Tuesday, November 2, 2010

Another Tax-Exempt Uptown Organization Gets Political?

click to enlarge
Interesting.  This past weekend, 46th Ward aldermanic candidate Befekadu Retta blanketed Uptown (including the Wilson el station) with flyers about a political meet-and-greet, which included promises of what he'll do if elected.  What caught one reader's eye was the fine print:  "This event is sponsored by VOP Tenant Association."

VOP stands for Voice of the People, a local provider of affordable housing and (this is the important part) a 501(c)(3) tax-exempt organization.  That means it doesn't have to pay income taxes or property taxes; some non-profits have their city water, sewer and sanitation fees subsidized.  Voice of the People also happens to be the recipient of several million Wilson Yard TIF dollars, and is considered a partner and project developer of the TIF.

So, here's the thing:  Organizations that apply to go through the lengthy process of becoming tax exempt must comply with specific IRS regulations to attain the privilege of not paying taxes.  One of the things they promise is to never, ever, ever get involved with politics, endorse candidates or take sides on political issues.  As the IRS puts it:
To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization ... may not participate in any campaign activity for or against political candidates.
If the IRS discovers that an organization it has declared tax-exempt has broken its promise and engaged in political activity, it's not shy about rescinding that organization's tax-exempt privilege

We've got no beef with either candidate Retta or VotP.  But we're pretty sick of broken rules, broken promises, and non-accountability.  We've had enough of that over the past 24 years.  So here are our questions:
  • Did Voice of the People really risk its very valuable tax-exempt status just to host a candidate meet and greet?
  • Or... Did the "VOP Tenant Association" cross that line without the knowledge of Voice of the People's administration?
  • Or... Was the "sponsored by" language something that the Retta campaign added for perceived legitimacy or political advantage?
Enquiring minds want to know.

Update:  Commenter IndigoJade says:  "I really must set the record straight folks. The flyer that is posted here was a misprint V.O.P.was never involved with Retta's campaign or sponsered an event for him. This event was canceled because of this false information. Hate to take the kerosene out of your lamp but this problem was corrected within a day of it being discovered."


  1. Thank you for pointing this out. Play by the rules people.

  2. and where can we report this malfeasance?

  3. According to the IL Sec. of State, Uptown Neighborhood Council is also incorporated as a not-for-profit and has hosted candidate forums, or meet and greets. As I understand the code, the VOP and other NFP's are in violation only if they engage in campaign activity, as opposed to political activity. For example, if they endorse a candidate (directly or by denying other candidates the same opportunity to meet and greet its members), provide a chosen candidate canvassing, field or financial support, or lobby for/against legislation, then they would be risking their status. Hosting open houses for all candidates, assuming that's their plan, is unlikely to trigger a violation.

  4. Ok, my use of political v. campaign activity was dead wrong but the distinction stands. From the IRS:

    The Restriction of Political Campaign Intervention by Section 501(c)(3) Tax-Exempt Organizations

    Under the Internal Revenue Code, all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity. Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.

    Certain activities or expenditures may not be prohibited depending on the facts and circumstances. For example, certain voter education activities (including presenting public forums and publishing voter education guides) conducted in a non-partisan manner do not constitute prohibited political campaign activity. In addition, other activities intended to encourage people to participate in the electoral process, such as voter registration and get-out-the-vote drives, would not be prohibited political campaign activity if conducted in a non-partisan manner.

    On the other hand, voter education or registration activities with evidence of bias that (a) would favor one candidate over another; (b) oppose a candidate in some manner; or (c) have the effect of favoring a candidate or group of candidates, will constitute prohibited participation or intervention.

  5. Wouldn't sponsoring a Meet and Greet with one candidate, and not the other six, clearly "favor one candidate over another" - which is a violation, according to the last paragraph you quoted?

    I'd love to hear from the other six campaign managers to know if their candidates have received similar invitations yet.

  6. Bah, invitation! I'd love to see a candidate just show up assuming the meeting was open to all candidates!

  7. @ Suzanne --

    You are correct that UNC, per IL SoS, is registered as a Not-for-Profit corp.

