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Wednesday, February 15, 2012

DC's Next Installment On Media Matters: Tax Exemption Status

By Susan Duclos

The Daily Caller is out with it's next installment in their series on Media Matters, after previously showing coordination and collusion with liberal media writers, liberal bloggers, former JournoList members and the White House representatives, and this time they target Media Matters tax exempt status and provide copies of Media Matters for America and Media Matters Action Network's 2010 tax returns.

One central requirement before an organization like Media Matters can achieve the gold-standard nonprofit status — known by its place in the tax code, Section 501(c)(3) — is that it may not “attempt to influence legislation as a substantial part of its activities” or “participate in any campaign activity for or against political candidates.”

Via the website:

Exemption Requirements - Section 501(c)(3) Organizations

To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.

Organizations described in section 501(c)(3) are commonly referred to as charitable organizations. Organizations described in section 501(c)(3), other than testing for public safety organizations, are eligible to receive tax-deductible contributions in accordance with Code section 170.

The organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization's net earnings may inure to the benefit of any private shareholder or individual. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction.

Section 501(c)(3) organizations are restricted in how much political and legislative (lobbying) activities they may conduct. For a detailed discussion, see Political and Lobbying Activities. For more information about lobbying activities by charities, see the article Lobbying Issues; for more information about political activities of charities, see the FY-2002 CPE topic Election Year Issues.

Back to The Daily Caller's top ten interesting nuggets from the Media Matters' tax returns we see a few that possibly hit grays area in the Exemption Requirements.

•During 2008, Media Matters entered into a fundraising-sharing agreement with the liberal Center for American Progress, which is run by former Bill Clinton chief of staff John Podesta. According to the agreement, “both organizations agreed to collaborate to raise funds to create a definitive progressive nerve center,” and to “split, equally, all contributions raised for the progressive nerve center.” In 2010 Media Matters paid the Center for American Progress $212,000 as its share of the fundraising take.

•Media Matters Action, the organization’s lobbying arm, gave away $125,000 of its donors’ money to the Herndon Alliance, a Seattle organization that advocates for universal healthcare. The grant was earmarked for “rapid response media capability for countering misinformation and obstructive rhetoric.” It also gave $135,000 to ProgressNow, an online grassroots organizing project that supports Democratic causes.

•Media Matters For America gave $200,000 to the Citizen Engagement Laboratory, the parent group of Color of Change, which was founded by former White House “green jobs czar” Van Jones. The grant was described as funding a “campaign to expose Glenn Beck’s racist rhetoric in an effort to educate advertisers about the practices on his show.”

The Daily Caller reports that "Congressional Republicans are now interested in examining Media Matters For America‘s tax-exempt status."

(RELATED: The Daily Caller’s full coverage of Media Matters For America)