DMHOA in violation of IRS restrictions on political activities?

An anonymous source claims that the Delaware Manufactured Homeowners Association (DMHOA) "habitually engages in a substantial amount of lobbying activities to influence legislation, as well as also engaging in political campaigns and even endorsing candidates for political office."

So reads the cover page of a packet of documents, some dating back to 2003, which was anonymously distributed to an unknown number of individuals and organizations in Delaware, including the IRS Fraud Division and the Criminal Investigation Unit of the Delaware Division of Revenue. Judging from the dates on some of the pages, the packet was assembled within the last few days.

Some might wonder, Who cares if the DMHOA is lobbying and endorsing candidates? What's the big deal?

The big deal is that the DMHOA is a nonprofit charitable organization organized under Section 501(c)(3) of the IRS Code, meaning that "it may not attempt to influence legislation as a substantial part of its activities and may not participate in any campaign activity for or against political candidates." (Source: IRS.gov)

From the DMHOA's Certificate of Incorporation, signed by President Edwin "Ed" Speraw in 2004: "No substantial part of the activities of the Corporation shall be the carrying on of propaganda or otherwise attempting to influence legislation, and the Corporation shall not participate in, or intervene in (including the publishing or distribution of statements) any political campaign on behalf of or in opposition to any candidate for public office."

Before I continue, I want to make it clear that I do not have a problem with the Delaware Manufactured Homeowners Association, Mr. Speraw, or any of the organization's officers, lobbyists, members, etc. I do not currently live in a manufactured home, but I did for a short period of time, and the rights of both manufactured homeowners and tenants are very important to me; I am glad that such advocacy groups exist. However, based on the information that was provided to me and my own research, I believe that the DMHOA has overstepped the bounds of its 501(c)(3) status.

According to the DMHOA, its mission is "To educate and inform our members, our public servants and the general public, and to work for legislative and legal remedies to protect and strengthen the rights of everyone who lives in manufactured housing on leased land in Delaware."

Another mission statement, printed in a newsletter that was distributed to DMHOA members 7-8 months ago, reads: "Delaware Manufactured Home Owners Association is dedicated to working for legislative and legal remedies to protect and strengthen the rights of everyone who lives in manufactured housing in Delaware."

In other words, lobbying is not only a "substantial part" of the DMHOA's activities; it's what the organization is all about. In fact, it has nine lobbyists in Dover -- more than any other employer, save for the League of Women Voters, which has an astonishing and rather unnecessary ten lobbyists working for its causes. (Source: Delaware Public Integrity Commission)

Note: The DPIC lists the lobbyists for the "Delaware Manufactured Homeowners Association" and "Delaware Manufactured Home Owners Association" separately, but they share the same mailing address, and are certainly one and the same. I assume that this is an error, as the second is simply an alternate name for the first, which is how the organization is named on legal documents.

Over the last few years, the DMHOA has lobbied for a number of bills, many of which have become law with the help of Democratic officials, notably Reps. Schwartzkopf, Atkins, Longhurst, Kowalko, and Sen. Bunting. This is a matter of public record; the DMHOA has made no secret of its lobbying activities, and what it terms its "successes" have been recounted in local and online news articles which can easily be looked up. Of course, 501(c)(3)'s are permitted to lobby, so long as doing so is not a "substantial part" of their activities (the anonymous source I referenced above erroneously claimed that 501(c)(3)'s are not permitted to lobby at all, but this is not the case).

There is unquestionable evidence that the DMHOA is engaging in far more lobbying than is permitted of 501(c)(3) organizations, but it is less easy to prove that the organization endorses candidates. In fact, I cannot prove it at all; in my research I have been unable to find any official written endorsements of candidates for political office. Of course, the organization is not allowed to orally endorse candidates either, but that particular regulation is practically unenforceable.

The DMHOA itself might not endorse candidates, but its officers and lobbyists make no secret of which candidates they support. For example, in November 2009, DMHOA President Ed Speraw wrote on the organization's website, "We have much to be thankful for because of the representation we helped to elect to the House and Senate. The leadership of Representatives Valerie Longhurst, Pete Schwartzkopf, John Atkins, John Kowalko, Bill Carson; Senators George Bunting and Bruce Ennis are reasons to rejoice."

Speraw makes it quite clear that the DMHOA "helped to elect" these politicians; this may not be the same as officially endorsing candidates, but in my opinion it's a gray area.

Another example from recent history is a campaign flyer for Rob Robinson (D), who ran against Ruth Briggs King (R) last year in a special election to fill the 37th District's seat in the House. It features Robinson with five members of the DMHOA, all wearing yellow DMHOA T-shirts with the organization's name and logo clearly visible. Did this constitute an endorsement on the part of the DMHOA? Perhaps not in the strict sense (their support of Robinson was neither written nor oral), but the photo was certainly intended to imply to voters that the organization supported Robinson's candidacy. Again, a gray area.

Returning to 2010, on Rep. Pete Schwartzkopf's campaign website, petefordelaware.com, there is a page featuring positive comments from "citizens" about the Democratic incumbent, who is facing a challenge from Republican Chris Weeks. One of these citizens is Judson Bennett, who is perhaps best known in Sussex County for using his Coastal Conservative Network to disseminate political news and gossip, but more interesting are three seemingly unrelated comments from Dorothy Boucher, Richard Maly, and John Walsh, who make it clear that they support Schwartzkopf.

These three individuals are lobbyists for the DMHOA (Source: Delaware Public Integrity Commission). Of course, every individual has the right to support the candidates of his or her choice (though Walsh specifically mentioned the organization in his byline), but this raises a question: Does the DMHOA have a partisan political agenda? Is it a coincidence that on a page featuring five positive comments about Schwartzkopf, three are from lobbyists for the organization? Does the DMHOA work for manufactured homeowners, or for the Democratic Party? Surely, the interests of the two groups do not always overlap.

As I stated before, I do not have anything against the Delaware Manufactured Homeowners Association, but the information available to me suggests that

1. The organization is doing too much lobbying, and
2. It is working to elect Democrats in Delaware, even if not by officially endorsing them.

Therefore, the DMHOA's nonprofit charitable status as a 501(c)(3) should be reexamined. Perhaps the group should file as a different kind of nonprofit organization -- or perhaps its officers should simply form a Political Action Committee, since political action seems to be their primary focus.

As for the politicians who are working closely with the DMHOA to legislate its agenda (all of whom seem to be Democrats), it is plainly obvious that they are taking advantage of the organization's influence on approximately 50,000 manufactured home owners in Delaware, and relying on votes from the residents of sizable manufactured-housing communities in their districts to win reelection term after term.