A left-wing dark money group that supports many organizations aligned with the Democratic Party may have violated tax laws by using its charitable resources to control the political activities of another organization, according to lawyers who spoke with the Washington Free Beacon.
Secure Democracy, a 501(c)(4) nonprofit established in 2018 to focus on election policy and voting issues, lobbied and ran ads pushing Republican lawmakers in more than 20 states, including many battleground states, to expand mail-in voting during 2020 and 2021. On its face, Secure Democracy was a non-partisan, independent nonprofit, but behind the scenes, New Venture Fund, part of the Arabella Advisors funding network, was allegedly bankrolling its operations and calling the shots on its political activity, according to a Free Beacon report.
The New Venture Fund’s direct involvement with Secure Democracy’s political activities may have been a violation of nonprofit tax laws and could provide a basis for the IRS to remove its 501(c)(3) charity status, the Free Beacon reported, citing expert lawyers.
Voting Rights Lab, a project of the New Venture Fund, had complete control over Secure Democracy’s operations, with its executive director Megan Lewis approving “everything,” according to a Feb. 4, 2020 document on internal processes obtained by the Free Beacon. In September 2020, Lewis approved $90,000 in ads against five Republican senators from her New Venture Fund email account over the advice of Secure Democracy’s attorney David Mitrani, who said it was political spending, per the Free Beacon.
Secure Democracy executive director Sarah Walker voiced concerns about the arrangement in an Oct. 28, 2021 email to New Venture Fund’s general counsel Andrew Shultz, where she worried it was “fraught with compliance and potential legal ramifications,” according to emails obtained by the Free Beacon.
Soon after, New Venture Fund swiftly worked to eliminate communication between the groups and shut down Secure Democracy, replacing it with the group Secure Democracy USA on Nov. 17, 2021. New Venture Fund later cut ties entirely with the Voting Rights Lab over the issue in June 2022, staffers told the Free Beacon.
“Since NVF appears to be directing the political expenditures of Secured Democracy, as a c3 they are doing indirectly what they cannot do directly,” Paul Kamenar, an attorney with the National Legal and Policy Center, a watchdog group, told the Free Beacon. “NVF is at risk of losing their tax-exempt status.”
PHILADELPHIA, PA – OCTOBER 27: A man photographs himself depositing his ballot in an official ballot drop box while a long line of voters queue outside of Philadelphia City Hall at the satellite polling station on October 27, 2020 in Philadelphia, Pennsylvania. (Photo by Mark Makela/Getty Images)
Walker, who the Free Beacon reports was removed from her Secure Democracy email around the time she spoke up, filed a wrongful termination lawsuit in November 2022, arguing she lost her job for blowing the whistle on potential tax fraud.
In a statement to the Daily Caller News Foundation, the New Venture Fund said it “supports a wide range of nonpartisan projects from across the ideological spectrum, appropriately uses funds, and complies with the law.”
“Allegations to the contrary are false, and we are litigating them with the former NVF employee making these false claims,” they said.
New Venture Fund is part of a network of left-wing funding organizations managed by consulting firm Arabella Advisors. The firm, run by former Bill Clinton official Eric Kessler, manages certain administrative, legal and philanthropic functions of several non-profits including the Sixteen Thirty Fund, Hopewell Fund, North Fund and New Venture Fund, which donate to a variety of left-leaning groups, causes and Democratic candidates, according to tax filings and statements on the funds’ and Arabella’s websites.
“There were so many discussions about how Secure Democracy had to remain pristine and separate, and there could not be any illusion of a link between the two,” a former employee told the Free Beacon. “One of the reasons was because they obviously wanted to appear unbiased and influence voters.” (RELATED: Dem Dark-Money Group Struggling In Biden’s Economy)
In the past, New Venture Fund has also poured money into research conducted by universities and non-profits on how “misinformation” and “disinformation” spreads online.
“New Venture Fund, and any project they manage, are expressly prohibited from engaging in any political activity,” Americans for Public Trust executive director Caitlin Sutherland told the Free Beacon. “Not only do these records show careless and sloppy bookkeeping, but also seem to indicate a pattern of flagrant violations of the rules governing nonprofits.”
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