IRS asked to Investigate Funder for SalmonState and Alaska Venture Fund

AAF Asks IRS to Review New Venture Fund’s Alaska Projects

The American Accountability Foundation has asked the Internal Revenue Service to investigate the New Venture Fund and two Alaska-based projects it fiscally sponsors, SalmonState and the Alaska Venture Fund, alleging that their structure and activities may violate federal rules governing tax-exempt charitable organizations.

The June 2 referral, submitted to the IRS Tax Exempt and Government Entities division, asks the agency to examine whether New Venture Fund’s arrangements with the two projects comply with the requirements for organizations recognized under Section 501(c)(3) of the Internal Revenue Code.

New Venture Fund, based in Washington, D.C., acts as a fiscal sponsor for a number of projects. Under fiscal sponsorship, a project operates through an established nonprofit rather than forming and administering a separate tax-exempt organization. The sponsor generally provides administrative services and accepts charitable contributions on the project’s behalf.

The referral argues that SalmonState and the Alaska Venture Fund operate with characteristics more commonly associated with independent organizations, including their own public identities, staff, fundraising activity, programs and leadership structures.

According to the filing, SalmonState was launched as a New Venture Fund project in 2015. The group describes its work as advocacy and policy campaigns focused on salmon, fisheries and related development issues in Alaska. The referral states that SalmonState was originally organized as an Alaska nonprofit corporation but was involuntarily dissolved by the state in 2018. It has continued operating as a fiscally sponsored project of New Venture Fund.

The Alaska Venture Fund, also known as AVF, is another New Venture Fund-sponsored project. The referral alleges that AVF maintains its own branding, staff, programs and leadership, while annually reviewing whether to remain under New Venture Fund’s sponsorship or incorporate independently.

AAF President Thomas Jones wrote that the projects’ fiscal-sponsorship status prevents separate public reporting of their finances.

“Neither the IRS nor the public can examine SalmonState’s or AVF’s budgets, compensation, or programmatic spending,” Jones wrote in the referral.

The filing asks the IRS to review New Venture Fund’s original 2006 application for recognition of tax-exempt status and determine whether its current use of fiscal sponsorship is consistent with the representations made at that time.

It also asks the agency to examine the projects’ lobbying, political advocacy and campaign-related activity. Federal law generally prohibits Section 501(c)(3) organizations from participating or intervening in political campaigns on behalf of, or in opposition to, candidates for public office. Such organizations may conduct some lobbying, subject to applicable limits and rules.

AAF cited New Venture Fund’s involvement in two Alaska ballot-measure campaigns as part of its request for review. The referral states that New Venture Fund contributed approximately $1.05 million to the 2016 campaign supporting automatic voter registration through the Permanent Fund Dividend application. It also cites reported cash and in-kind support of about $263,000 for the 2018 Stand for Salmon ballot initiative.

The organization alleges that SalmonState’s ongoing campaigns concerning projects and policies including Pebble Mine, the Ambler Road, the West Susitna Access Road, commercial-fishing bycatch and transboundary mining should be examined to determine whether they constitute permissible charitable education or lobbying and political activity subject to federal restrictions.

The referral does not allege that AVF engaged in documented express advocacy. Instead, it asks the IRS to examine AVF’s internal records and New Venture Fund’s consolidated financial records to determine whether any expenditures required campaign-finance registration or separate reporting.

AAF also references New Venture Fund’s former relationship with Secure Democracy, an elections-focused organization that became the subject of litigation and media reporting concerning political spending and organizational control. The filing asks the IRS to consider whether the Alaska projects present similar compliance questions.

Among other requested actions, AAF asks the IRS to assess whether excise taxes are warranted for any impermissible political expenditures; examine New Venture Fund’s lobbying expenditures; review its Form 990 disclosure practices; and determine whether additional reporting regarding fiscally sponsored projects is necessary.

An IRS referral is an allegation, not a finding of wrongdoing. The IRS generally does not publicly confirm whether it has opened an examination of a particular tax-exempt organization.