16

But do they know that the city of Indianapolis is getting billions
of dollars? The University of Indiana, Ball State, all these univer-
sities? And there’s no restriction on them. As a matter of fact, one
of the points I want to make here is that, in the brief time I’ve
been in Congress, the only time we've had major scandals on what
happened with Federal money was with military contractors and
universities. Remember that?

I have never, in the time that I’ve been here, as Mr. Spratt said,
nor has any constituent of mine ever said to me, “You have simply

ot to do something about those Girl Scouts. Their influence on
ongress is pernicious, and they’ve got to be stamped out.”

Like Alice in Wonderland, I can believe six impossible things be-
fore breakfast on occasion, but this legislation has given me no
ends of trouble, because I was sworn as a Member of Congress, and
I raised my hand to uphold and defend the Constitution.

And this kind of an assault on it, although I voted against it, and
I will vote against it again—I assume it’s coming back, since we're
holding hearings on it another time—I can’t help but think about
the days of the McCarthy hearings, when people were asked to list
their associates and who they talked to and what their status was,
and, gentlemen, that’s the questionnaire that you've asked these
nonprofits to give you. It is an invasion of every kind of protection
that the Bill of Rights gives us as citizens.

I don’t care how many times you say you're going to look at Mar-
tin Marietta, I know you're not going to, because, like everybody
else in here, I’ve read. your statement in the paper. I know who
you're after. You're after the people who lobbied against what you
wanted to do here.

It has been spelled out by more than one of your members that

‘ou want to go after the people who, one, didn’t approve of your
bud et or who have a different political philosophy than you have.
ell, this Capitol, in its 200 years, has withstood a lot of people
who came here with a political philosophy that they wanted every-
body else to live under, and that pendulum has swung back and
forth, and it will again.

But it is the most dangerous thing that I think that I’ve seen in
the time that I have been here, that you will try to restrict the
rights of the citizens of the United States to address their Govern-
ment and, particularly to bring this up when you know—and you
do know—that they’ve been restricted considerably already.

As Mr. Spratt said, as far as I can tell, because no complaints
have ever been raised again, they've abided by those restrictions.
I apologize to you for putting you through this.

Mr. McINTOsH. Thank you very much, Ms. Slaughter. Let me say
that if your statement is that the Girl Scouts should not be covered
and that Martin Marietta should be.

Ms. SLAUGHTER. That’s not my statement, sir.

Mr. McINTosH. I think we’re in agreement on that, and that’s
what our bill proposes.

Ms. SLAUGHTER. I’m telling you that the Girl Scouts are covered.

Mr. McINTosH. Please read the legislation, because they’re not.

Ms. SLAUGHTER. They are. Maybe you ought to read it, Mr.
Chairman. They are.

Mr. McINnTosH. Believe me, I have.


37

Tf I could ask both of you to please rise. Mr. Clinger has asked
us to swear in all of the witnesses before this subcommittee.

[Witnesses sworn.]

Mr. McINTosH. Thank you. Please let the record show that they
both answered in the affirmative.

Let’s hear first from Mr. Isaac Randolph, who is from my home
State of Indiana, Indianapolis, and has donated his own time and
effort in creating what I think is an extremely worthy program for
the youth of that city.

ir. Randolph.

STATEMENTS OF ISAAC E. RANDOLPH, JR., EXECUTIVE DIREC-
TOR, ST. FLORIAN CENTER, INDIANAPOLIS, IN; AND C.J. VAN
PELT, DIRECTOR OF PUBLIC POLICY, YMCA OF THE USA

Mr. RANDOLPH. Thank you, Mr. Chairman.

Good afternoon to the chairman and the committee members. I
would like to thank you for the opportunity to declare my support
for the Istook-McIntosh-Ehrlich grant reform amendment.

My name is Isaac E. Randolph, Jr., and I am an Indianapolis
firefighter, and founder and executive director of the St. Florian
Center, a youth leadership program. During my 10-year tour of
duty as an Indianapolis firefighter, I witness daily acts of short-
sighted decisionmaking practices within our youth population.
Many times these decisions lead to actions that leave a wake of de-
struction, afflicting the lives of individuals and families alike. From
these experiences came my motivation to develop the St. Florian

enter.

Named after the patron saint of firefighters, the St. Florian Cen-
ter was created in 1993, to address the critical leadership develop-
ment needs of our inner-city youth. Our principal focus is a 9-week
summer leadership camp that is currently operated on the campus
of Butler University in Indianapolis.

During our 45-day operation, we teach 60 boys and girls, between
the ages of 10 and 15, various aspects of leadership principles and
how they relate to business, law and Government, community serv-
ice, and the sciences. The objective of the summer camp is for ca-
dets, through practice of leadership skills and techniques, to as-
sume total operational control of the camp prior to the end of the
9 weeks.

To date, we have served over 200 youths and their families from
Indianapolis, providing not only safe educational activities during
the summer, but also a chance for many of them to develop the
skills and character traits necessary to become contributing mem-
bers of society. In short, we practice the premise that leaders are
made and not born.

At this time, I would like to state that the following statements
reflect my personal opinions and observations concerning current
Federal grant funding issues. In creating the St. Florian Center, I
had very little experience with developing a grassroots organization
and quickly realized that, if I am to be successful, I must develop
some of my core beliefs about the concept of nonprofits. My core be-
liefs soon became my litmus test for any activity that could have
impact on my organization. To test an activity or concept for appro-
priateness, I simply asked four simple questions concerning its ef-


33

plained their own program. I think you probably had that experi-
ence yourself, as a freshman Congressman.

Mr. MCINTOSH. Yes.

Mr. Spratt. There are lots of things you learn every day and
people walk into your office to tell you about. You don’t even know
to request it. So if the exemption is conditioned on your initiating
a request, then it’s problematical, I think.

Mr. LONGLEY. I think there’s certainly an issue to be dealt with.
There is a need for information, and, as a Member of Congress, I
can’t always depend on my own imagination to conjure up who I
should be talking to.

Mr. McINTosH. Thank you, Mr. Spratt.

I think we will go until we hear the 10-minute bell. Let me ask,
on this side, Mr. Ehrlich, do you have any questions for this panel?

Mr. EHRLICH. No.

Mr. McIntosH. OK. Ms. Slaughter, you have a question for me.

Ms. SLAUGHTER. Well, I do, Mr. Chairman.

I was just handed a copy of this, and it appears to me to have
come from the Alliance for Justice, Mr. Skaggs. At least that’s what
the letterhead says. What reason do you have to think that this is
not theirs?

Mr. Skaccs. Well, representatives of the Alliance have said that
they did not prepare it and, in fact, said that they had heard from
committee staff that the committee staff did prepare it, presumably
to embarrass them and to make it appear as though it was their
product, not the committee staff's. There is no disclaimer on it to
indicate.

Ms. SLAUGHTER. Mr. McIntosh, I would like to ask you, then, is
that true? I’ve never seen that happen in the years I’ve been here,
and I find that not exactly a good way to run a Government.

Mr. McInTosu. If the gentlelady would yield.

Ms. SLAUGHTER. I will.

Mr. McINTosH. Looking at this document, with which I wasn’t
familiar before the hearing, let me say, and asking the staff, it was
produced by our staff; it is on their letterhead.

Ms. SLAUGHTER. It’s on your letterhead, you mean?

Mr. McINTosH, On the Alliance’s letterhead.

Ms. SLAUGHTER. On the Alliance’s. You produced it on their let-
terhead?

Mr. McINTosH. It should have had a disclaimer that the informa-
tion about grant totals was put on there by the staff. It wasn’t in-
tended to mislead or embarrass, and we don’t have any problem
telling people where it came from.

Ms. SLAUGHTER. Then what was it intended for?

Mr. McINTosu. It was intended to point out that the Alliance in-
directly receives a substantial amount of benefit from the Federal
Government.

Ms. SLAUGHTER. Are these accurate numbers?

Mr. McINTosu. As far as I know they are accurate, and I would
be interested to see what the Alliance says about that.

Ms. SLAUGHTER. May I ask them? Is there anybody here from the
Alliance?

Mr. McINTOSH. They will be before us later in the hearing.


42

is vital to the YMCA, and the process for delineating and expressing our institu-
tional views is well-defined and broad-based within the organization.

OVERVIEW OF YMCA GOVERNMENT FUNDING

In 1994, the YMCA received just over $1.9 billion in revenues, 93 percent of which
are private funds. In response to requests from governments at the local, state, and
federal levels, nine hundred sixty-nine YMCAs receive some type of government
funding. The ‘national average for revenues from all government sources—federal,
state, and local—is 7 percent.

Most, YMCAs’ government funding comes from the Child Care and Development
Block Grant in the form of subsidies for child care for working poor parents, Most
other grants to YMCAs, while originating from the federal government, come to
them as pass-through from states, school districts, municipalities, and courts, The
funding for these comes from Community Development Block Grants, the Office of
Juvenile Justice and Delinquency Prevention, and HUD Drug Elimination Grants.

Compared with other human service providers, YMCAs receive relatively little of
their support from government grants, There are two principal reasons for YMCAs’
reluctance to accept government funding. First, many YMCAs worry that they will
not be able to sustain new programs bequn with government money if those funds
are later withdrawn. Second, there is a long-standing concern on the part of many
YMCA board members that the receipt of government funds will lead to unwar-
ranted governmental intrusions into the operations of private organizations. The
measure before you can only confirm those fears,

YMCA CONCERNS WITH THE MCINTOSH/ISTOOK/EHRLICH PROPOSAL

The McIntosh/Istook/Ehrlich proposal is an unprecedented effort to restrict federal
grantees’ use of private funds for advocacy activities. This proposal would seriously
undermine the grantee organizations’ ability to fulfill their missions.

Grantees are barred under current laws from using grant funds to pay the direct
or indirect costs of lobbying. Current law upholds the Tight of grantee to engage
in advocacy with its private funds. This proposal strikes directly at the heart of that
right. It is common practice for the YMCA and many other non-profit organizations
to be involved both in the delivery of government-funded Services and in a range
of activities that the McIntosh/Istook/Ehrlich Proposal would deem political advo-
cacy. Indeed, both types of activities are integral to the traditional role of non-profit,
community-based organizations as mediating institutions between the individual
and government. By forcing the YMCA and other non-profits to choose between ad-
vocacy and the delivery of government-funded services, this proposal would seriously
undermine these organizations’ capacity to mediate and serve as an effective advo-
cate for their constituencies.

