I'm not sure it's correct that ACORN can do partisan political work. My recollection is that ACORN set up the ACORN PAC precisely because it could not do partisan work. I can't think of any reason why this would have changed.

This is the statement that ACORN's Chief Organizer Bertha Lewis and Executive Director Steve Kest sent around to allies and donors this morning addressing many of the inaccuracies involved in this story.

The main thrust of the story itself was based on a memo written two weeks after this summer's embezzlement scandal broke and was based on a very preliminary examination of the organization and its relationships.

October 22, 2008

To: ACORN friends and allies
Fr: Steven Kest and Bertha Lewis

We wanted to let you know about an article in this morning's New York Times which is inaccurate and misleading in the extreme.

The article, headlined "ACORN Report Raises Issues of Legality", misconstrues beyond recognition a June 2008 confidential report prepared to guide ACORN's board in the wake of ACORN founder Wade Rathke's departure from the organization.

The ACORN board, fully cognizant of its responsibilities as stewards of the organization, took a number of steps in early June to ensure that the organization was being effectively and appropriately managed. They brought in an outside accounting firm to review the organization's financial procedures. They asked the Sidley Austin law firm to examine decisions made in 1999-2000 regarding the embezzlement of organizational funds by Rathke's brother. And they asked outside counsel Beth Kingsley, of Harmon Curran, to conduct a full review of governance, corporate structure, and related issues for ACORN and its affiliated organizations.

An early draft of Kingsley’s report, which was presented to the full board at its June 20th meeting, found its way to Stephanie Strom of the Times and was the basis for her article this morning.

The report made a long list of recommendations for improving governance of ACORN and its family of organizations. Virtually all of these recommendations were adopted or are in the process of being adopted. Affiliate boards were strengthened. New board policies were adopted, including protections for whistleblowers, prohibitions on conflicts of interest and nepotism, and requirements for document retention. And additional safeguards to ensure that all funds are spent appropriately were put in place.

Given the heightened scrutiny that ACORN’s civic engagement work was likely to encounter during an election year (an expectation which has been amply born out in the last several weeks), Kingsley’s report discussed the relationship between ACORN and Project Vote. Kingsley recommended that ACORN and Project Vote pay close attention to documenting the strictly non-partisan nature of the voter registration drives carried out jointly by ACORN and Project Vote. She suggested this because it is good policy and practice, and, she wrote, in order to “create a solid defense against whatever accusations might be thrown at them”. Throughout the report she said certain steps “must be taken in order to fully protect the organization against its enemies’ allegations”. Nowhere in Kingsley’s report is there any hint that this work was being conducted outside the letter of the law. To the contrary: her report argued that we needed to do a better job of documenting that the work was being conducted appropriately and in a non-partisan fashion, so that we could incontrovertibly prove this when we were attacked.

Here is Beth Kingsley's statement in response to the Times article

Statement of Elizabeth Kingsley

Ms. Strom’s article in today’s New York Times misrepresents the purpose and context of my June memo as well as my conclusions and recommendations. I was providing confidential advice to a group of organizations that I knew would come under just the sort of politically motivated attacks we have seen this fall. My advice was offered for the organizations to be prepared to defend themselves against any imaginable allegation that might be brought. Accordingly, I flagged areas where I had concerns about their ability to affirmatively and formally prove the absence of legal violations. This is a far cry from stating that any actual violation had occurred or even that it may have.

The report that Ms. Strom describes was delivered to the ACORN board less than two weeks after I began work on the project. It was based on an examination of procedural and structural relationships, not extensive field work to examine specific transactions or operations. It identified potential weaknesses in the ability to prove a negative – that funds were not misused. My report did not analyze the use of any 501(c)(3) funds or Project Vote’s operations, other than to say that “I am not worried about the content of this program” from the 501(c)(3) perspective, based on all my knowledge of that program.

Regarding the relationship between ACORN and Project Vote and the use of charitable funds, the legal standard is an ill-defined “facts and circumstances” analysis. In the face of such a vague and subjective legal test, a cautious approach will advise stricter and clearer separation than would be absolutely required. Knowing that political attacks would be coming, I used strong language to alert the organizations to the need to take such a careful approach, saying that they “must take certain steps in order to fully protect the organization against its enemies’ allegations.” I did not say “must do this in order to follow the law.” I said I “cannot confirm”, based on my review to that time, how strategic decisions had been made based on the information I had compiled in those two weeks. I had uncovered and reported no evidence that decisions had been made improperly. I did not by any means conclude that there was “potentially improper use of charitable dollars for political purposes.”

Indeed, the written contract governing the joint voter registration efforts between Project Vote and ACORN requires that all work be scrupulously nonpartisan, and that both take steps to ensure that their operations provide neither support nor opposition, assistance or hindrance to any candidate or party. There is a procedure for selecting jurisdictions that gives Project Vote staff the right to make final selections based on its own research and nonpartisan criteria. ACORN must certify that any targeting recommendations it might make are based on nonpartisan considerations only.

The law does not prohibit people wearing two hats, or playing a role in a nonpartisan charity while also being politically involved in a different capacity. I raised concerns about such situations because of the challenge for an embattled organization of proving that certain decision-making was insulated from political considerations. There is absolutely no IRS guidance that requires such separation of roles. In fact, recent guidance indicates that an individual’s work for a charity will not necessarily be tainted by their political involvement outside of that role. However, to avoid the nearly impossible task of having to prove a negative, a charity that expects to be challenged does well to go beyond the minimum legal requirements.

My June memo was intended to encourage the organizations to create a solid defense against whatever accusations might be thrown at them, not to state a legal baseline that had not been met.

In summary, and contrary to the implications of the Times story, Kingsley’s report is an example of an organization and its board taking comprehensive steps to improve its governance and ensure that its work is conducted in accordance with all appropriate laws.