ALEC Support Drops 19 Percent in 2013

The embattled American Legislative Exchange Council (ALEC) lost nearly 20 percent in grant revenue between 2012 and 2013 according to new tax filings, reflecting the financial hit that the "corporate bill mill" has suffered as it has been dragged into the sunlight and its corporate members have fled.

ALEC's contributions and grants dropped from $7,216,208 in 2012, to $5,825,882 in 2013, according to the organization's tax filings made available today. This amounts to a loss of $1,390,326, or a 19 percent drop. This is about the lowest its been since 2009, after numbers are adjusted for inflation.

The group's expenses remained largely unchanged, and ALEC ended 2013 with a $1,188,421 deficit.

ALEC's financial troubles are part of a trend that began in 2012, after the organization came under intense scrutiny for its role in pushing voter ID restrictions, anti-union legislation, and Stand Your Ground bills like the one implicated in the killing of Florida teenager Trayvon Martin. Thanks to public awareness campaigns by CMD, Common Cause, Color of Change, Greenpeace, Progress Now, People for the American Way, and other public interest organizations, ALEC lost over 70 corporate members during the 2012-2013 period, and with it, a significant chunk of its revenue. Today, over 90 firms have cut ties with ALEC.

ALEC's 2013 budget shortfall was predicted last August, according to internal ALEC documents leaked toThe Guardian. Those documents showed ALEC's "private sector" membership dropped from 280 in 2011, to 241 in 2012, to a new low of 214 in August, 2013. Legislative membership also dropped, from 2,200 in 2011, to 2,010 in 2012, to 1,810 in 2013. The Guardian documents also showed ALEC trying to tap its corporate and legislative board members to raise funds for the organization from "major donors," but those fundraising efforts were apparently unsuccessful.

ALEC Revenue Down, But Public Affairs Spending Up

Amidst the exodus of ALEC members and growing public scrutiny in 2013, ALEC significantly expanded its public affairs department. On tax filings, nonprofits must report their top three program expenditures, and in 2013, for the first time, "public affairs" was among ALEC's top expenses.

ALEC hired former Edelman PR exec Bill Meierling in early 2013, and by year's end the organization had spent $802,295 on program expenses for public affairs, according to its tax filings.

The corporate bill mill also contracted with Edelman for additional public relations help in 2013, to the tune of $208,000.

Whether Edelman will continue taking ALEC's money to woo reporters and attack critics is unclear. The global PR firm recently announced that they will "not represent clients that deny climate change," in the wake of reports by the Climate Investigations Center, The Guardian, and Vice, although it has refused to say whether it still works with ALEC.

ALEC's role in denying climate change and thwarting renewable energy initiatives has been the cause of the most recent wave of corporate defectors. Since August, corporations like Microsoft, Google, Facebook, Yelp, AOL, and Yahoo have all dumped ALEC over its anti-environmental agenda, with Google CEO Eric Schmidt saying ALEC is "literally lying" about climate change.

The chair of ALEC's corporate board, software giant SAP America, also quit the organization in recent weeks, citing its "strange policies" on climate change, gun safety, and voting rights. Emerson Electric also announced this week that it had left ALEC.

Jeffersonian Project Focused on "Immigations," "Religion and Civil Society"

The Guardian documents also revealed the existence of the "Jeffersonian Project," a 501(c)(4) organization apparently formed in anticipation of the IRS looking closely at whether ALEC is eligible for 501(c)(3) charitable status, which has been challenged in complaints from Common Cause, Clergy VOICE, and the Voters Legislative Transparency Project. Those complaints allege that ALEC has engaged in more lobbying than is permissible for a charity, and ALEC's lawyer, Alan Dye, told the ALEC board that forming a 501(c)(4) "would provide greater legal protections or lessen ethics concerns."

The Jeffersonian Project's 2013 tax filings, obtained exclusively by the Center for Media and Democracy, show that the group raised only $60,000 in its first year of existence, via two $25,000 donations and one $10,000 contribution. The filings note that "the organization was in its its start up phase" in 2013 and did not engage in any program-related activities.

Notably, the role of the Jeffersonian Project is described as educating "the public as well as Congress" on issue areas including "religion and civil society" and "immigations" (yes, "immigations").

This is significant because ALEC has claimed that it will no longer wade into "social issues" like religion or immigration. And, it suggests the Jeffersonian Project anticipates influencing Congress, where ALEC has traditionally focused on state-level politics.

For years, ALEC promoted anti-immigrant legislation, most notably Arizona's SB1070, which it adopted as the "No Sanctuary Cities for Illegal Immigrants Act" while private prison companies like Corrections Corporation of America were ALEC members (although the prison corporations claim not to have voted on the bill). ALEC also adopted measures like the "Resolution on the Fourteenth Amendment" declaring that children born in the U.S. are not eligible for citizenship, as well as a "Resolution Against Amnesty" and a "Resolution to Enforce Our Immigration Laws and Secure Our Border."

In the wake of controversy in 2012, ALEC disbanded the task force responsible for its anti-immigrant legislation, Stand Your Ground bills, and voting restrictions, and claimed it would no longer focus on "social issues." (It then quietly restarted the task force under the name "Justice Performance Project," claiming concern about prison overcrowding without acknowledging ALEC's legislative agenda that fueled the growth of prison populations and profits for its funders.)

In recent years, ALEC has stayed away from issues with a religious bent, although it did push anti-gay policies throughout the 1980s.

Given ALEC's recent financial troubles, perhaps the Jeffersonian Project's focus on "religion and civil society" and "immigations" will present more fundraising opportunities.

CMD Research Director Nick Surgey contributed to this article.