    However, there are various types of non-profits; 501c3 is the one that gets tax-exempt status and is designated at the federal level (IRS), not the state:


    Per the IRS lookup, I don't see UNC as a 501c3 agency:


    My hunch is that they might be a 501c4, which can get involved in politics, as long as it isn't their primary role.

    Anyway, just a guess. For what it's worth, VOP does show up as a 501c3.

    Also, since I'm making wild guesses, I'd bet that the "sponsored by" language was added by a non-savvy candidate; VOP would likely know better than risking their tax-exempt status for the sake of supporting a relatively unknown aldermanic candidate.

  8. @ Meg


    Offices are closed today due to the election. I'll be calling tomorrow, opening an investigation wouldn't hurt.

  9. When UNC, Uptown Neighborhood Council, was filing papers to incorporate, we carefully reviewed the options and restrictions. As Suzanne points out, a 501 (C)3 like V of the P, may host candidate forums as long as they do not endorse or favor any one candidate.

    UNC is a 501 (C)4, which means we can actively participate in the political process.

    We carefully considered our mission:
    To bring balanced ecomonic development to Uptown with a focus on the arts, culture & entertainment...and decided this was the smartest choice.

    I deeply hope we can use these months before the election to wisely learn more about each candidate and their vision for rebuilding our trust and ward.

  10. Quite frankly, there is an appalling lack of thoughtfulness in this post. So much so, that it should not have even been written.

    First of all, the flyer clearly cites the "VOP Tenant Association” as a sponsor of the meet & greet , not "Voice of the People in Uptown Inc." (aka VOP), which is the 501(c)(3) tax-exempt organization restricted from political activity.

    Based on this fact alone, any insinuations of shenanigans against VOP are ridiculous on their face.

    Second, it is reasonable to assume that the “VOP Tenant Association” is not an arm of the non-profit, just as the tenants associations of Chicago Housing Authority properties or that of a private for-profit landlord are not an arm of those entities.

    What's your agenda in making such insinuations?

    Shame on you.

  11. I just wonder if this is making a mountain out of a mole hill. Personally, I'd rather spend my time figuring out a way to tackle crime than dealing with the IRS.

    Mr. Retta seems like a very decent citizen of uptown. In fact, I went to all of the candidates websites today and read what each was about. I also emailed every candidate as well, asking them what their 90 & 180 day plans are as well and short and long term goals. I'm not voting for anyone who can't clearly articulate their intents and purposes.

    It's my experience that focusing on small details skews greater results. Additionally, maybe the VOP intends to do this for all candidates and even if not, I'm certain that a platform/audience exists for all in the running.

    I would like a common, unifying body to bring us neighbors together and bring about change. The best we may ask of an Alderman is to work with all of us to help outline our vision for uptown. This is a community responsiblity and it's going to take all of us working together. The more we divide, the more we skew.

  12. The older, more established organizations know better. It's natural for newer tax-exempt organizations to be lured into local politics. I don't think that they are intentionally committing fraud, it's just that whoever filed the paperwork (probably an accountant) didn't explain the rules.

  13. El and Katherine are right, 501c3 and 501c4 orgs can behave very differently. They also differ in that contributions to a 501c4 are not tax-deductible and those made to a 501c3 are.

    Caring Neighbor, I just got off the phone with VOP. This appears to be an off-road adventure by an over-enthusiastic resident. Fyi: Documents and events sponsored or authorized by VOP have, as a practice, the org logo and the name of the sponsoring individual, neither of which appear on this flyer. More details to come...

  14. For those of you who weren't around for Election 2007 or whose memory is impaired by alcohol use, like mine, here's an oldie, but a goodie.

    Or an innie or an outtie. I forget.

    Our passive aggressive friends over at JPUSA loaded some of their properties up with Shiller signs. JPUSA supposedly being a religious organization. Probably in the same sense some massage therapists are actually prostitutes. OH, save me Mary Magdalene.

    I of course took some pics and posted them. Here is one such pic.

