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In Governor’s Race, Todd Lamb’s Nonprofit Walks Fine Line

Oklahoma Lt. Gov. Todd Lamb speaks to a group in Enid in October last year.
Billy Hefton
/
Enid News & Eagle
Oklahoma Lt. Gov. Todd Lamb speaks to a group in Enid in October last year.

A nonprofit foundation created by Lt. Gov. Todd Lamb has raised more than $850,000 since it launched to much fanfare in late 2015 and will soon roll out its first major initiatives.

Newly released IRS filings show the E Foundation for Oklahoma, a tax-exempt public charity that is allowed to shield the names of its donors, more than doubled its first-year fundraising total of $237,000 by taking in $622,500 in 2016.

The group has largely stayed quiet since Lamb, long viewed as a candidate for governor, named several high-profile business leaders and conservative figures, including Devon Energy President John Richels, business magnate T. Boone Pickens and former Gov. Frank Keating, to key advisory or board positions.

But interviews, internal documents and tax records point to a foundation strategy of influencing Oklahoma public policy for years to come.

That mission puts the group at risk of being at odds with the federal tax code and has raised concerns about a real or perceived conflict of interest between the foundation’s goals and Lamb’s race for governor. In the spring, after formalizing his gubernatorial campaign, Lamb stepped down as chairman of the foundation board to serve in an advisory role.

Lamb’s chief of staff, Susan Winchester, referred comments about Lamb’s future involvement in the E Foundation to the foundation.

Part of the E Foundation’s mission is to create nonpartisan programs that seek to help start-up businesses and grow jobs in the state. It also is planning to be a voice advocating for conservative and free-market policies, such as supporting charter schools, reining in government spending and ensuring the future of Oklahoma’s military installations.

Experts in nonprofit law say the latter goal will require the foundation to walk a thin line because its 501(c)(3) structure greatly restricts it from engaging in lobbying and bars it from any direct political activity.

Beth Kingsley, a lawyer who specializes in nonprofit law with the Washington, D.C., firm Harmon, Curran, Spielberg + Eisenberg, said the foundation’s status as a tax-exempt public charity is further complicated by Lamb’s involvement in the gubernatorial campaign.

“How you actually distinguish what is permissible from something which is tied to advancing a politician’s career is hard,” Kingsley said. “It’s not an easy line to draw, and there is not a clear dividing line in anything the IRS has promulgated.”

Michael Carnuccio, foundation president and CEO, said Lamb stepped down as board chairman after he filed campaign fundraising paperwork in April. In its earliest stages, Lamb had been the face of the organization, giving interviews and appearing in videos.

Carnuccio said Lamb will stay involved in the foundation and will serve on the group’s advisory board. But Lamb will not have a vote or direct say in its governing decisions while he is a candidate.

In addition, Carnuccio said the foundation drew up a strict political involvement policy that outlines what staffers and board members can do in regard to supporting Lamb’s or any other political campaign.

“What we said is we want a bright line of separation,” he said.

Rules and Perceptions

The IRS states that 501(c)(3) organizations are “absolutely prohibited from directly or indirectly” participating or intervening in any political campaign.

But it’s often more complicated than that, said Abby Levine, who provides legal guidance for nonprofits as legal director with Bolder Advocacy at the Alliance for Justice.

She said there is nothing preventing a nonprofit board member or staffer from donating to a candidate or supporting a candidate as long as they do it as a private citizen and not as a representative of the nonprofit.

Levine added that the IRS “has made it clear that people can wear multiple hats” and can run for public office while still being involved with a nonprofit group.

However, Levine said, a nonprofit can’t endorse candidates, tell its members or supporters how to vote or allow a candidate to use its resources, such as mailing lists or office space.

Those who wade too much into political activity can be stripped of their tax-exempt status, making it more difficult for them to fundraise, or they can even be hit with back taxes, Levine said.

Because the vagueness of the guidelines and the lack of IRS resources to police the thousands of 501(c)(3) organizations across the country, nonprofits are rarely punished for violating the rules, she said.

“But a lot of groups worry about public perception and might not want to be seen as alienating funders, alienating someone in the community or detracting from your message,” Levine said. “Just because you can do something doesn’t mean you should.”

Carnuccio said during the gubernatorial campaign Lamb will still likely take part in the foundation’s activities albeit in a reduced role. He said Lamb could return to the leadership role after the election, whether he wins or loses the race.

“We have a five-year lease on our office here,” he said, referring to a suite of offices in a building on Oklahoma City’s Bricktown Canal. “So we are going to be here after this election and the one after that.”

