Tax-Exempt Status Rejected, Christian Coalition Regroups

New York Times/June 11, 1999
By David E. Rosenbaum

Washington -- The Christian Coalition, a powerhouse in the Republican Party for the last decade, has been denied tax-exempt status because of its political activity, officials of the organization said Thursday, and is reorganizing in an effort to retain its influence.

For a decade, the organization has rallied voters behind candidates, almost all Republicans, who supported the causes of religious conservatives at the national, state and local level. It has been especially influential in Iowa, which holds the first party caucuses in Presidential election years. But in the last couple of years, the coalition has had trouble raising money and its influence has seemed to be waning.

Outsiders who have tracked recent developments in the organization said that it had never recovered from the loss of Ralph Reed, the politically talented executive director who left two years ago to become a political consultant in Atlanta, and that Pat Robertson, the founder and president, was taking complete control to change the course.

Last week, the coalition, which has headquarters in Chesapeake, Va., announced that Reed's successor, Randy Tate, had been demoted and that the chief operating officer, Kenneth Hill, would be leaving. Earlier this year, four other top officials either resigned or were discharged. They are Donald P. Hodel, the president; Dave Welch, the national field director; Arne Owens, the communications director, and Charles H. Cunningham, the national operations director.

Thursday, officials of the coalition said that its longstanding application to the Internal Revenue Service for tax-exempt status would not be approved and that as a result the coalition would be reorganized. Ever since Robertson founded the coalition in 1988 after his unsuccessful race for the Republican Presidential nomination, it sought tax exemption under section 501(c)(4) of the Internal Revenue Code.

Donors to such organizations may not deduct their contributions, but the organizations themselves do not have to pay income taxes. Organizations that have such an exemption are not permitted to engage in "substantial" political activity. The I.R.S. has generally interpreted this to mean that they could not support parties or candidates.

One of the main activities of the Christian Coalition has been to prepare voter guides and to distribute them in churches. The guides generally describe the candidates in a race and leave little doubt about which one the coalition favors.

In the 1994 Senate race in Virginia between Senator Charles S. Robb, a Democrat, and Oliver L. North, a Republican, the guide said, Robb, who had voted for an appropriation for the National Endowment for the Arts, favored Government-financed obscenity.

Mike Russell, the coalition spokesman, said the group had recently withdrawn its application for tax exemption. Other officials said it had been withdrawn after it became apparent that it would not be approved. As is its practice on such matters, the I.R.S. refused to comment.

The lack of tax exemption means that the organization may have to pay a small amount in income taxes each year. More important, it may make churches reluctant to allow representatives of the organization to speak and distribute material during services. Churches are covered by another section of the tax law that theoretically does not allow participation in any political activity.

Russell said the coalition would now be broken up into two distinct organizations.

One, to be called the Christian Coalition International, would engage in political activities. This organization would not be tax-exempt. A separate group, to be called the Christian Coalition of America, would concentrate on voter education and would assume the existing tax-exempt status of the Christian Coalition of Texas, Russell said.

Robertson will assume "a greatly increased role" in the day-to-day operation of both organizations, Russell said.

Robertson has recently taken a pragmatic approach to politics. During the impeachment trial last winter, he warned that President Clinton had won the public relations battle and that it was perilous for Republicans to expend energy trying to remove him from office. He has also conceded that Congress will not approve a Constitutional amendment outlawing abortion and has said Republicans should turn to other issues.

Last winter, Robertson said he hoped to raise $21 million for political activities in the 2000 elections.

Charles Black, a Republican consultant, said he thought the Christian Coalition would remain an important organizing force in many states. Another Republican strategist, Richard N. Bond, who was director of George Bush's Presidential campaign in 1988, agreed with that assessment but said it was important for the organization to rise above "a lingering image of intolerance."