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Bad Seeds – Why the ACORN Scandal Matters to Other Nonprofits

The Association of Community Organizations for Reform Now, aka ACORN, was, until the past year, a relatively unknown organization to most Americans.  Founded in 1970 and based in New Orleans, Louisiana, ACORN’s most visible face is that of a 501(c)(3) public charity ostensibly advocating for low- and moderate-income families in the areas of neighborhood safety, voter registration, health care, affordable housing, and other social issues.  ACORN also has a non-charitable arm that lobbies for primarily left-wing causes and candidates, as well as dozens of affiliated splinter groups.  ACORN’s “charitable” division receives millions upon millions of dollars in federal grant money each year.

ACORN’s profile increased dramatically during last year’s presidential campaign, with then-Senator Obama’s candidacy and subsequent victory, himself having been a community organizer with close ties to the group.  The problems for ACORN started when numerous chapters were busted for voter registration fraud.  Estimates go as high as 400,000 falsely registered voters, including Mickey Mouse and Paul Newman.  ACORN’s voter registration program is under investigation in 14 states, with over 30 indictments having been handed down so far with likely many more to come.

The latest fiasco for ACORN comes from the most unlikely of sources:  a couple of 20-something budding independent journalists who visited various ACORN housing assistance offices around the country, posing as a prostitute and pimp.  As of today (September 16, 2009), we know of 4 ACORN offices where workers have been videotaped bending over backwards to help these two kids, dressed like characters from a bad 70’s movie, set up a brothel, commit tax fraud and cover up a child sex slavery ring.  ACORN insists the whole “sting” is fraudulent, but yet it has fired most of the employees shown on the tapes.  To make matters worse, now the federal government has swung into action.  First, the Census bureau severed all ties to ACORN (ACORN had been contracted with to assist in the 2010 census).  A few days later, the Senate voted 83-7 to cut off all HUD (Dept of Housing and Urban Development) funding from the group’s housing division.  And just today, the House will consider legislation to strip ACORN of all government funding.

Why are we talking about this?  Well, for one, most of the main stream media has been ignoring the story, so many of you may not even be aware of what’s going on.  But there is a bigger reason:  legitimate nonprofits, especially those with programs that help the needy with housing and similar programs, stand to be tarnished in the minds of the donating public by virtue of ACORN’s misdeeds.

Over the years, we have worked with hundreds of programs that target the needs of the poor and inner city.  The vast majority of these organizations are small, neighborhood-based charities that truly make a difference in the lives of those they serve.  Many are community development outreaches of area churches offering faith-based solutions to some of life’s most difficult circumstances.  What a tragedy it would be to see these hard-working, struggling organizations suffer guilt by similarity.  Make no mistake:  this story is not going away anytime soon.  ACORN, regardless of whatever good things it may have accomplished here or there, is fast becoming a pariah due to one of two things:  either its unwillingness to run a tight ship or outright criminal behavior.  Either way, it is probably curtains for them.

So how does a legitimate program protect its reputation and funding base?  Americans are some of the most generous people on the planet.  Billions of dollars are donated each year by families all across America.  Witness 9/11, the tsunami, hurricane Katrina…Americans give big.  But nothing will shut off the flow of cash faster than the taint of corruption.  First, if your organization has any ties whatsoever to ACORN or one of its affiliates, you have a decision to make.  Do we stay or do we go?  I think you already know our advice:  run!  Assuming your organization has no ties to ACORN, you need to aggressively reassure your donors that your program is clean and its operations completely transparent.  We sincerely hope that good community programs all across the country will rise up and demand accountability and set the record straight that corruption, cronyism and fraud will not be tolerated among their ranks.

You want to protect your organization?  Stand up for integrity!

We pray that all the good organizations that accomplish so much survive this scandal unscathed.  We believe it will take deliberate action on their part to ensure that outcome.

Greg McRay, EA

Greg McRay is the founder and CEO of The Foundation Group. He is registered with the IRS as an Enrolled Agent and specializes in 501(c)(3) and other tax exemption issues.

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Sissy Quinn
Guest

I just this week received a 501c3 for historic preservation in my community. On page 8 of the booklet I received, it clearly states that my corporation cannot engage in political campaign activities. How come no one brought this up during the recent elections? As I see it it is just another infraction by this more than “shady” group.

Mentoring Minds of Music, NV
Guest
Mentoring Minds of Music, NV

I am a Black single Mom who spends two days a week giving, paying, and loading food for single families of all ethnic backgrounds. Most of these families are white fathers with teenage sons whose Mothers have left. It’s sad that my hard work will be impacted by the Acorn issues.

Keith W. Mills
Guest

Well stated. Thank you for looking after the NP community”at large.”

Val
Guest

What I want to understand is how a 501(c)3 can be politically active even as lobbyist. I’ll lose my non-profit standing if I even mention politics in any form. Why haven’t they lost theirs for their lobbying activities?

Clarence Barnett
Guest

ACORN is a thorn. Their reputation has been tarnished and just like everyone else whose reputation precedes them; good, bad or indifferent your fan base is affected. Forget political slant, racial overtones, likes and dislikes. It is what it is. They need to clean up their act, right the ship, get rid of bad baggage, admit wrong doing, and let the chips fall where they may. Too many NPOs and churches have been hurt by someone else’s mistakes, wrong doing and naivete in spite of their good deeds. ACORN has been marked as such.

Shawn
Guest

By their good works ye shall know them! A good organization carries an aura of good people that work within it and that are helped without. The good ones should produce enough good that they are known for the good that they do and don’t have to rely upon the non-profit status as a crutch. Shawn

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[…] Bad Seeds – Why the ACORN Scandal Matters to Other Nonprofits […]

Oscar H. Blayton
Guest

Your advice to disassociate from Acorn in the very broad manner in which you state it seems to me to be irresponsible. It seems that all the facts are not out yet , nor are they clear at this point. Your article seems to have a “political” flavor, but I sincerely hope that such was not your intent.

Dan G
Guest
The fact that they didn’t file a return for the “pimp” is irrelivant, IRS CODE STATES: “…if it tends to encourage such conduct” is enough to revoke their status. 2. IRC 501(c)(3) and IRC 501(c)(4) Organizations A. Charity Law Exemption recognized under IRC 501(c)(3) is unique in that, unlike exemption under other paragraphs of IRC 501(c), it is grounded in charity law, so that denial of exemption under IRC 501(c)(3) may be based on charity law. (1) Substantiality Test Violation of constitutionally valid laws is inconsistent with exemption under IRC 501(c)(3). As a matter of trust law, one of the… Read more »
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