An example of the interconnectedness of our advocacy efforts is illustrated by the
Baltimore YMCA. Recently, the YMCA, concerned about the growing gang problem
in the city, convened an interest group—consisting of government representatives,
community leaders, and elected officials—to discuss the need to develop effective
gang prevention programs. As a result of these meetings, the community as a whole
will plan and implement comprehensive, community-wide prevention strategies in-
volving both the private and public sectors. This type of positive collaborative effort
benefits communities in every region of the country, but it would be severely re-
stricted by this proposal.

The Mclntosh/Istook/Ehrlich proposal would dramatically broaden the range of ac-
tivities treated as proscribed political advocacy, thereby negatively impacting a wide
range of successful cooperative efforts between YMCAs and federal, state, and local
governments.

Unlike existing federal grant and federal tax law rules, the proposal’s definition
of political advocacy would encompass all efforts to influence legislation and agency
action, as well as participation in litigation involving governmental parties except
where the grantee is a defendant. The latter restriction apparently would class as
“political advocacy” a variety of routine litigation from efforts to collect unpaid bills
owed by government agencies to appeals of adverse zoning decisions.

The proposal to treat efforts to influence executive branch decisions as Political
advocacy would have a particularly broad effect. The boards of directors of YMCAs
are made up of volunteer community leaders. These volunteers give generously of
their time to address needs and solve problems in their communities. Not always,
but often enough, addressing needs means speaking up and speaking out about gov-
ernment and its programs, as well as estab! ishing ‘partnerships with schools, police
departments, courts, housing agencies, state and county welfare departments and
other government agencies that touch the lives of so many Americans. This proposal


10

Huge corporations receive millions in Federal grants, but these
corporations—which, incidentally, make generous campaign con-
tributions to the Republican party—aren’t affected by this gag rule,
despite the chairman’s statement, which I found surprising, be-
cause the bill singles out nonprofit corporations.

Nor is their use of Federal grants being investigated by this sub-
committee, and I refer people to the chart to the right. In other
words, General Electric, which received over $6 million in Federal
grants in 1994, is allowed to lobby for rollbacks in Federal environ-
mental laws, but the Sierra Club, which received only $5,000 in
Federal grants, would be prohibited from opposing these efforts.

Lockheed, which received over $45 million in Federal grants in
1994, is exempt from congressional scrutiny, but the Alliance for
Justice, which received no grants, is intimidated and harassed by
this subcommittee. :

Mr. Chairman, I think we ought to have another day of hearings
to hear from these corporations that are listed on that chart to tes-
tify before us. We will ask them to respond to the same questions
being sent to the nonprofit groups.

Speaking for myself, I believe that the gag rule is unwise. These
hearings are being conducted for coercive purposes. However, if the
subcommittee is going to proceed with these hearings, we ought to
be ensured that they are conducted in an even-handed manner and
that investigations investigate the activities of all Federal grantees.

Mr. Chairman, I say all of this with a great deal of regret, and
I certainly say it with concern, because I think that there is now
a precedent that hasn’t been seen in this country since the 1950's,
when we saw people questioned about their loyalty and intimidated
about their stands for America. I will participate in these hearings.
I appreciate this chance to make this opening statement, and I re-
gret to have to make such a hard opening statement, but I think
it has been justified.

Mr. McINTosH. Thank you, Mr. Waxman. Our next opening
statement will be Mr. Tate.

Mr. Tate, if you would yield me 15 seconds, I would like to make
one observation.

Mr. TATE. Sure.

Mr. McINTOSH. It’s somewhat remarkable that today, in our
hearing, we have six witnesses who are here before us. Four of
them tell us they are opposed to this legislation. At each of the pre-
vious hearings, we’ve had people who have told us they are opposed
to the legislation. We are, in fact, keeping a very open forum for
the discussion of these ideas.

It strikes me that when people don’t have an alternative to ad-
dress a problem, they complain about process, rather than seri-
ously coming forward with a legislative proposal. But we are going
to go forward with legislation to address this problem on behalf of
the taxpayers. .

Thank you, Mr. Tate.


70

subjected to new litigation directed against our defense of innocent human life, sim-
py because we also receive (federal grants to help us serve and enhance other

uman lives, is of the gravest concern to the bishops and to a wide variety of Catho-
lic organizations.”

In New York City, as well as elsewhere around the country, nonprofits described
these enforcement provisions as an intimidation factor. Because of potential harass-
ment, they feel they will have to give up advocacy. And for many nonprofit organiza-
tions providing service delivery, as well as staff working within such organizations,
that is an impossible choice. A social worker in Seattle pointed out that their Profes-
sional Code of Ethics requires social workers be advocates for their clients, including
in the policy arena.

These enforcement mechanisms are also troubling because many nonprofits may
not even know that they receive federal fronts The key reason is that they may
not know when federal funds are commingled with state or local funds. For example,
many states combine federal block grant funds with state funds, but local nonprofit
recipients are not even aware of that fact. There lack of knowledge, however, may
cost them dearly.

(6) The Istook amendment singles out only one type of federal assistance—grants.
While specifically targeting grant recipients for engaging in advocacy using their
own, privately raised funds, this proposal specifically exempts federal government
contractors, including defense contractors, who spend a lot more of the taxpayer's
money than do nonprofits. Under this bill, advocacy by nonprofits will be muzzled,
but government contractors will be free to hire as many high priced lobbyists as
they want, take out as many full page ads in the Washington Post and buy as many
thirty second TV spots as they want, and throw around as much PAC money as they
feel is necessary. Many nonprofit organizations feel that is just not fair.

This effort, lead by conservatives, was started as a “defund the left” initiative. But
it has turned into an attack on the entire nonprofit sector. Unfortunately, the great-
est impact will be felt by small community-based organizations, many of which do
not even know they get federal funds because much of the money passes through
state and local governments.

In a David and Goliath world, this bill takes the side of the Goliaths against the
Davids in the nonprofit community, and the ordinary Americans they represent.

(7) Don't destroy the long standing partnership between government and the non-
profit community. There has been a long-standing partners! ip between government
and the nonprofit sector to provide services and research in this country. This part-
nership put the nonprofit sector in a unique and well-qualified position to comment
on gaps in service delivery, identify problems and strengths with existing law and
regulation, and, in general, help to reinvent government to make it more efficient
and responsive to public need. The nonprofit sector has become the voice for vulner-
able populations and those that do not have the resources or skills to assert their
basic rights. While there is a wealth of perspectives within the nonprofit sector,
there is one common theme: we speak for the public interest, not a private interest.

The Istook amendment would cut off the ability of nonprofits to provide com-
mentary to local, state, and federal governments, and would have a chilling impact
on the entire nonprofit sector. And although House Republican leadership has spo-
ken of strengthening public charities and the voice of the grassroots, the message
of the amendment is clear: you should be seen (and do the work), but not heard,
Such efforts only work to undermine the strength of the nonprofit sector—and un-
dercut a key part of our American social fabric.

In Spokane, Washii n, for example, I was told of partnerships involving non-
profit federal grantees, businesses, and the city government to plan a housing rede-
velopment initiative for the metropolitan a1 e work of these committees were
intended to shape city, state, and federal policies to meet the needs of Spokane resi-
dents. These activities would be considered “political advocacy” and, for several key
nonprofit organizations in Spokane, would be ended by the Istook amendment.

Placing limita on the amount of advocacy federal grantees can perform with their
own private dollars forces an untenable choice. They may provide services for people
in need OR they may provide a voice for people need. Our American heritage calls

for both.
(NoTE.—Attachments A and B can be found in subcommittee files.}
ADDITION TO STATEMENT OF Gary D. Bass

KEY POINTS

1. No federal funds (either directly or through overhead) are permitted for lobby-
ing. No federal funds are permitted to influence the awarding of grants, contract,


52

Ms. VANPELT. Certainly. We have many small YMCA’s in this
country who have budgets of under $1 million, many with budgets
under $500,000. They are very active in their communities. As you
might guess, they are small communities, and they do a great deal
of the collaborative type of activities that I was talking about, espe-
cially when I referenced the Delaware YMCA.

That is not an uncommon activity. All that would have to be
counted, under the definition of your bill, as lobbying, and it would
be very easy for them to hit a 5-percent cap, based on their budget
size.

Mr. McINTosH. So a YMCA that maybe has a budget of
$500,000, and the community feels it needs to spend more than

25,000 in advocacy at the local level.

Ms. VANPELT. Well, certainly the way you describe “advocacy,”
yes, sir.

Mr. McINTosH. Wouldn’t that $25,000 be spent better in provid-
ing services, sort of youth programs and gyms, pools, things that
we had at our YMCA?

Ms. VANPELT. Well, yes, sir, but you’re not counting direct dol-
lars; you’re counting time spent. So what we are doing is prorating
people’s time as they spend at meetings, people’s time as they
spend talking, people’s time as they sit on councils and advisory
councils.

Mr. McInrosu. And I think that may be exactly the point that
Mr. Randolph was making, is that he thinks the mission of helping
people can be better served doing things than spending it in ses-
sions with Government bodies.

Ms. VANPELT. Well, if I may say, sir, I think that one of the
things that makes communities operate is the partnerships that we
have with Government, as the service provider. So when we are ap-
proached by the school system, or approached by the court system
or the judges, and asked to deliver services, we do have to spend
some time talking with them about what is the most comprehen-
sive and efficient way to deliver programs to those kids.

h Mr. McINTosH. But more than 5 percent? That’s a lot of over-
ead.

Ms. VANPELT. Well, I think that in a small community, again, as
your definition is so broad, that normal activities of give-and-take
in a community, planning and preparation, are now considered ad-
vocacy.

Mr. McInrosu. Actually, I think planning and preparation would
not be. It would be advocating that they give you money.

Ms. VANPELT. Well, I don’t believe that your bill is that specific.

Mr. McINToSH. We can look at the language and come back. I
will reserve some other questions after my colleagues have had a
chance to ask them.

