Freedom Partners

{{#badges:front groups}}Freedom Partners, formally known as the "Freedom Partners Chamber of Commerce" (and previously the "Association for American Innovation"), is a 501(c)(6) "business league" group with close connections to the Koch brothers. According to Politico, "It will be run by former top AFP strategist Alan Cobb and will wage a behind-the-scenes push in state capitols for reforms consistent with the brothers’ small-government, free-enterprise philosophy, including possibly curbing union power and abolishing income taxes."

The listed address for the Association for American Innovation is 2200 Wilson Blvd Ste 102-533 Arlington, VA 22201, which is a UPS Store mail-drop.

The Association for American Innovation was chartered as a Delaware corporation on November 2, 2011, according to Bizpedia.

Also, as of May 22, 2013, a Google internet search for "Association for American Innovation" found no official webpage for the organization.

501(c)(6) "Business League" Status

Forming the organization as a 501(c)(6) of the tax code sets the group apart from many of the other notorious and controversial "dark money" groups that were active in the 2010 and 2012 elections. These groups, such as Karl Rove's Crossroads GPS or Americans for Prosperity, are organized as 501(c)(4) "social welfare" nonprofits.

Section 501(c)(6) is reserved for business leagues, chambers of commerce, such as the U.S. Chamber of Commerce, or trade associations like the pharmaceutical lobby PhRMA or the American Bar Association. But, unlike those groups, there is little evidence the Association exists to advance the interests of any particular trade or industry.

Marc Owens, former director of the IRS tax exempt division, told The Huffington Post, "It's possible that the Kochs think there's less audit exposure with a (c)(6)." But he added, "It's not clear to me what line of business is furthered by an innovation group. That could make it difficult to establish entitlement to (c)(6) status with the IRS."

Vague, Ambiguous IRS Rules & Controversy over IRS Targeting of Conservative 501(c)(4) Groups

Much of the law governing both 501(c)(6) and 501(c)(4) groups is the same: political intervention cannot be their primary purpose. But the IRS rules for what constitutes political intervention are relatively ambiguous and rarely enforced. And this provides an opening for the Kochs and their allies to continue influencing elections from the shadows.

Although the IRS rules are ambiguous for both (c)(4) and (c)(6) groups, states like California, Montana, and New York have attempted to enforce various state laws. However, another advantage to organizing the Association for American Innovation as a (c)(6): unlike (c)(4)s, they largely will not fall under the charitable trust jurisdiction of state attorneys general.

Scrutiny of (c)(4) groups is likely to heat up from several angles making a (c)(6) group more attractive. Attorney Greg Colvin, an expert in nonprofit law, told the Center for Media and Democracy "A (c)(6) is exactly where you'd expect captains of industry to go for political leverage out of the public view, especially if the notorious 501(c)(4) organizations are about to be more heavily scrutinized and regulated by the IRS."

This is especially true after the controversy surrounding the IRS targeting of tea party groups has caused Senate Democrats to focus on the vague 501(c)(4) tax laws which are seen to have contributed to this scandal. As The Huffington Post reported, Senator Max Baucus (D-Mont.) said in his opening statement to a Senate Finance Committee hearing on IRS targeting of conservative groups, "Once the smoke of the current controversy clears, we need to examine the root of this issue and reform the nation’s vague 501(c)(4) tax laws." He elaborated, "[n]either the tax code nor the complex regulations that govern nonprofits provide clear standards for how much political activity a 501(c)(4) group can undertake. The code does not even provide a clear definition of what qualifies as political activity."

Additionally, the government watchdog group, Citizens for Responsibility and Ethics in Washington (CREW) filed a federal lawsuit in May 2013 asking for a judicial order that IRS initiate a process to bring its rules on 501(c)4 nonprofits in line with federal law, and this adds to the potential for even more scrutiny of (c)(4) groups.

Finances

Contributors and Membership

Freedom Partners boasts over 200 members with each member paying at least $100,000 in annual dues, according to POLITICO. Despite Freedom Partners connection to other Koch family entities, Freedom Partners' President Marc Short claims, "Koch-linked entities provided a 'minority' of the funds" for Freedom Partners in the 2012 fiscal year. Short also noted, that "the largest single donor gave about $25 million."

Distribution of Grants and Other Financial Assistance

Freedom Partners' tax returns from the 2012 fiscal year reveal that the organization provided financial support for 34 groups (both private and government affiliated) between November 2011 and November 2012. Freedom Partners, unknown to the public at the time, was the largest financial contributor to conservative groups in the 2012 election.

