06/11/2007

Rep. creates nonprofit corporation

By Brian Mcgillivary

bmcgillivary@record-eagle.com

Elsenheimer

TRAVERSE CITY — State Rep. Kevin Elsenheimer paid a Lansing lobbyist to create a nonprofit corporation in his name that can lobby his colleagues, advocate on political issues, and accept untraceable donations from individuals and corporations.

But the Antrim County Republican said he will only use the corporation to benefit area youth, despite what's stated in incorporation documents for the Elsenheimer Community Fund.

"It's something I'll use to send northern Michigan kids to camp or on class trips to Washington, D.C.,” Elsenheimer said. "I don't see it as a means to advance a policy agenda.”

Elsenheimer could have organized as a charitable organization, which would have limited the corporation's political activity.

Instead, the Elsenheimer Community Fund is organized under section 501c(4) of the Internal Revenue Service code, the same as advocacy organizations such as Planned Parenthood and Right to Life. Such organizations can advocate on issues, lobby government officials, and participate in partisan campaign activity related to their underlying mission.

An attorney, Elsenheimer said he's not "personally aware” of the differences in nonprofit organizations.

Such nonprofit organizations are not required to disclose donors or specific expenditures and can take unlimited money from individuals, corporations, unions and gaming interests.

Rich Robinson, executive director of the non-partisan, nonprofit Michigan Campaign Finance Network, said the use of 501c(4)s is growing in Lansing.

"The only reason I can think of is because politicians don't want to leave a nickel of corporate money on the table,” Robinson said.

The vast majority of the "community funds” operate under archaic names with origins that are difficult to trace, he said.

"The donors are never disclosed and there is seldom any evidence of the work they do,” Robinson said.

State Sen. Jason Allen, a Traverse City Republican, has a similar 501c(4) called the "Northern Michigan Community Fund” along with two other nonprofit accounts mainly funded by secret corporate donations, among them tobacco, casino and landfill interests.

"Congrats to Elsenheimer; at least he put his name on his 'community fund,'” Robinson said.

Elsenheimer said he believes the public has a right to know who gives money to his fund and how it is being spent. He pledged to post every contributor and expense online.

"I want this to be a model for other legislators on how to operate their funds,” he said.

After Allen's secret funds were disclosed by the Record-Eagle in May 2006, Elsenheimer said he didn't have any nonprofit funds, though he was considering setting up such an account.

But he already was much further along than the consideration stage, documents show.

By early 2006, Lansing attorney and lobbyist Manny Lentine had already registered Elsenheimer's community fund with the state of Michigan as a nonprofit corporation.

Elsenheimer said he wasn't aware Lentine had submitted the documents to the state, even though Elsenheimer's signature appears on the application for an employer identification number. That date: March 30, 2006.

Elsenheimer said the application to the IRS for 501c(4) status wasn't filed until January 2007 and approved in March 2007.

"That's when I feel I really set up the fund,” he said. "I don't even have a bank account set up for it yet.”

Elsenheimer said he is waiting to see if the state Legislature decides to regulate 501c(4)s before proceeding.

"Ultimately, it may be determined that it doesn't make sense to pursue this type of program,” he said.