Mr. Spratt.

Mr. Spratt. It’s kind of late. Let me just ask you one particular
question, Ms. VanPelt. You indicated in your testimony that there’s
a letter attached to your testimony signed by the executive officers
of 22 of this country’s leading charities. My testimony doesn’t have
that letter attached.

Ms. VANPELT. Oh, I’m sorry, sir. We will be sure to get you a
copy of that.


50

association to serve the needs of all. These principles are expressed in all Y pro-
grams—programs that involve people of all ages, from infants to senior citizens.

Six million young people participate in YMCA programs every year. These pro-
grams encourage children and teens to grow strong and secure in who they are and
to develop positive values. YMCAs regard volunteer service as integral to YMCA
youth programs and have developed models that demonstrate the value of involving
yor Un {people in community service.

“A believe that government should support initiatives that strengthen the
service ethic and challenge all to respond, collectively as well as individually, to the
social and environmental needs of their communities. These initiatives should be lo-
cally based and should offer a wide range of opportunity for involvement. The volun-
teer experience should promote individual growth and enhance community life.
More specifically, YMCAs believe that government community service initiatives
should reflect the following principles:

Training and Supervision: All youth community service programs should recognize
the need for supervision and training, both for sponsoring organizations and the vol-
unteers. Successful programs require a commitment to paying qualified and experi-
enced staff members to work with volunteers.

Community-based: All Programs should be developed or adapted by the commu-
nity in response to needs it has identified. This approach brings about meaningful
volunteer experience that produces results that are more easily measured at the
local level. Examples of successful models should be collected and made available
to other communities.

Involve Existing Programs: Government community service programs should not
duplicate the many successful programs operated by community-based organiza-
tions. New delivery systems should not be created until existing programs are given
a fair chance to meet the challenge of a government initiative. The nonprofit com-
munity should be considered in these decisions.

Multigenerational: People of all ages should be encouraged to volunteer. Also, in
order to respond to the needs of people of all ages, from prekindergarteners to senior
citizens, community service initiatives will need to include varied program designs
and models.

Economic and Cultural Diversity: Youth service programs should involve people
from different economic, social, and ethnic backgrounds. Volunteers should have the
opportunity to learn and work with people of other cultures and with different life
experiences.

port for Volunteers: Programs should provide support to participants. This
may include training and education, career counseling, and, when appropriate, reim-
bursement for out-of-pocket expenses.

Career and Vocational Training: Service offers young people important devel-
opmental experiences. Full-time service programs are a key element of a youth em-

ployment strategy,

job Protection: Government initiatives should not be viewed as a means of devel-
oping a low-cost labor force. Instead, they should be viewed as ways of improving
our communities and the service providers themselves.

Private/Public Partnerships: The private sector is making a commitment to youth
service activities through contributions to local organizations and programs. Govern-
ment initiatives should ensure that private funds are not diverted from these local

rograms, Instead, government policymakers should recognize that an expanded ef-
Fere'will mean an increased financial commitment by both the private and public

sectors.
‘Approved by the YMCA National Board, March 1991.

Mr. McINrosH. Thank you for joining us today, Ms. VanPelt.

Let me begin the questioning with Mr. Randolph. You had men-
tioned in your statement that you thought it was important, to con-
tinue the mission of go" charity, to be independent of activities
engaged in lobbying. Do you see a danger for groups that are orga-
ni wd to help our communities if they move away from actually pro-
viding assistance and move toward lobbying the Government to
provide that assistance?

Mr. RANDOLPH. I think there is a chance, Mr. Chairman, that
one could be forced, through the absolute pursuit of an agenda with
pending legislation, to steer away from the mission at hand, espe-
cially when that mission needs—the total focus of the mission



56

vocate on at the national level, what it is they would like for us
to ‘Speak for them about.

ese are issues that they are dealing with, that come through
the doors of the YMCA every single day. So they come back to us
with the survey and say, “These are the issues that are the top pri-
orities for us, that we find every single day are problems. If you
can help us, coordinate at a national level to help, whatever you
can do to address these problems while we do it at the local level,
then help us this way.” And that’s how we come to those activities
that you have before you.

Mr. EuRLICH. If I could have an additional 30 seconds from the
chairman.

I believe your comment in answer to Mr. Spratt’s question was,
you view it as a public-private partnership.

Ms. VANPELT. Yes, sir.

Mr. EHRLICH. And that really is why we’re here today and where
that line should be drawn. I thank you for your testimony.

Ms. VANPELT. Thank you.

Mr. McIntTosu. Thank you very much, Mr. Ehrlich.

Ms. Slaughter.

Ms. SLAUGHTER. Thank you, Mr. Chairman.

Tm a little disturbed by the last question to Ms. VanPelt, be-
cause we're not holding these hearings today as to whether any
member of this panel or any Member of Congress objects to the
things you're doing with your own money; isn’t that correct? It’s the
Federal money you're worried about.

iM, McINTOSH. We're also very worried—would the gentlelady
yield?

Ms. SLAUGHTER. About what their philosophy is and what they
do with their own money.

Mr. McINTOosH. Would the gentlelady yield?

Ms. SLAUGHTER. I will.

Mr. McINTosH. Mr. Ehrlich.

Ms. SLAUGHTER. Would you like to answer that, Mr. Ehrlich?

Mr. EHRLICH. Was that directed to me?

Ms. SLAUGHTER, Yes.

Mr. EHRLICH. Yes, ma’am. Many of these groups enjoy a special
status in society we call nonprofits. That’s something that we have
through the tax code, a benefit that we have chosen to confer upon
a variety of groups in this country. Additionally, as you well know,
money is fungible.

Ms. SLAUGHTER. That’s fine, Mr. Ehrlich.

Mr. EuRLICH. Can I answer? Can I finish?

Ms. SLAUGHTER. Well, no, you have answered what I wanted to
hear, frankly.

Mr. Enrzicu. OK.

Ms. SLAUGHTER. I think what I’m hearing you say is that you
really don’t want. any non rofit; is that correct?

Mr. EHRLICH. Ma’am, I've been in Congress only 8 months, but
Tm fascinated.

Ms. SLAUGHTER. Or you don’t mind a nonprofit that agrees with

‘ou?
¥ Mr. EHRLICH. Can I answer?

Ms. SLAUGHTER. Sure. Go ahead.


60

your position that there is not a problem and that Congress really
shouldn’t even be looking at this?

Ms. VANPELT. Yes, sir, I think that current law is sufficient, that
if there is a problem and that if a problem is identified, if there
is a problem under current law, then we need enforcement of cur-
rent law. I think that this is overbroad.

Mr. GUTKNECHT. And would it be your position, then, based on—
you sat and listened to the testimony and heard about this one par-
ticular group that had received over 96 percent of its money from
the Federal Government, and it turned around and engaged in
what at least I would say was pretty obvious political activity,
would you say that that was a violation of the current law or not?

Ms. VANPELT. I’m sorry, sir, I’m not familiar enough with the
case or with current law.

h Mr: GUTKNECHT. Well, you sat—you heard everything we just
eard.

Ms. VANPELT. Yes, sir, but I have no comment to make on that.

Mr. GUTKNECHT. So you don’t have an opinion?

Ms. VANPELT. I’m not qualified, especially on the record, to com-
ment on that.

Mr. GUTKNECHT. I find that incredible. I mean, you do feel quali-
fied to offer an opinion on the bill.

Ms. VANPELT. Yes, sir. My testimony is very deliberate about the
effect that this proposed bill will have on the YMCA. I cannot com-
ment on the National Council of Senior Citizens and how they op-
erate.

Mr. GUTKNECHT. Well, it really is about the current state of the
law. I mean, what we’re really talking about, is the law today ade-
quate or is it not adequate?

Ms. VANPELT. Well, sir, I feel, in the case of the YMCA, that the
law is adequate.

Mr. GUTKNECHT. So you think the law is adequate.

Ms. VANPELT. In the case of the YMCA, yes. And I can speak on
behalf of the YMCA.

Mr. GUTKNECHT. But is there some danger that, if there’s a log-
ical progression, and your—and I agree with Mr. Ehrlich, I mean
I’m surprised that so many of these groups are so actively involve
in what you would describe as political advocacy today. Isn’t there
some danger that 5 years down the road, 10 years down the road,
you're going to be in the same situation?

Ms. VANPELT. I don’t think so, sir.

Mr. GUTKNECHT. So you think the law is adequate as it is today?

Ms. VANPELT. Yes, sir.

Mr. GUTKNECHT. Thank you very much.

Mr. McIntosu. Thank you, Mr. Gutknecht.

I think everyone has had a chance for a round of questions. I
have another couple questions for Ms. VanPelt. We can go through
another round if other members do, as well.

Ms. SLAUGHTER. Mr. Chairman, I do have a request. Was it Mr.
Ehrlich or somebody referred to testimony previously of someone
who had broken the law, I don’t have any knowledge of that, and
if somebody on the committee staff would please give me that, I
would be much appreciative.


48

icy should define the problem to include tobacco, alochol, and over-the-counter drugs
as well.

‘Acknowledge That Everyone Is At Risk: Effective programs recognize that all chil-
drenvare at tk of addiction "Therefore, government policy should support programs
that involve people of all ages, from rural and urban communities, and from all eco-
nomic classes.

Give High Priority to Prevention Efforts: Programs that promote self-esteem and
healthy lifestyles and that teach decision making help people develop skills that im-
prove their chances for leading positive, successful lives, and they. prevent young
people from becoming substance abusers. Shrinking the supply of Sruge involves

tage outlays of resources; that strategy will never be as successful as initiatives di-
rected at shrinking the market. Therefore, prevention should be a significantly high-
er priority in government substance abuse policy. Federal, state, and local preven-
tion programs should encourage the development of new, creative approaches to pre-
venting substance abuse among youth.

Provide for Early Intervention: Children and teens who experiment with tobacco,
alcohol, and other drugs—or who experience related problems—should be provided
with services to prevent the development of severe addiction problems in the future.
Government policy should recognize and support the development of early interven-
tion programs.

