have to disclose the donations and expenditures of the IFA’s political activity. Hurst outlined two choices the IFA has. One is to form a political action committee and follow their reporting procedures and the second is to file what is called an electioneering communications report, which details who donated to that political activity and how much they spent.

“It is my understanding that they are going to form a PAC,” Hurst said, adding they don’t have to do that if they file the electioneering reports.

Hoffman said that is where things get “very, very complicated.”

“According to Idaho law, anything that is done prior to the 30-day window is not an electioneering communication,” he said, adding he does not intend to disclose any donations or expenditures related to his recent mailings opposing two North Idaho legislators, Rep. Luke Malek, R-Coeur d’Alene, and Sen. Shawn Keough, R-Sandpoint.

“In that instance there, we are allowing people to know their voting records,” Hoffman said.

However, in the Malek flier mailed out last week, the IFA claimed Malek voted for a bill, HCR 63, that would “Begin the expansion of Obamacare in Idaho,” but Malek never voted on that bill.

Hoffman said that was a “typo” and that IFA wasn’t concerned about HCR 63 because it didn't exactly expand Obamacare.

“That bill involved creating a study committee, and I don’t consider that expanding Medicaid,” he said. “It’s not the best legislation, but it doesn’t concern me.”

The bill, which only passed the House of Representatives at the end of the session this year, would have established an interim committee to study ways to potentially expand Medicaid during the next legislative session.

If it was a “typo,” as Hoffman states, the IFA made the same mistake on at least two other mailings sent out regarding Rep. Paul Romrell, R-St. Anthony, and Rep. Rich Wills, R-Glenns Ferry, who voted in favor of HCR 63. Those two fliers were posted to IFA’s Facebook page until The Press inquired about them on Friday and then they were removed.

Hoffman said those fliers were a mistake as well and his organization wasn’t very concerned about HCR 63 anymore.

“We erred on those and we have to correct the record on those other two,” Hoffman said, adding he is unsure how they will correct the record.

When asked if the change of heart had anything to do with the fact that Reps. Vito Barbieri, R-Dalton Gardens, Don Cheatham, R-Post Falls, Ron Mendive, R-Post Falls, and Eric Redman, R-Athol voted in favor of the bill as well, Hoffman denied that had anything to do with the decision to correct the record.

Hoffman said, regardless of the mailings, Malek, Wills and Romrell have been vocal about expanding Medicaid, which the IFF opposes.

“Unfortunately, we did a very lousy job communicating that,” he said. “We will correct the record.”

Malek said on Friday he fully believes the group intended to use that bill to campaign against him until they realized he had not voted on it.

“If they are two-stepping around this issue and backtracking on that bill they clearly meant to use, that is disingenuous,” Malek said. “...they are bad actors in the public policy realm.”