 
E Foundation’s Role

When Lamb announced creation of the E Foundation in November 2015, questions arose about what exactly the organization would do.

Like Lamb, Carnuccio is no stranger to politics. He ran the right-leaning think tank, Oklahoma Council of Public Affairs, from 2010 to 2015.

Other executives and board members, including Maj. Gen. Lee Baxter, Antioch Energy founder Nathaniel Harding, U.S. Fleet Tracking CEO Jerry Hunter and APMEX founder Scott Thomas, represent key business leaders in the state and have been frequent donors to Lamb’s political campaigns.

But Carnuccio said the nonprofit is a non-political entity by design and is focused on long-term goals.

“This wasn’t about anything political,” Carnuccio said.

The foundation’s early initiatives, which are set to launch in the coming weeks and months, also differ from the work of typical think tanks that operate in the political realm, he said.

This includes the OK!nnovate project, in which the E Foundation envisions serving as an incubator or accelerator for small businesses.

That would include hosting meetings or events for entrepreneurs to pitch their start-ups. A group of local business leaders would judge the competition and the winners could receive grants, access to office space and partnerships with private-equity firms.

Lamb is the keynote speaker at his annual Lt. Governor’s Young Professionals Conference, to be held Oct. 12 in Oklahoma City. According to the organization’s online invitation, his speech will unveil the OK!nnovate program, illustrating how closely Lamb and E Foundation’s policy prescriptions can align.

The E Foundation is also planning its OKThrive program, with the goal of finding jobs for 1,000 unemployed Oklahomans by late 2018.

Carnuccio, Lamb and other foundation representatives have also been meeting with military leaders and local officials to plan ways to safeguard the future of the state’s military installations in case another federal round of base closures begins.

The group also has hired former Republican state Rep. Jason Nelson to focus on social services issues and named Oklahoma City University associate professor Russell Evans as an advisor on economic issues.

While the foundation is restricted by the IRS in the degree it can lobby or advocate for specific legislation, the group plans to issue recommendations on “big-picture issues,” Carnuccio said.

Position papers and strategic plans published by E Foundation show many of these will be issues Lamb has championed as a candidate. Those include expanding school-choice options, developing a long-term energy plan and auditing state, local and school budgets to find waste or inefficiencies.

Carnuccio said now that the foundation is almost two years old, he expects it to be more visible on these fronts and in conveying ideas to policymakers.

“Will E Foundation produce a budget for the state of Oklahoma? That’s not our structure,” he said. “But will we put out commentary and recommendation that clearly say we should stop funding this or put more resources here? Yeah, you’ll see us engaging in that type of conversation, but not to the point where it’s lobbying.”

Donors Not Disclosed

Less clear is where the E Foundation is getting its money.

The IRS allows charitable nonprofits to keep their donors secret. Carnuccio declined to disclose any donors except for saying there is a “small, limited number of donors and investors.” The group’s latest tax return, most of which is public record, shows 12 individuals contributed to the foundation in 2016.

Lamb’s gubernatorial campaign, which raised more than $1 million from April 1 to June 30, shows that he has no trouble finding financial backers. Of the 19 members of the E Foundation’s advisory council, executive committee and board of directors, 12 donated to Lamb’s gubernatorial campaign. Most gave $2,700 – the maximum an individual can give per election to a single candidate.

The E Foundation is also one of 153 groups listed as an affiliate or associate of the State Policy Network, a 501(c)(3) nonprofit that supports conservative-leaning think tanks across the country.

Oklahoma Watch is a nonprofit journalism organization that produces in-depth and investigative content on a range of public-policy issues facing the state. For more Oklahoma Watch content, go to www.oklahomawatch.org.
Oklahoma Watch
Oklahoma Watch is a nonprofit journalism organization that produces in-depth and investigative content on a range of public-policy issues facing the state. For more Oklahoma Watch content, go to www.oklahomawatch.org.

IRS tax filings show the network gave out $1.5 million in grants in 2015 to 18 groups, according to the latest publicly available report. This included $55,300 to the Oklahoma Council of Public Affairs.

But it is unclear if the E Foundation has also been a recipient. Carnuccio declined to comment on whether the State Policy Network or any other groups are donors.

“This is just general philosophy we have, and I have personally, about donor disclosure,” he said. “And that’s just a slippery slope.”

Oklahoma Watch is a non-profit organization that produces in-depth and investigative journalism on important public-policy issues facing the state. Oklahoma Watch is non-partisan and strives to be balanced, fair, accurate and comprehensive. The reporting project collaborates on occasion with other news outlets. Topics of particular interest include poverty, education, health care, the young and the old, and the disadvantaged.
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