Ensure Access to Treatment Programs: These should be available to people who
are addicted to alcohol and other drugs. Government policy should promote recov-
ery, Communities should be provided resources to develop programs that meet the
varied needs of addicts and that advance the recovery process.

Reengnize the Importance of Involving Families: Services provided to, those af-
fected by substance abuse should focus on the family. Government policy should pro-
vide support to families and should involve parents in developing programs for chil-

ren.

Increase Public Information About the Risks of Tobacco and Alcohol: Everyone
pays for substance abuse, directly or indirectly. The severe consequences of, addic-

jon demand that policies encouraging tobacco and alcohol use be curtailed. This
should include a prohibition of advertising encouraging youth to smoke or drink.
Government policy should support public education campaigns.

Promote Research: The knowledge base has not kept pace with growing awareness
about the problems associated with substance abuse. There is a great need for infor-
mation about the problem, possible solutions, and effectiveness of programs. Govern-
ment policy should promote and fund applied research studies.

Promote Community Collaboration: Neighborhoods and communities must be en-
couraged to create initiatives that reflect the needs of the people who live in them.
Government policy should provide funds and other incentives and should support
Programming that involves public/private partnerships at the local level

Involve Community-Based Organizations: Nonprofit, community-based organiza-
tions are critical providers of successful prevention, early intervention, and treat-
ment programs. Government policy should provide funds and other incentives to in-
crease these groups’ effectiveness. Furthermore, government programs should not
limit eligible providers; they should involve schools, for-profits, and nonprofits in
programs.

meourage Innovation and Replicate Successful Local Programs: Solutions to the
problems associated with substance abuse require innovation, risk taking, and cre-
ative programming. Government policy should support such efforts and should rec-
ognize successful models for replication in other communities. Government policy
ghould aloo recognize the needs of local programs for a sustained commitment to
funding.

THE YMCA PUBLIC POLICY POSITION ON YOUTH HEALTH AND FITNESS

Promoting healthy mind, body, and spirit is central to the YMCA mission. For
over a century, YMCAs have provided accessible and affordable health and fitness

rograms to meet the needs of children and families. In YMCA youth health and
Rinese ectivities, the emphasis is on developing self-esteem, providing positive adult
role models, promoting good health, and respeting others values that are essential
fo helping @ young child develop into a healthy adult. YMCAs are committed to
strengthening the self-confidence and self-reliance of youth to help them make their
own healthy choices. YMCAs know it is better to help young people develop healthy
behaviors and enjoy physical fitness, than to pay the high costs of health care later.

"As one of the nation's largest youth-serving organizations—last year over 6 mil-
lion young people participated in YMCA programs—YMCAs recognize that the
health of the nation’s children is at-risk. Many children are at-risk of long-term


20

Mrs. MEEK. Yes.

Mr. McInTosu. I appreciate your statement right there. I think
that there’s a lot that we could have in common about this. We
may not agree with everything on the bill, but it certainly wasn’t
our intention to gag anyone or prevent the little guy, if you will,
the charity that’s helping in the community to run a community
center or help the elderly or the poor.

We don’t want to stop them from speaking up when they see a
problem. It was when a group became primarily a lobbying group
that I sense there was a problem and almost a conflict of interest
in some ways. And so I hope, with the sentiment of your opening
statement, that we can work together on this. We may not end up
agreeing, but I think we’re both on the same track, and I would
love to be able to talk with you more about it.

Mrs. MEEK. I would, too, Mr. Chairman. This is scary legislation.

[The prepared statement of Hon. Carrie P. Meek follows:]

PREPARED STATEMENT OF HON. CaRRIE P. MEEK, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF FLORIDA

Mr. Chairman, I ask unanimous consent that my entire statement be included in
the record.

Let me make two brief points.

First, Mr. Chairman, you are quoted in yesterday's New York Times that this is
the first in a series of hearings in which the witnesses will be groups who have lob-
bied against the Republican efforts to balance the budget.

I think it is outrageous that you would attempt to use the power of a Congres-
sional committee to chill the First Amendment rights of those groups who oppose
your idealogy. Is this a return to the tactics used in the 1950’s by Senator McCar-
thy? What about the groups who get Federal grants and appear to support your po-
sition on various issues?

For example, last year the American Medical Association received $655,000 in six
Federal grants. These grants include sponsoring a conference on family violence,
giving demonstrations to prevent injuries, and setting up an education program to
protect people from the hazards of environmental tobacco smoke. I support the
AMA’s getting these Federal grants, and I also support the right of the AMA to
lobby both the Federal government and State and local governments on such topics
as health care legislation.

As another example, International Business Machines Corporation says that it re-
ceived about $92 million in Federal grants last year. I support IBM’s getting Federal

ants to do research that is important to the nation’s Riture, and also support
the right of IBM to lobby both the Federal government and state and local govern-

ments.
But I wonder whether you plan to investigate political advocacy by the AMA and
IBM.

Second, I want to briefly address the constitutional issue that we considered at
the August 2 subcommittee hearing on the Istook-MclIntosh provision. On Septem-
ber 7 the House considered an amendment by Representative Schroeder to the de-
fense appropriations bill. Her amendment would have extended the Istook-McIntosh
provision to defense contractors. During the floor debate Chairman Livingston op-
posed the amendment on the ground that it “totally flies in the face of any constitu-
tional principles that I know of” to tell a defense contractor that the contractor can-
not use its own funds to lobby the Federal government. I wonder whether you, Mr.
Chairman, agree with Chairman Livingston on this constitutional issue for defense
contractors and, if you do, why the constitutional issue should be decided differently
for groups such as the American Red Cross and the United States Catholic Con-
ference.

‘As you know, these two organizations—along with many others—are opposed to
the Istook provision. I ask unanimous consent to place in the record letters from
Elizabeth Dole, President of the American Red Cross, and Revered Monsignor Den-
nis Schnurr, General Secretary of the United States Catholic Conference, explaining
why they oppose the Istook provision.


38

fect on our clients, our mission, the public trust, and fiscal viabil-
ity.
Those questions are: Does it directly serve our client? Does it fall
within the mission of our organization? Will it enhance the public
trust of our organization? And, finally, is it a fiscally responsible
act?

Mr. Chairman and committee members, it is because of my core
beliefs that I am here today to testify in support of the Istook-
McIntosh-Ehrlich amendment. I believe that, currently, Federal
Government grants not only fly in the face of my personal beliefs
but probably in those of most grassroots philanthropic agencies as
well.

It is truly difficult to see how a client benefits from a dollar he
or she never sees. In my opinion, Federal dollars finding their way
back to Washington via the lobbying system does an incredible dis-
service to the most important element of community service, the
client.

As a nonprofit organization, I believe that an agency’s mission
should drive its action, and any deviation from such needs to be
looked on with a certain amount of scrutiny. It would be interest-
ing to see the mission statements of those organizations that fun-
nel a considerable amount of their funding toward influencing leg-
islation. One would imagine that few, if any, of these organizations
were chartered to be political action committees.

Another consideration is public perception. Public trust is one as-
pect that all nonprofit organizations should have in common. As a
donor, most individuals or organizations believe that their con-
tributions will be used in a prudent and efficient manner by the
recipient. If an agency violates that trust through disproportionate
fund allocation systems, then all nonprofit organizations are
viewed with skepticism. A ripple effect such as this could have a
negative impact on all nonprofit entities and the people they serve.

Mr. Chairman, being involved in the never-ending chase for lim-
ited dollars, I would be hard-pressed not to support this amend-
ment before the committee. As I prepare to close, I want to tell you
my story about how I stretch a dollar.

‘his year I had a staff of eight college students who worked tire-
lessly in the development of my cadets’ character, leadership traits,
and communication skills. Working on an average of 45 to 50 hours
a week, they were compensated at a paltry rate of $3 an hour.

It deeply disturbs me that small, newly developed agencies such
as ours must scrape to make ends meet, yet there are literally mil-
lions of dollars flowing back to Washington, essentially untouched
by the local community. I can only hope that, with the approval of
this amendment, an environment that promotes client well-being,
mission adherence, public trust, and fiscal responsibility will once
again be prevalent in our communities.

Thank you.

Mr. McINTosH. Thank you, Mr. Randolph.

Let us hear now from Ms. VanPelt, and then we will proceed
with questions.

Ms. VANPELT. Thank you. Mr. Chairman, members of the com-
mittee, my name is C.J. VanPelt, and I am the director of public
policy of the YMCA of the USA. The YMCA of the USA public pol-


69

activities, organizations that may be close to the line really do not know if they will
exceed the new limit.

The real complaint from nonprofit organizations is not the cap, however. It is that
the government would be conditioning their right to free s based on whether

ey are a grant recipient. As the Congressional Research Service reported! the
Istook plan to limit the amount of private funds to be used for advocacy purposes
Taises serious constitutional issues. “Although Congress may clearly limit, regulate
or condition the use of the funds it appropriates, it has been a principle of federal
constitutional law that the government may not condition the receipt of a public
benefit, upon the, requirement, of relinquishing one's protected First Amendment
rights.” The Istook plan, according to CRS, “may thus potentially encounter signifi-
cant First Amendment difficulties.

(4) The reporting requirements are overly intrusive and burdensome. Nonprofit
federal grantees must currently provide narrative and financial reports to granting
agencies. They must follow generally accepted accounting procedures along with al
procedures stipulated in OMB Circular A-110, Uniform Administrative Require-
ments for Grants and Agreements with Institutions of Higher Education, Hospitals,
and Other Nonprofit Organizations. They must conduct an audit under the stand-
ards established by OMB Circular A-133, Uniform Audit Requirements, which re-
quires a “snapshot” of all organization activities—including those supported with
private funde—at a single point in time. Finally, all charitable tax-exempt organiza-
tions must file an annual report to the IRS (Form 990) that. includes information
about lobbying, including how much was spent on direct and grassroots lobbying.

Under the Istook amendment, nonprofit federal grantees would also have to sub-
mit to the granting agency a new annual report due by December 31. For those that
engage in advocacy activities, they will need to provide a “brief iption” of their
advocacy activities and how much money they spent on these activities. This infor-
mation will be compiled by the granting agency, forwarded to the Census Bureau,
and then posted on the Internet.

