News Release
Center for the Defense of Free Enterprise
Date: February 8, 2002
Contact: Sandy Fields, Communication Director
Telephone: 425-455-5038

Center files complaint with Internal Revenue Service against Environmental Working Group
Group asks IRS to revoke EWG's non-profit tax exempt status for unlawful lobbying and political action

For the complete text of the complaint, click here.

For's story on EWG complaint, click here.

Bellevue, Washington The non-partisan Center for the Defense of Free Enterprise has filed a complaint against the Washington, DC-based Environmental Working Group (EWG) with IRS Commissioner Charles O. Rossotti, asking that EWG's privileged non-profit status be revoked for violations of several tax laws.

The Environmental Working Group concentrates on anti-pesticide, anti-chemical and anti-corporate programs. It has gained recent notice for its lobbying on the 2002 Farm Bill, including a Wall Street Journal editorial that glowingly approved EWG's Farm Subsidy Database web site publicly displaying all federal farm subsidies, including who got the money and how much. The database actually contains many conservation subsidies as well as those for the standard subsidy crops, cotton, wheat, peanuts, sugar and tobacco. EWG's database project appears to be aimed at creating a Farm Bill that would harm America's mass market industrial food production and replace it with subsidized "organic food" production that could serve only a limited population.

 In all the furor, no one has asked who is paying EWG to lobby the 2002 Farm Bill. The answer that unfolds in the complaint is disturbing.

Among the violations charged in the complaint are allegations that EWG:

Ron Arnold, Center executive vice president, said, "These violations by EWG come as no surprise. Our organization tracks over a hundred environmental groups, and EWG is among the most active in lobbying."

Until recently, tracking EWG was nearly impossible. "EWG began in the 1980s as a 'project' of the San Francisco-based Tides Foundation, which operated more than 250 such 'projects' under one tax exempt umbrella," said Arnold. "Tides got most of its money from giant foundations, but you couldn't tell which 'project' it was going to. Tides didn't report specifics about EWG in their IRS Form 990 annual reports. For years EWG was virtually a secret society, with totally invisible money and no public accountability."

But in 1999, the Environmental Working Group emerged from the Tides umbrella and incorporated in Washington, DC. "Then EWG had to file its own IRS Form 990 and became visible," said Arnold. "And we began to see strange things. Like blank spaces on the Form 990 where lobbying expenditures were supposed to go. When we compared that to newspaper accounts of EWG's lobbying and political action, it didn't add up. That was the red flag that led us to investigate further."

Researchers at the Center then employed the database of the Foundation Center, a New York City-based organization that tracks non-profit groups. There they obtained records of foundation grants to the Environmental Working Group. Among more than 90 grant records was a year-2000 grant from the Joyce Foundation in the amount of $1.6 million, with the stated purpose "For work on 2002 Farm Bill." Foundations are strictly forbidden by tax laws from donating to influence the outcome of specific legislation. This grant appears to be completely illegal.

Recipient non-profit groups such as EWG are allowed a modest amount of lobbying, and EWG is qualified to spend 20 percent of its annual budget on its own lobbying, plus 5 percent urging others to influence the outcome of specific legislation. Even though the Joyce Foundation grant was to be spread over 3 years, even one-third of $1.6 million exceeds EWG's maximum allowable lobbying amount. The Joyce grant alone, not to mention numerous others, puts EWG beyond the limits of the tax law.

Arnold said, "If that's not Lobbying Without Laws, what is it?"

Read the complete complaint and decide for yourself.