    Grand JPUSA Pooba Jon Trott was quite unhappy with me. I seem to recall being called a stalker.

    My feelings were deeply hurt.

  15. I really must set the record straight folks. The flyer that is posted here was a misprint V.O.P.was never involved with Retta's campaign or sponsered an event for him. This event was canceled because of this false information. Hate to take the kerosene out of your lamp but this problem was corrected within a day of it being discovered.

  16. Thanks for setting the record straight and doing the right thing, IndigoJade. Nice to hear VOP took responsibility for the error. There's no "kerosene in our lamp," just the interest in having a clean election and having people follow the rules. Thanks for doing both.

  17. A response from the candidate would be a nice gesture, as well.

  18. indigojade said... "I really must set the record straight folks. The flyer that is posted here was a misprint V.O.P.was never involved with Retta's campaign or sponsered an event for him. This event was canceled because of this false information. Hate to take the kerosene out of your lamp but this problem was corrected within a day of it being discovered."

    Really, it was cancelled? Because I live on this block, and happened to be walking by before and during the time mentioned, there were multiple copies of this sign up (they are still there) at the address where this was scheduled; there were people on the corner getting signatures for the candidate and right around the time the event was supposed to be over, I saw the candidate walking out of that building.

    Now I'm not saying anything about the candidate in any way shape or form regarding whether VOP is Voice of the People or not or whether it was officially used or not. All the people involved with the candidate seemed perfectly nice during my encounter with them. I'm just wondering how accurate your statement is because it seemed to me that there was definitely an event albeit a small one.

  19. This same flier is posted at the corner of Magnolia and Sunnyside. Although the meeting may have been cancelled, the flier provides the impression that Retta is being endorsed by the VOP. This may have an impact on the way the residents of the VOP will vote.

  20. So how does one contact the IRS and request and investigation of their tax status?

  21. To report this to the IRS, which can take away their not-for-profit status for fraud and abuse, just cut & paste the following into your web browser:


  22. Really? Somebody makes unauthorized flyers to invite neighbors over to meet Retta and people want to report it to the IRS because why? Fraud? People might vote for Retta?

    Think about it this way, what if these flyers invited neighbors to meet James Cappleman and said the event was sponsored by UNC. Who do you call? UNC? James? Or the IRS?

    I believe Caring Neighbor when s/he said the intent was to have a clean election and make sure the rules are being followed. So next time, before inferring skunk, or invoking the IRS, let's at least call the principals first.

  23. This was more than an unauthorized distribution of posters. This was an event on their property and a denial that it ever occurred.

    Perhaps VOP didn't know the rules, wink, wink. However, Mr. Ritta works for Cook County Clerk's Office Election Department and he's well aware of the rules and he still went on with this event. Any candidate who knowingly jeopardizes a not-for-profit's tax exempt status has some serious explaining to do.

  24. You’re absolutely right about ISBE employees; they should---and do---know better, which begs the question: what did Retta know? I don’t what he knew about this flyer, do you? So why not call and ask him? If he knew about it, well then heck, file a complaint with ISBE.

    The VOP is aware of the rules, which is why they have a specific procedure (described above) to safeguard their organization from intentional and unintentional co-opting endeavors like this one. Just because neighbors still visited with Retta doesn’t mean VOP failed or lied.

  25. "which begs the question: what did Retta know?"

    It might raise the question, but it doesn't beg the question.

    What's up with the witch hunt?

  26. Dunleavy, I thought a question was begged rather than raised when claims, such as the ones given here, are taken as proof without actual evidence, no?

    Uptown Superhero, I'm afraid you might be misreading me. Let's try another approach: Go ahead and call the IRS. They will be super impressed with this "evidence." :-)))

  27. What's up with the witch hunt? -dunleavey

    Mr. Ritta has potentially placed a not-for-profit at risk for losing their tax exempt status so that he could promote himself. Because of his job, he should know better. But maybe Ritta knew nothing about the rules or maybe some excited VOP person happened to create the flier and was able to somehow get the campaign logo on his own without Mr. Ritta's knowledge, wink, wink.