Nonprofit organizations have pointed out that the Istook amendment will force
them to keep two set of financial books. One to monitor the amount of money spent
on lobbying—as defined by OMB Circular A-122 and the IRS—and another to mon-
itor money spent on advocacy—as defined by the Istook amendment. Many organiza-
tions point out that it is ironic that the new Republican Congress prides itself on
reducing the amount of government intrusiveness and paperwork, yet this amend-
ment would result in the opposite.

Further complicating the reporting ‘irement is that the Istook amendment re-
quires reporting based on a federal fiscal year. Not only will nonprofit organizations
need two books because of the difference in scope of what is being prohibited, but
also because they must report on the basis of a federal fiscal year. One nonprofit
organization in Chicago described a state grant that includes federal money passed
through the state. The organization must submit reports to the state and file an an-
nual report on the state fiscal year, which differs from the federal fiscal year. Under
the Istook amendment, they would need to add another report based on the federal
fiscal year, but since their state granting cycle cuts across the federal October 1 to
September 30 year, it will be very complicated.

(5) The enforcement mechanisms are perceived to be a means for intimidating
nonprofits from engaging in any type of advocacy activity. Two Istook amendment
provisions stand out. First, that the burden of proof is on the federal grantee to

lemonstrate “by clear and convincing evidence” that they are in compliance with the
provisions in the bill. Under current grant rules, the government, through the audit
and narrative reports, determines whether the grantee has been complying with the
Frent stipulations. If'not in compliance, the agency begins administrative actions.

inder the Istook amendment, this would be reversed. It is particularly important
because of the second point.

‘The Istook amendment permits anyone to sue a federal grantee for noncompliance
with the law under the False Claims Act. Thus, frivolous law suite could be filed
for up to ten years that will require the federal grantee to respond. The grantee will
need to prove “by clear and convincing evidence” that it was in compliance. Like the
new paperwork requirements, this will cost considerable sums of money.

Nonprofit organizations throughout the country criticize this “bounty hunter” Be:
vision because it, allows hostile groups to harass advocates. A recent letter from Car-
dinal Roger Mahony, chairman of the National Conference on Catholic Bishops’
Committee for Pro-Life Activities, which was quoted in the Washington Post on Sep-
tember 19, 1995, best sums up the concerns: “The prospect that we could now

Maskell, Jack H., “Constitutional Issues Raised by Proposals to Restrict Privately Financed

Advocacy Activities of Federal Grantees,” Congressional Research Service, July 28, 1995.



THE ISTOOK-McINTOSH-EHRLICH PROPOSAL

THURSDAY, SEPTEMBER 28, 1995

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON NATIONAL ECONOMIC GROWTH,
NATURAL RESOURCES, AND REGULATORY AFFAIRS,
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT,
Washington, DC.

The subcommittee met, pursuant to notice, at 2:20 p.m., in room
2154, Rayburn House Office Building, Hon. David Mcintosh (chair-
man of the subcommittee) presiding.

Present: Representatives McIntosh, McHugh, Ehrlich, Tate,
Scarborough, Gutknecht, Peterson, Waxman, Spratt, Slaughter,
Condit, and Meek.

Ex officio present: Representative Collins.

Also present: Representative Istook.

Staff present: Mildred Webber, staff director; Jon Praed, chief
counsel; Todd Gaziano, senior counsel; Karen Barnes, professional
staff member; David White, clerk; David Schooler, minority chief
counsel; Bruce Gwinn, minority senior policy analyst; and
Elisabeth Campbell, minority staff assistant.

Mr. McINTOsH. The Subcommittee on National Economic
Growth, Natural Resources, and Regulatory Affairs will come to
order.

Mrs. CoLLins. Mr. Chairman. Mr. Chairman.

Mr. PETERSON. Mr. Chairman.

Mr. McINTosH. Mrs. Collins.

Mr. PETERSON. If I might, we have Mr. Skaggs, who would like
to sit with the committee, Mr. Chairman, if that would be all right
with you.

Mr. McINtosH. That is fine with me.

Mrs. CoLtins. Yes, that’s what I was going to ask.

Mr. McINTosH. Yes.

Mrs. CoLLins. That he be permitted to sit with the committee.
As you know, it was considered that he be permitted to sit with the
committee and to ask questions.

Mr. PETERSON. Yes, that has been worked out.

Mr. McINTOSH. What we were going to do—and we haven't really
adopted a formal policy on this. Mr. Fstook joined us for one of the
previous hearings. Mr. Skaggs is welcome. I was hoping to have the
questioning time reserved for the members.

Tm really quite amenable either way, but I would like to have
the policy be that, however you want it for this one, but I would
like to work out with Mr. Peterson a policy for the future on that,
so we're fair to everybody.

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71

or loans. There are severe penalties for violations of either rule, including fines and
debarment.

2, These rules apply equally to all types of federal awards—nonprofit grantees,
defense contractors, etc.

3. Total federal grants in FY 1994 was $226.4 billion.

4. In FY 1994, 89% of federal grants went to state, local and tribal governments,
which would not be covered under the Istook amendment.

5. Even counting some higher education organizations that may be exempt from
the Istook amendment because they are organized as part of the state government,
total grants covered under the Tstook amendment amount to $245 billion in FY 94.

6. The amount of money spent on federal contracts ($196.4 billion) is 8 times the
amount of money that would be covered under the Istock amendment.

7. If there is “welfare for lobbyists,” where is it? Undocumented payments to Pen-
tagon contractors is $500 million to $750 million per year, according to the General
Accounting Office. Total lobbying expenditure of charities is $72 million per year.

8. There is an image that charities are spending a lot of money lobbying on var-
ious issues. Let’s put things in perspective. Two $7,600 Pentagon coffee pots is
greater than $12,520, which is the average expenditure of charities that lobby, ac-
cording to the Internal Revenue Service.


74

Ms. Aron. Let me continue.

Mr. McInTosu. I will let you continue. I’m just telling you it’s
not a fruitful use of your time. It would be much more Feneficial
to us to hear your arguments about the bill. I will give you your
time to use it as you see fit.

Ms. SLAUGHTER. It’s beneficial to me, Mr. Chairman.

Mr. MCINTosH. Well, I don’t think it’s useful in persuading any-
body about the merits of this particular legislation.

Ms. SLAUGHTER. If I could speak to that for just a moment. When
you and I talked a while ago, one of the comments that we wanted
to make—Ms. Aron has just confirmed what I was asking you
about, are these numbers accurate?

Mr. McINntosu. Let me ask her that.

Ms. SLAUGHTER. But this really does fly in the face of what
you're doing in this hearing, Mr. Chairman. y have to tell the truth,
it is absolutely unscrupulous for the committee to put out a phony
piece of paper here.

Mr. McINtosnH. Ms. Slaughter, let’s let Ms. Aron answer your
question. I would be delighted to hear Ms. Aron’s answer to your
question, are those numbers accurate?

Ms. SLAUGHTER. She just said that they weren't. I heard it in her
testimony. This is what she said.

Mr. MCINTOSH. Well, I’d like to hear that.

Ms. SLAUGHTER. I'd like to hear her say what, in behalf of her
agency, she feels has been done to her today by this committee.

Mr. McINTosu. I'd be delighted to hear her figures.

Ms. ARON. OK. I’d like to continue. Your office put out false in-
formation on such stationery in such a way as to suggest that the
information is from the Alliance for Justice. Staff committee delib-
erately took a piece of our stationery and forged it, the anonymous
authors.

Mr. McINTosH. Ms. Aron, do you have any indication of people’s
intent? I mean, do you read people’s minds?

Ms. ARON. Well, sir, even if this was unintended, as you state.

Mr. McInrosu. I just asked you a question. I mean, do you read
people’s minds?

Ms. ARON. Well, sir, I cannot fathom why this information was
put together except, sir, to say that it was put together in such a
fashion as to mislead the public, the nonprofit community, sir, and
the press. That is what I believe was the intention.

The anonymous authors of this work have acted in a dishonest
and cowardly way. If opponents of the Istook-McIntosh proposal
distributed anonymously in this room office stationery with a list,
sir, of your corporate contributors that receive Federal grants, you
would accuse them of dishonesty and cowardice.

The fact that the information your staff put out is wildly inac-
curate makes it that much worse. Sloppiness or deliberate dis-
regard for the facts is almost as serious a crime in policy discourse
as is dishonesty.

Now, sir, I would like to tell you a little bit of information about
the Alliance for Justice. The Alliance is an association of public in-
terest legal organizations and nonprofit associations. We are tax-
exempt, 501(c)(3), and we receive no Federal money. A few of our


31

Mr. Spratt. This National Council, as a grantee.

Mr. LonGLEy. OK.

Mr. Spratt. They have found the services of private organiza-
tions like this so useful, for principles which I think you would
agree upon, the Government finds that a private sector organiza-
tion, pul liely supported, can do it better than the Government it-
self, that most of this program is, in effect, carried out through
these private grantees.

What they do is render a service in return for a fee from the Fed-
eral Government.

Mr. LONGLEY. I’m familiar with the program. In fact, I visited
with one of them in the State of Maine.

Mr. Spratt. Now, this is contracting for a human resources serv-
ices, but how does that differ from contracting with Lockheed-Mar-
tin Marietta for engineering services? How do we distinguish be-
tween the two? In both cases, the Federal Government is contract-
ing with a grantee.

ir. LONGLEY. I’m not sure there’s any difference. And, frankly,
I don’t think Federal money should be used, whether it’s a defense
contractor or a political party, for partisan political activity, period.
In fact, just for the record, I supported an amendment that was of-
fered on the floor that, was defeated, that had included that lan-
guage. But a member of your party elected to ask for a motion to
reconsider, and it was defeated on the floor. I supported it.

Mr. Spratt. So you think this should apply to defense contrac-
tors who get substantial contracts as well as organizations like the
NCSC who have human resources contracts?

Mr. LONGLEY. I think, in principle, yes.

Mr. Spratt. Now, are you actually accusing them of taking Fed-
eral grant money and spending it on political and partisan activi-
ties?

Mr. LONGLEY. I’m saying that, as a practical matter, it’s impos-
sible to make a distinction, particularly when the group has re-
ceived 96 percent of its funds from the Federal Government.