As reported by Politico, recipients of the largest grants included:

• Center to Protect Patient Rights, a group that vehemently opposes Obamacare: a total of $115 million, from three grants.
• Americans for Prosperity, an organizing and advocacy group that is courted by Republican presidential candidates: $32.3 million.
• The 60 Plus Association, a free-market seniors group that also opposes Obamacare: $15.7 million.
• American Future Fund, an Iowa group that spent a lot of money on ads in 2012, many for Mitt Romney: $13.6 million.
• Concerned Women for America Legislative Action Committee, which gets involved in a number of social policy debates: $8.2 million.
• Themis Trust, a Koch-based voter database that is made available to other conservative organizations: $5.8 million.
• Public Notice, a fiscal policy think tank: $5.5 million.
• Generation Opportunity, a group for “liberty-loving” young people: $5 million.
• The Libre Initiative, which targets a free-market message to Hispanic immigrants: $3.1 million.
• The National Rifle Association: $3.5 million.
• The U.S. Chamber of Commerce: $2 million.
• American Energy Alliance: $1.5 million.
• And several groups — including the State Tea Party Express, the Tea Party Patriots and Heritage Action for America — got less than $1 million each."

Freedom Partners' federal tax returns for 2012 also revealed several entities wholly owned by Freedom Partners. As noted by Lisa Graves of the Center for Media and Democracy, these entities are:

• The "American Entrepreneur Fund LLC," which had assets of $885,316 and whose activities are listed as simply as "projects"
• The "American Enterprise Group LLC," which had assets of $424,975 and whose activities are listed as "management"
• The "American Strategies Group LLC," which had assets of $97,714 and whose activities are listed as "public outreach"
• The "MIC LLC," with assets of $25,000 and whose job was "research"
• And, "American Strategic Innovations LLC," with assets of $4,976, whose job was also listed as "research"

Personnel

Board of Directors

Freedom Partners' Board Members are listed on their website as follows:

• Marc Short - President

Marc Short is the former chief of staff for the House Republican Conference, former executive director of the Reagan Ranch, former executive director of Freedom Alliance and former director of the Virginia Finance Committee for the Oliver North for U.S. Senate campaign.

• Richard Fink - Executive Vice President

Richard Fink is the current executive Vice President and a member of the Board of Directors for Koch Industries and is CEO of Koch Companies Public Sector. He is also currently the President of the Charles G. Koch Foundation, and a Director of the Fred C. and Mary R. Koch Foundation.

• Wayne Gable - Chairman of the Board of Directors

Wayne Gable is the former managing Director of International Government Affairs at Koch Industries.

• Kevin Gentry - Board of Directors Member

Kevin Gentry is currently Vice president of Koch Companies Public Sector. He also is vice chairman of the Republican Party of Virginia.Foundation.

• Nestor Weigand - Board of Directors Member

Nestor Weigand is chairman of the board and CEO for J.P. Weigand & Sons. He is also a director for the National Association of Realtors, chairman of the board of Wesley Medical Center and a member of the Board of Directors of Regal Entertainment.

Other Staff

• James Davis - Vice President for Strategic Communications

James Davis is the former communications director of the 2012 Republican National Convention.

Contact Information

Association for American Innovation
2200 Wilson Blvd., Ste. 102-533
Arlington, VA 22201

Articles and Resources

Related SourceWatch Articles

• Koch Industries
• Koch brothers
• Koch Family Foundations
• Americans for Prosperity
• FreedomWorks
• American Commitment

Related PRWatch Articles

• Brendan Fischer, California Elections Board Peels Back Layer of Dark Money Onion, Finds More Onion, PRWatch.org, November 6, 2012.
• Brendan Fischer, Kochs Form "Business League," Will Keep Political Spending In the Shadows, PRWatch.org, May 2, 2013.
• Brendan Fischer, Ambiguity in Tax Rules and Disintegration of Election Law May Have Led to IRS Tea Party Mess, PRWatch.org, May 15, 2013.

External Resources

• Kenneth P. Vogel, Koch World reboots, Politico, February 20, 2013.
• Peter Overby, After Tough 2012, Conservative Koch Brothers Regroup ,NPR, February 28, 2013.
• Koch Bros Start New Dark Money Group, SustainableBusiness.com, May 7, 2013.
• Peter H. Stone, New Koch Brothers Group Revamps Billionaires' Dark Money Operation, The Huffington Post, April 26, 2013.