UA Foundation paying for lobbyists
The way in which the University of Arizona funds lobbying efforts was the subject of a recent report by the Arizona Center for Investigative Reporting, which specifically targeted the UA Foundation.
The UA has a state relations team, whose primary job is to oversee government and community relations between the university and the state legislature.
“We work at the direction of the leadership of the university and the Arizona Board of Regents to promote the agenda of the university or, a better word would be, the priorities of the university at the state capitol,” said Tim Bee, vice president of Government and Community Relations at the UA.
All three in-state universities are governed by the board, which in charge of what the universities lobby for at the state legislature.
“The board approves a legislative agenda for the public university system, which aligns with its mission to provide opportunity for learning, discovery, research, public service and economic development for Arizona residents and the global community,” said Sarah Harper, vice president of communications for the board.
“The board also sets expectations for all university lobbyists regarding engagement with lawmakers, executive staff and other stakeholders.”
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“Historically, they have worked to represent us with health science initiatives,” Bee said. "This year will be the first year that they are working with us on the entire university package.”
However, the UA does not pay Molera Alvarez to act on their behalf. Instead, the UA Foundation pays Molera Alvarez to act on behalf of the UA.
Founded in 1958, the UA Foundation is a separate, but affiliated, organization from the university.
“The UA Foundation is a separate 501(c)(3) from the organization that has the specific charge of raising funds for supporting the institution,” said Liz Warren-Pederson, assistant vice president of Marketing and Communications for the UA Foundation.
Its status as a 501 (c)(3) allows for one advantage when it comes to taxes.
“501 (c)(3) is a category of the tax code that organizations can apply for where they are tax exempt and contributions to them may be tax deductible,” said Abby Levine, the director of the Bolder Advocacy program for Alliance of Justice.
Within the 501 (c)(3) category of the tax code, there are two different types of organizations.
“There are organizations that are considered to be public charities, then there are what are considered to be private foundations,” Levine said. “And, the difference tends to be where the organization’s funding comes from.”
Public charities tend to receive funding from a broader scope of people, said Levine. Private foundations tend to have a smaller pool of support.
Another difference between public charities and private foundations are guidelines set for lobbying.
“Public charities can lobby under fairly generous limits,” Levine said. “Private foundations are subject to more prohibitive taxes that they spend on lobbying.”
There are two ways that public charities measure their limits on lobbying, said Levine. They can use the 501(h) expenditure test or the substantial part test—the expenditure test being more generous and clear.
Tax filings show that the UA Foundation uses the 501 (h) expenditure test, which allows the foundation to not jeopardize its non-profit status. Under this test, the limit on lobbying expenditures is $1 million.
“Depending on what definition we’re using, there are a lot of nuances in terms of it," Levine said. “But, essentially, lobbying is trying to influence a ballot measure or a piece of legislation.”
“One thing that all 501 (c)(3)s can’t do, is that they cannot support or oppose candidates for public office,” said Levine. “That’s something that’s sort of separate from what counts as lobbying... all 501 (c)(3)s are absolutely prohibited from supporting or opposing [candidates].”
There are certain rules that the university follows that do not apply to the UA Foundation, which allows the university to hire contract lobbyists by proxy. The foundation is not an organization that the Board of Regents governs.
“Recent changes to the statute prohibit the use of tax-payer dollars to fund university lobbying,” Harper said. “As the foundation is a private, separately organized 501(c)(3) organization, the board cannot direct the foundation’s actions.”
A.R.S. 15-1650.04 prohibits the board of regents or any university under its jurisdiction from using state general fund money for hiring lobbying services. This law does not apply to the universities foundations, because they are technically separate entities from the universities they serve.
“It would be that we are contracting with a company at the university’s request,” said Pederson. “And the university sets its priorities for that.”
Public opinion on tax-payer money is one reason the UA would decide to hire contract lobbyists through its foundation.
“As a state institution, state dollars and tuition dollars should be funding that type of activity, which is why the foundation can step in,” said Pederson.
However, the UA Foundation carries more leeway with disclosure laws. This also serves as a reason that donors give to the UA through the foundation.
“Often times donors wish for their gifts to remain anonymous for a variety of reasons,” Pederson said. “And so, they feel that we as the foundation can steward their personal data and personal financial information more effectively than a direct donation to the university.”
The UA — along with Arizona State University, Northern Arizona University, and the board of regents — are public bodies. Under state law, they are required to disclose anyone representing them at the state capitol.
“A public body is required to disclose the name of each lobbyist retained by or representing the public body, A.R.S. 41-1232.01(A)(3)," said Eric Spencer, the director of Election Services with the secretary of state, in an email.
“Thus, regardless of who pays for a lobbyist,” Spencer continued, “a public body that knowingly receives the benefit of lobbying services is required to disclose that lobbyist’s identity in the public body’s registration.”
The UA Foundation is only legally required to disclose the amount that goes towards lobbying on their annual 990 forms, which the foundation does. They also provide supplementary information on how that money was used.
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