I'll go one step further. Their own national director of commu-
nications, or their spokesman, has been actively involved, in the
last week or two, arguing with me over this group’s partisan activ-
ity. In one case, I was informed by a reporter for a newspaper in
my State that they defended their right to engage in partisan activ-
ity as they saw fit.

I might add one other point: I visited with the Green Thumb Pro-
pram which is active in my State—and this is kind of significant,

ecause contrary to assertions that were contained in news media
coverage of the National Council in my district, that suggested or
implied or failed to object to a statement that they the National
Council, employed 324 people in my State. The fact is, they do not
employ anyone in my State.

Mr. SPRATT. They placed 324 people in the State.

Mr. LONGLEY. No, they didn’t place 324 people in my State. The
Green Thumb Program placed 324 people in my State. And by way
of contrast, Green Thumb approached me back in February, con-
cerned about the impact of Federal grants and the possible changes
in the job training programs. I met with them. I met with 10 or
20 of the participants in that program. We had a very cordial dis-


17

Mrs. SLAUGHTER. They are covered. They may not use their Fed-
eral money to do any of the things I read off here. That’s what you
want, isn’t it? It has already happened, Mr. McIntosh. When you
got here, the Congress had taken care of that.

Mr. McINTosH. I don’t believe the Girl Scouts—Ms. Slaughter.

Mr. WAXMAN. Point of order, Mr. Chairman. Each member
should get 5 minutes and not have to be rebutted by the chair.
We've got to let each one say his piece and, then, let’s get on with
the hearing.

Mr. MclNTosH., We're going to move now to Mrs. Meek. Do you
have an cpening statement?

Mrs. MEEK. I do have, but I must go and vote, because that’s
why they sent me here. I will do my opening statement when I re-
turn,

Mr. MCINTosH. Yes, we will do that.

Mrs. MEEK. I must say something on this.

Mr. McINTOSH. Mrs. Meek, we'll do that. Let’s stand in recess
until 3:30.

Mrs. MEEK. Thank you, sir.

[Recess.]

Mr. McInrosH. Let me turn now to Mrs. Meek for her opening
statement.

Mrs. MEEK. Thank you, Mr. Chairman, and I ask unanimous
consent that my entire statement be included in the record.

Mr. McINTosH. Seeing no objection, it shall be done.

STATEMENT OF HON. CARRIE MEEK, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA

Mrs. MEEK. Thank you, Mr. Chairman. I would like to make two
brief points. First, you are quoted, Mr. Chairman, in yesterday's
New York Times, that this is the first in a series of hearings in
which the witnesses will be groups who have lobbied against the
Republican efforts to balance the budget.

if this is true, the statement that was made in the Paper, I think
it’s outrageous that anyone, including yourself, would attempt to
use the power of a congressional committee to chill the first amend-
ment rights of those groups who may oppose your ideology.

I can think of some of the many, many small groups that you
perhaps have not even envisioned that this legislation might im-
pact, and I’m sure some of those groups have not even been sent.
a questionnaire or have been asked their opinion. I cannot imagine
what would happen if this particular proposal were to pass, and
someone from the Homeless Trust came up to lobby me, and I
couldn’t talk to them, when I could talk to anyone from one of the
large corporations you see there.

I think you must understand that each of us is elected to rep-
resent people, not necessarily large corporations, but groups of peo-
ple. I’m afraid, as some of the other members have been, that this
may be a return to McCarthyism. I came along during that time,
Mr. Chairman, and I know some of the scare tactics that were used
during that time, and I do have a good memory. I wouldn’t like to
see that happen again.

Mr. McINTosu. Mrs. Meek, I appreciate your memory. Would you
yield for a real quick comment on that?


23

STATEMENT OF HON. GIL GUTKNECHT, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF MINNESOTA

Mr. GUTKNECHT. Mr. Chairman, I really didn’t have any long
opening statement, but I would like to just say that I agree wit
some of the comments that Mrs. Meek made.

“Facts are stubborn things.” John Adams said that 200 years
ago, “Facts are stubborn things.” I know there has been a lot of
hysteria about this. I think, from my perspective, we are doing ex-
actly the right thing.

I think the American people need to know that there are organi-
zations who lobby here in Washington, DC, who receive in excess
of 95 percent of all of their funds from the Federal Government,
and then they turn around and spend 99 percent of their effort lob-
bying for more money from the Federal Government.

I think that is unbelievable, and I think, when the facts come out
about it and people have a chance to examine the evidence, I think
virtually everyone will agree with this bill.

So that was my only opening statement, Mr. Chairman. I would
yield back, and now we have to go vote.

Mr. McINTosH. Thank you very much, Mr. Gutknecht. Let’s take
a recess until after this vote, and then we’ll turn to the first panel.

[Recess.]

Mr. McINTOSH. The subcommittee is reconvened. Our first panel
today will be two of our fellow colleagues, Representative Jim
Longley of Maine and Representative David Skages of Colorado.

‘elcome, both of you, and thank you for coming before us today
to testify about your thoughts and concerns in this issue and other
related subjects to the bill. I don’t think we need any further intro-
ductory remarks. Mildred is telling me that we don’t swear in our
colleagues who are Members of Congress. We trust that you're
truthful, although it is a policy to swear in the other witnesses.

Let me begin now by turning it over to my colleague from Maine,
dim Longley.

STATEMENT OF HON. JIM LONGLEY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MAINE

Mr. LONGLEY. Mr. Chairman, thank you very much. Before I
begin, I just want to make absolutely sure, are there any more
opening statements?

Mr. McInTosu. That’s a dangerous question to ask. It’s good to
know there are none.

Mr. LonGLEY. Thank you, Mr. Chairman and members of the
committee. I want to discuss my experience with one particular
group that has been receiving Federal money and, I think, using
it in an outrageous manner. This is the National Council of Senior
Citizens.

I first became aware of the National Council about 2 or 3 weeks
prior to last November’s election, when they were part of a vicious
assault against now-Senator Olympia Snowe of Maine in her cam-
paign against former Representative Tom Andrews.

ey got my attention at that time. Frankly, I didn’t know very
much about them. I just assumed it was a senior advocacy grow
from Washington. I was very surprised to learn, in the weeks fol-


19

like to speak to us, who really aren’t in the business of political ad-
vocacy, from speaking out and coming and trying to lobby us and
tell us what things that they’re doing.

I know you're not going to investigate IBM, and you're not going
to investigate the American Medical Association. There isn’t that
much money in the world, Mr. Chairman, and you already have a
bill that’s working that prohibits this. It’s the law of the land to
prohibit this.

Second, I would like to address the constitutional issue, which I
have heard so many of the other members talk about, but at the
August 2 subcommittee hearing on the Istook-McIntosh amend-
ment, the House considered an amendment by Representative
Schroeder to the Defense appropriations bill.

Her amendment would have extended the Istook provision to de-
fense contractors, but you opposed it, and you’ve heard that from
one other member today. But there is a constitutional issue here.
Believing strongly in the Constitution and having lived behind its
protection, I certainly would like to see this apply to everyone.

I ask unanimous consent to place in the record letters from Eliz-
abeth Dole—I respect her very much—from the American Red
Cross. I’m sure you have that letter, in which Mrs. Dole, and also
Monsignor Schnurr, general secretary of the U.S. Catholic Con-
ference, explaining why they are against the Istook provision.

Now, Mr. Chairman, you're a freshman. I know you don’t want
to run up against these two organizations. You don’t want to run
up against Elizabeth Dole, and I know you're not going to run up
against the Catholic Conference. I know better than that.

Mr. MCINTosH. Seeing no objection, we'll definitely put both of
those letters in the record.

Mrs. MEEK. Good. I guess the point I’m trying to make, Mr.
Chairman, whether deliberately or not, your legislation carries the
wrong message. The message it carries is that we don’t want politi-
cal advocacy from people who are small in content. They are non-
profits. They don’t get the big money, so we'll just not put this par-
ticular legislation on the large corporations or the people who don’t
use their money to lobby the Federal Government.

I guess my point, Mr. Chairman, is that there are those who
have reasons to lobby us, and we also need input from those small
organizations. We need input from the Red Cross. We need input
from the Boy Scouts, the Girl Scouts, and all of them. And even
though you don’t think it’s going to impact them, it will discourage
them, because they don’t know, they really don’t know.

You would be surprised, when you draw this line in the sand,
many times the public will not understand, no matter how well-in-
tentioned you are. And I do hope you don’t mean to gag anyone,
but the real feeling here is that some of these groups will be
gagged, and I think we should look at this legislation more closely.

Remember, you and I just got here. We don’t know everything.
So you need to just kind of open up and give us more time to lool
at this piece of legislation, knowing that your intents are noble and
that you don’t want to gag people. I think you should consider that,
Mr. Chairman.

Mr. McINTOSH. Well, Mrs. Meek, I appreciate that. Would you
yield for a second?


32

cussion. They informed me of what they felt the benefits of it were,
but they have not lifted a finger in any type of partisan activity.

I will also add that I have heard participants in the Green
Thumb Program who are upset at the tactics that are being used
by the National Council.

Mr. Spratt. But what we've got here is not just lobbying for
the—you’re complaining about partisan political activity directed at
you as a candidate.

Mr. LONGLEY. No, as a Member of Congress.

Mr. Spratt. This bill goes much further. Political advocacy is
broadly defined, is one of my major problems with it, to include
even the communication that Green Thumb made with you. That
would be a prohibited type of contact under this particular grant.

Mr. McInTosu. If the gentleman would yield.

Mr. Spratt. Certainly.

Mr. McIntosu. Let me clarify. There is an exemption in the bill
that says, when an organization is providing information to a Gov-
ernment entity or a member of a legislative body that has been re-
quested, that is not lobbying or an advocacy activity that counts to-
ward the 5-percent threshold. Even if it did, they would have the
5-percent threshold that they would be able to operate under. But,
in this case, it’s spelled out that it’s not an advocacy activity.

Mr. Spratt. But he would have to initiate the request in order
to qualify that as an exempt activity? He would have to go to Green
Thumb and say, “Come to me and tell me how your program is
working”?

