Jessica Jaramillo looks on while Senate Majority Leader Michael Sanchez advises Debbie Armstrong during Emerge New Mexico’s 2010 training. The group recently lost its 501(c)(4) status because it exists for partisan reasons. (Courtesy photo)

The IRS recently revoked the 501(c)(4) status of a group that trains Democratic women to run for office in New Mexico and other states. Emerge New Mexico says that won’t affect its work, but the move could have larger implications for nonprofits nationwide.

With politics increasingly permeating the nonprofit sector, the IRS recently revoked the tax-exempt status of a group that trains Democratic women to run for office in New Mexico and other states.

Emerge New Mexico Executive Director Reena Szczepanski told NMPolitics.net the larger organization had already decided, at the time the IRS revoked its 501(c)(4) nonprofit status, to reorganize under Section 527 of the tax code, which allows more political activity and requires disclosure of donors.

Emerge’s mission – which is openly partisan – hasn’t changed. And Szczepanski doesn’t expect funding to drop because of the disclosure requirement. She said the group disclosed its largest donations when it was a 501(c)(4).

“It has not changed the scope of our mission or activity,” Szczepanski said. In fact, the group’s seventh class of women graduated earlier this year and 13 of them jumped into New Mexico state legislative races. Nine won primaries and are on the general-election ballot.

That’s the most ever, and encouraging to a group that aims to put an end to the underrepresentation of women in elected office – including Congress (where they make up about 17 percent of members) and the state Legislature (where they make up almost 29 percent). There are currently six women who went through an Emerge training elected to office in New Mexico – four Albuquerque-area judges, a Santa Fe school board member and an Eddy County commissioner.

In this time of Super PACs, unlimited political spending and the difficulty of tracking it all, the revocation of Emerge America’s tax status may have larger implications for nonprofits that engage in political activity. More of them might be forced to register as 527 groups and disclose their donors – as Emerge now has to do.

Larger implications

Bloomberg recently reported on the revocation of Emerge’s 501(c)(4) status. The larger issue, it reported, is that the IRS’ action “may foreshadow an investigation into groups such as Crossroads GPS and Priorities USA that spend millions on the 2012 U.S. presidential election” and are organized as 501(c)(4) organizations.

Szczepanski said Emerge saw the change in the way the IRS dealt with 501(c)(4) organizations coming. That’s why it reorganized.

501(c)(4) groups are allowed to engage in limited political activity, but it can’t be their primary function. They don’t have to disclose donors, which is desirable to many that want to secure funding from people who will only give anonymously. It’s also desirable for groups whose funders might not be politically popular.

Emerge exists solely to train Democratic women to run for office, and the IRS found that its activities “are conducted primarily for the benefit of a political party and a private group of individuals, rather than the community as a whole.”

But they’re not the only ones, a D.C. watchdog group says.

“There’s a boatload of groups that (the IRS) should looking at,” Bloomberg quoted Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, as saying. “When you look at the budgets of these groups, it’s clear that their primary purpose is political activity.”

From Bloomberg:

“Sloan’s group (last week) asked the IRS to investigate whether the nonprofit American Action Network qualified for tax-exempt status. American Action Network spent $26 million in the 2010 midterm campaign to help elect Republican candidates, more than any other 501(c)(4) group, according to the Center for Responsive Politics, a Washington-based research group that tracks campaign contributions.”

Emerge was ‘proactive’

Meanwhile, in New Mexico Szczepanski said she’s just glad that her “Big ‘D’ Democratic” group had the wisdom to be “proactive, rather than waiting for something to happen and then scrambling to figure out what to do.”

Now Emerge, she said, is well-positioned to increase its influence in New Mexico. Szczepanski said Emerge doesn’t involve itself directly in campaigns or endorse candidates. There may be other reasons why, but there’s one very practical reason.

“We do see that day when we’re going to be so successful that we have grads running against each other,” she said.

If you want to learn more about Emerge New Mexico’s funding and spending since it became a 527 organization, you can click here. There’s not much there, because the change is relatively recent.