How Education Reformers Fund Their Reform Lobbying Efforts Without Revealing Their Donors

Chris Bragg of the Times-Union with an illuminating piece about how education reform groups push their political agenda without revealing who's funding it:

Three groups pushing education reforms that spent heavily lobbying state government this year funded at least a portion of their efforts though donations whose original sources are essentially untraceable.

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StudentsFirstNY Advocacy, the Coalition for Opportunity in Education and Families for Excellent Schools spent more than $8.3 million during the 2015 legislative session lobbying state government to promote charter schools and other issues, according to recent lobbying disclosure filings.

Here is one of the games the education reformers play to hide where the money's coming from:

Manhattan-based group StudentsFirstNY Advocacy, which pushes for charter schools and other causes, spent $2 million this year, but the sources behind roughly half that spending are unclear..

One million dollars were donated to StudentsFirst NY Advocacy by another nonprofit, StudentsFirst NY Inc., that heavily overlaps with it: The two groups share an office suite and staff.

Both StudentsFirst NY Advocacy and StudentsFirst NY Inc. are issue-oriented nonprofits that must disclose their donors if they engage in substantial lobbying spending. If StudentsFirst NY Inc. had itself spent its $1 million on lobbying, it would have had to disclose the sources behind the funds.

But because the $1 million passed from StudentsFirst NY to StudentsFirst NY Advocacy, which then spent heavily on lobbying, only the name of StudentsFirst NY Inc. appears on the lobbying disclosure filing submitted by the Advocacy arm in July.

How did StudentsFirstNY explain the interesting arrangement of having one wing of StudentsFirstNY write the other wing a check, have that second wing do the lobbying and thereby hide where the money was coming from?

 StudentsFirstNY responded with this:

Asked if the money transfer was meant to obscure the identity of donors, a StudentsFirst NY spokesman maintained the $1 million came from pre-existing StudentsFirst NY funds — not from new donations funneled through the group.

Jenny Sedlis, executive director of StudentsFirst NY, added in a statement that "StudentsFirst NY is proud of the campaign we ran to increase high quality school choices for kids." Sedlis is also listed as a lobbyist for StudentsFirstNY Advocacy.

In short, the ends justify the means and that's that.

But wait, it gets better.

The StudentsFirstNY suite must be a pretty big place because it turns out the education reformers at Families For Excellent Schools also list the StudentsFirstNY suite as their base of operations - and boy do they drop some murkily-sourced cash on political lobbying:

Families for Excellent Schools, another Manhattan group that also lists the same address as StudentsFirst NY but says it operates separately, has taken a much more direct approach that has allowed its donors to remain anonymous.

Families for Excellent Schools, which spent $1.6 million on New York lobbying so far this year, has an issue-oriented nonprofit arm that would have to disclose its benefactors. But the group does almost all its lobbying through its apolitical arm, which does not have to report its donors under New York lobbying laws and can take tax-deductible donations.

The apolitical arm spent a staggering $9.7 million on Albany lobbying in 2014, but did not disclose a single donor.

Such apolitical nonprofits, categorized as 501(c)3 groups, face restrictions from the Internal Revenue Service on how much they can spend on lobbying — a likely reason why such nonprofits are exempt from disclosing their donors under New York law.

The heavy lobbying spending as defined by New York law, plus the IRS restrictions on lobbying by such nonprofits, could raise potential issues regarding the group's tax status.

But David Grandeau, an attorney for Families For Excellent Schools and former top state lobbying regulator, has maintained that the IRS definition of lobbying is far narrower than the one found in New York law, a distinction that he says makes the heavy New York lobbying spending by the group permissible under federal regulations.

The shell games the charter school advocates, hedge fundies and education reformers are playing are similar to the games Governor Cuomo plays with the LLC loophole - it's all about funding a political agenda with a lot of cash, doing it murkily but legally and ensuring that a small segment of the population (i.e., really, really wealthy interests)  can impose most of their political agenda on the rest of the state.

The corruption in this state is endemic and so deep-rooted that the US attorney can literally cart out most of the political leadership in Albany on corruption charges but the bribery, kickbacks and larceny continue apace like nothing's happened.