Mr. Lonatey. I think that there’s a way of dealing with an ap-

propriate need for an exchange of information. We have a vei
large and complex Government. Any one of us knows how difficult
it is to obtain good information. Any one of us also knows how dif-
ficult it is when an agency of the Federal Government or one that’s
heavily dependent on Federal funds takes it upon themselves to
pursue their own agenda and push beyond the honest exchange of
information.

So it’s a question of how you would draw the line, and I think
that the chairman and his cosponsors are to be commended for at-
tempting to find some solution to the problem. It is a problem;
there’s no question about it.

Mr. Spratt. And I’m not at all satisfied that this bill has solved
it with the line-drawing that’s done in it. My time long ago expired.
Thank you, though, for your answers. I appreciate the clarification.

Mr. MCINTOSH. Mr. Spratt, let me read from the statute so that
we have that in front of us. “The term ‘influence legislation or
agency action’ does not include making available the results of a
nonpartisan analysis, study, research, or debate; two, providing
technical advice or assistance, where such advice would otherwise
constitute the influencing of legislation or agency action, to a Gov-
ernment body or to a committee or other subdivision thereof, in re-
sponse to a written request by such body or subdivision, as the case
may be.”

Mr. Spratt. If I could respond to the chairman, his point is well
taken. But I had never heard of Green Thumb until they came to
me. And I couldn’t have guessed what they did or how they were
affected by Federal grants until they laid it out to me and ex-


14

that are given out. I am willing to continue to look at the problem
if contracts create the same type of problem. They do have different
regulations, currently, than grantees, but I’m willing to take that
up. I just don’t want to bog down this legislation with taking on
everyone at once. We've got enough people who are mad at us.

Mr. Conpir. Well, I understand that, and I’m not asking you this
to put you on the spot. I actually was trying to get a clarification
of this, because, as I look at this, Mr. Chairman, this appears to
me to be outrageous, if we’re allowing this to happen and we're cut-
ting off everyone else.

I support in concept what it is you're trying to achieve, but I
think we need to deal with this, as well. I think Mrs. Collins is
right. It’s difficult for us to deal with some of these other groups
and not deal with the defense contractors and people like that.

I didn’t mean to make an opening statement. I was trying to be
brief so we could more to the witnesses. I apologize.

Mr. TaTE. Would the chairman yield?

Mr. Conpir. Yes, I’ll yield to the gentleman.

Mr. TaTE. I’m sorry. The gentleman, I know, brings an open
mind and a fine mind to this debate, and I appreciate his question.
I think, just so the gentleman knows, it’s quite clear that when any
entity—for-profit, nonprofit—any entity is acting in their capacity
as a Federal grantee, they’re covered by this piece of legislation. I
think that’s responsive to the gentleman’s question.

Mr. WaxMAN. Would the gentleman yield to me?

Mr. Conpir. Yes, I'll yield to Mr. Waxman.

Mr. WaxMaN. I just want to make a point that there’s a 5-per-
cent threshold, which means if you’re a small operation, you exceed
that 5 percent. If you’re a $20 billion corporation, you can spend
$1 billion to lobby, and this would never apply to that institution.
So it is equivalent to saying the rich have the same rights to sleep
in the streets. It doesn’t really hold to say that they’re treated the
same.z2z2zz

Mr. Conpir. Well, reclaiming my time, Mr. Chairman, I will take
your commitment that we will continue to work on this. This needs
to be dealt with. Once again, I apologize. I didn’t mean to delay
this, and I appreciate your tolerance and your answer to the ques-
tion.

Mr. McInrosu. If the gentleman would yield for 1 quick second?

Mr. Connir. Yes.

Mr. McINTosu. And don’t apologize, because I think it’s a useful
point. The staff points out to me, if we are reading the chart cor-
rectly, that all of those institutions receive Federal grants and not
contracts, and, in that case, with the exception of the State univer-
sities and their affiliated organizations, they would all be covered
by our bill.

Mrs. COLLINS. Would the gentleman yield?

Mr. Conpir. Yes, I'll yield to Mrs. Collins.

Mrs. CoLLins. Thank you. I don’t want to leave the thought out
there that, when the Schroeder amendment came up on the De-
fense bill, that the chairman, seemingly, was in favor of it, because
the record shows that he voted against it. I thank the gentleman
for yielding.


73
FY 1994 FEDERAL GRANTS

mews

‘State, Local, Tribal Govts (not covered under Istook)

Covered under Istook: $24.5 pilin

‘SOURCE: Federal Awards Data Syston.

CONTRACTS V. GRANTS
(FY 94 dollars]

In biions

Contracts.
Grants

SOURCES: GSA and Census Bureau data

196.4
245

WELFARE FOR LOBBYISTS?
Annual; dollars)

In milons

500-750
n

Undocumented Payments to Contractors Each Year (Pentagon only) .......
Total Charitable Lobbying Per Year ($12,520 per charity) ....... ee

‘SOURCE: Goneral Accauating Office; Internal Revenve Service

LET'S PUT THINGS IN PERSPECTIVE

2 Pentagon Coffee Pots ($7,600 + $7,600 = $15,200) Is Greater Than Average Ex-
penditure Of Charities That Lobby ($12,520 per year).
‘SOURCE: Internal Revenue Service.

Mr. McINTosH. Thank you for joining us, Mr. Bass, and thank
you for providing these charts. If I might interject 1 second before
we get to Ms. Aron, it has baffled me why the Federal Government
thinks that we only give out $39 billion of grants when the inde-
pendent sector came and told us it was about $200 billion that
their members receive. I would be curious where your number
came from so we could cite it.

Mr. Bass, It’s sourced, Mr. Chairman.

Mr.-McINTOSH. Thank you. I appreciate that. Because apparently
the IRS doesn’t keep track of it in the same way. Their number is
much lower. And it’s always baffled me and something I thought
we should get to the bottom of. Thank you.

Ms. Aron.

Ms. ARON. Well, in the interest of expediting this hearing, and
the hour is late, I will give an abbreviated opening statement, and
you will have my testimony. So I think you know our views on this
eeislation, and we certainly join in with the YMCA and Gary Bass
of OMB Watch who have eloquently stated their objections.

I would basically just make one point, and that is, given the
events that have occurred today, the Alliance for Justice has to ob-
fect to the outrage of committee staff using an apparent piece of Al-
iance for Justice stationery and putting out false information on
such stationery.

Mr. McINTosH. Ms. Aron.


58

have anything to refute what we're saying here, that nonprofit
agencies are not lobbying with Federal money, except your percep-
tion?

Mr. RANDOLPH. Except the perceptions and some of the data
that’s been presented to me today, and based on my testimony that
the perception is, there’s a lot of money being flowed back to Wash-
ington through the lobb; ‘ing system.

is. SLAUGHTER. Is it based on this?

Mr. RANDOLPH. Well, based on this, based on that.

Ms. SLAUGHTER. If this is where you got your perception, Mr.
Randolph, this is a very suspect piece of paper.

Mr. RANDOLPH. I’ve not read that, ma’am. I don’t have that piece
of paper before me, so I can’t comment on it.

Ms. SLAUGHTER. What were you given today that I don’t have?
I guess that’s not a question you can answer, because you don’t
know what I’ve got up here. But I have not seen anything that’s
ever crossed my desk or my office, in the 9 years I’ve served in
Congress, that nonprofit agencies were violating that law.

Mr. McInTosu. Ms. Slaughter.

Ms. SLAUGHTER. If you will give me the time.

Mr. McINnTosu. Let me send to you some of the transcripts from
our earlier hearings where there was a case in point where some-
one did violate that. They almost had to pay back the grant money,
but the agency never asked for it. So we do have a factual record.

Ms. SLAUGHTER. A single case?

Mr. MCINTOSH. That’s one that we know about it. What we need
to do is find out about the National Council of Senior Citizens and
other groups, to see if there’s a similar problem.

Ms. SLAUGHTER. Well, Mr. Randolph, I'd sure like to give you
some of my perceptions on what's going on here. Maybe I could
write you a letter. I know you have to get back to Indianapolis.

Ms. VanPelt, if I could get back to you for a moment, your testi-
mony, as I heard it, started off with the fact that these reporting
requirements on this awful questionnaire you would have to fill out
would be a major burden on your agency.

Ms. VANPELT. Yes, ma’am.

Ms. SLAUGHTER. Did you say that you had a 148 vendors?

Ms. VANPELT. We have 140,000 vendors nationwide. That’s a
conservative estimate. We have close to 8,000 collaborations and
partnerships.

Ms. SLAUGHTER. If this law passes, you’ve got to contact every
one of them and ask them all these questions, in duplicate.

Ms. VANPELT. Yes, ma’am. We have to contact them and ask
them if they spend 15 percent of their company’s budget on advo-
cacy expenditures.

Ms. SLAUGHTER. Well, I submit to this committee that that’s
none of our business. I don’t know if we're ti ing to hold a grand
jury hearing, or something, but for Ms. VanPelt, as head of YMCA,
to have to go to everybody who sells her something and demand to
know how much of their business they spend on whatever they
may choose for themselves, I find is one of the strangest pieces of
legislation I’ve ever seen.

Tm absolutely flummoxed by it, Mr. McIntosh.

Mr. McInTosuH. I’m sorry, Ms. Slaughter.


6

It is but a mere continuation of the process that began many,
many weeks ago, and I know our respective personal staffs, in ad-
dition to committee staff, have spent hours and hours and hours
meeting with impacted and allegedly impacted groups concerning
specific issues those groups have brought to our attention.

That’s constructive. We appreciate it. I believe the record will
show we've listened. We haven’t always agreed, but we've certainly
listened. This hearing today is yet a mere subsequent chapter to
that sort of process, and I congratulate you for adopting that proc-
ess in the context of this very controversial piece of legislation.

Mr. MCINTOSH. Thank you very much, Mr. Ehrlich. Thank you
for your hard work in drafting this amendment. Let me turn now
to Mrs. Collins for a statement.

STATEMENT OF HON. CARDISS COLLINS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF ILLINOIS

Mrs. CoLLIns. Thank you, Mr. Chairman. This is the subcommit-
tee’s fourth hearing on legislation to curb alleged abuses by Federal
grantees that engage in political advocacy. So far, no example of
wrongdoing has been uncovered. Proponents of this legislation have
every reason, therefore, to continue these hearings, because they
are in desperate need of something to justify this bill.

However, they’re not likely to get the justification they seek from
today’s witnesses. Three of the organizations testifying today—the
Alliance for Justice, OMB Watch, and the St. Florian Center—are
not—and I repeat, they are not Federal grantees. Since they re-
ceive no Federal grants, they would not be covered by the legisla-
tion we’re discussing.

Nevertheless, these froups received an extensive set of questions
from the majority staff on the subcommittee asking about their po-
litical activities and a great many questions about their tax-exempt
status. Not only is it curious why groups not covered by the legisla-
tion are asked these questions, but it’s also not at all clear what
relevance the questions have to this particular bill.

The legislation we are discussing applies equally to all Federal
grantees, whether they are for-profit organizations or nonprofit or-
fanizations. The tax status of the organization, therefore, has abso-
lutely no bearing whatsoever on the restrictions contained in the
legislation.

And well it should not. Some of the biggest recipients of Federal
grants are major American corporations, not nonprofits. Just to
name a few, there’s Lockheed, which received over $46 million in
Federal grants in fiscal year 1974. Xerox received $20 million, and
Martin Marietta was awarded $10 million in grants, and they lobby
the House and Senate every day, including Saturdays and Sun-

days.
Parthermore, if we are concerned about Federal grants enabling
recipients to engage in lobbying, should we not also be concerne:
about Federal defense and other contracts that are enabling compa-
nies to do lobbying of that sort. The fact is that far more Federal
money is given out in Federal goody contracts than in grants, and
goody contract recipients are every bit as dependent on the tax-
payer as grantees.


29

lutely no scrutiny or set up a separate organization which would
be funded privately on that basis.

Now, we all take an oath to defend and uphold the Constitution
of the United States, and I know you, as well as the rest of us, are
concerned about these issues. Is that type of testimony from the ex-
perts in this area satisfactory to you about the constitutional issue?

Mr. Lonctey. I think so. I want to elaborate on that. I have
great respect for the first amendment, and I think that anyone has
a right to express their political views. I do not, however, think
that they have the right to expect the Federal taxpayer to pay for
it, and that is exactly what’s happening.

Tl contrast their behavior with the behavior of other groups that
receive Federal funds in my district, including the Maine Devel-
opmental Disabilities Council. I have also worked with the Family
Planning Association. Each of those groups has been extraor-
dinarily circumspect in not putting itself into an advocacy position
vis-a-vis partisan politics. In fact, as I was requesting information
from them, they specifically wanted to know that I was requesting
only information. They were very, very concerned that their activi-
ties.

Even as involved as they were in administering Federal grants
and as concerned as they were in any possible changes in those
grant formulas, they were still very professional and very cir-
cumspect in their relations with my office to insure that they were
providing us with information in a neutral fashion and that they
were not in any way seen as attempting to influence a partisan
agenda.

Mr. McINTosH. Thank you, Mr. Longley. Let me ask Mr. Skaggs,
are you troubled at all by the level of political advocacy by the Na-
tional Council of Senior Citizens?

Mr. Sxaccs. I’m troubled by anyone that violates the existing
Federal law that prohibits the use of Federal funds for lobbying the
Federal Government, and I would be troubled by any organization
that otherwise violates the requirements in existing law covering
the political activities and lobbyin activities of organizations that
qualify under section 501(c) of the Internal Revenue Code.

I do not have any independent evidence of the violations by the
National Council, and would want to see exactly what was going
on here. My impression is that the preponderance of the grant
money that has been referenced here is a passthrough by that
council under various legal provisions enacted by this Congress to
accomplish various charitable purposes that the Congress thought
was better conducted by a nonprofit organization than by a Govern-
ment agency.

Mr. LONGLEY. Could I add to that answer?

Mr. McINTosu. Certainly.

Mr. LONGLEY. I find it striking that the National Council insists
that it’s in compliance with the law, and that leads me to believe
that either—and I want to frame my answer in the context of not
my opinion, but their own internal auditor’s opinion that effectively
the organization would cease to exist without Federal funds. And
so that tells me that either the law is being sloppily administered,
or, in fact, the law hasn’t been written stringently enough to pre-
vent the partisan political activity it seeks to outlaw.


65

Ms. VANPELT. Thank you.

Mr. McInTosu. I’m going to ask unanimous consent to keep the
record open for 5 days. If any members have additional questions,
we will transmit them to you and put those answers into the
record. Seeing no objection, the record will be held open.

Let us now move to our next panel, if I could call forward the
two witnesses who will be participating there. The first witness is
Mr. Gary Bass, who is the director of OMB Watch. Joining him
also is Ms. Nan Aron, and I want to make sure I get the title cor-
rect, president of the Alliance for Justice. I guess that’s on the let-
terhead.

Ms. ARON. Which letterhead, sir?

Mr. McINTosH. The one I have here in front of me.

We appreciate both of you coming. As I think everyone knows,
we don’t agree on this legislation, but I want to hear your com-
ments and testimony and be able to have an exchange with you.

Mr. EnRLICH. Mr. Chairman, could I interrupt. Point of personal
privilege, with due respect to the witnesses.

Tm really interested in what you have to say, but I’m also ex-
pected in northern Baltimore County in about an hour and a half.
I will read what you hand out, and I promise you I will be in con-
tact. I really am interested in what you have to say and your con-
cerns.

I thank the chair for his indulgence.

Mr. McInTosu. Thank you, Mr. Ehrlich.

Mr. Bass, if you could please proceed.

STATEMENTS OF GARY D. BASS, EXECUTIVE DIRECTOR, OMB
WATCH; AND NAN ARON, PRESIDENT, ALLIANCE FOR JUSTICE

Mr. Bass. Well, in your list of good guys and bad guys, I hope
we make the good guy list. I certainly have been trying to do my
best to explain what the bill would do and ensure that you hear
from others on what they think it would do.

Let me start by saying the one key issue—and I agree with Con-

ssman Ehrlich on this—is that if a Federal grantee uses any
ederal funds to lobby at the State or Federal level, as proscribed
in Circular A-122, or if they use any Federal funds to attempt to
influence the awarding of grants, contracts, or loans, either on the
executive branch side or in Congress, as provided in the Byrd pro-
vision, that nonprofit or that entity should be severely prosecuted
within the constraints of the provisions of those regulations.

As we all know, that means either repayment of the funds used,
penalty fees, or debarment and suspension. To my knowledge, no
Federal funds, either directly or indirectly, such as through over-
head, are permitted for lobbying, and we have not heard of any sys-
temic pattern of abuse. I would agree with Ms. VanPelt that, if
there is a problem, the emphasis should be on enforcement. Let me
also say that the current rules apply equally to all types of awards;
that is, contractors, grantees, loan recipients, and so forth.

Tm also somewhat baffled, and so before you are some charts.
Unfortunately, I don’t have anyone here that can move the charts.
So since you have them in front of you, that I just passed out, I
would like to run through them, because I am somewhat perplexed.


67

PREPARED STATEMENT OF Gary D. Bass, PH.D., EXECUTIVE DIRECTOR, OMB WaTCH

My testimony today will address concerns over provision authored by Reps. Ernest
Istook (R-OK), David McIntosh (R-IN), and Robert Ehrlich (R-MD) that, has been
added to the Labor, Health and Human Services, Education and Related Agencies
Appropriations Act for FY 1996 (H.R. 2127), herein referred to as the Istook amend-
ment. In making my comments, I would like the Subcommittee to know that I am
wearing several hats today. First, I'am speaking as the Executive Director of OMB
Watch, a nonprofit research and advocacy organization that has worked to protect
the advocacy voice of the nonprofit sector since we were formed in 1983. Second,
I am speaking as a co-chair of a national coalition, the Let America Speak Coalition
(see Attachment A for a list of members), that strongly opposes the Istook amend.
ment, And third, and perhaps most importantly with respect to the comments I am
about to give here, I am speaking on behalf of hundreds of nonprofits across the
country that we in the Let America Speak Coalition have met with over the last
month about this issue. I know what they are thinking, what they fear about this
legislation, It is their thoughts—more than my own—that I will pass on to you
today.

y:

On behalf of the Coalition, OMB Watch has helped set up briefings around the
country to discuss the legislation and to better understand its impact on local serv-
ices, We have met with more than 1,000 nonprofit organizations that provide a full
range of services to meet human needs—from housing to health and human serv-
ices—as well as organizations involved in postsecondary education, the delivery of
cultural events (e.g., arts and music), and the protection of environmental concerns.
In every city, these nonprofit organizations describe the relationship with govern-
ment as a positive and productive partnership to provide critically important serv-
ices, They uniformly state that the Istook amendment would undermine this part-
nership, cutting off government from information that helps shape and improve the
quality of services in this country.

Let me highlight several of the major concerns they have with the Istook amend-

ment.

(1) The Istook amendment is not about grant reform. The supporters of this pro-
posal say it is about grant reform—that it will end “welfare for lobbyists.” They
imply that grant recipients are using grant money to pay for lobbying activity, and
that this bill will put an end to the practice.

The nonprofit community across the county is somewhat shocked by this charge.
They know that using federal grant money to lobby is already illegal, and penalties
for violating the prohibition are severe.

OMB Circular A-122, Cost Principles for Nonprofit Organizations, prohibits the
use of federal funds for lobbying on legislation at the state or federal level either
directly or through grassroots initiatives. (This same language, by the way, applies
to government contractors.) Furthermore, if a grantee wishes to receive reimburse-
ment for indirect costs (e.g., overhead), the grantee must provide the government
with additional information about all lobbying activities in order to assure that fed.
eral indirect cost dollars are not subsidizing such activities.

Penalties for violating Circular A-122 include having to repay all “associated”
costs for lobbying, immediate suspension or termination of grants, and debarment
from all future federal funds. Thus, for random violations, there already are power-
ful enforcement penalties.

ermore, recipients of federal grant contracts, and loans are prohibited from
using federal funds from lobbying for more funding. In this case, Tobbying includes
attempts to influence Congress or the federal executive branch. Recipients of federal
assistance must also disclose payments of non-federal dollars for such lobbying ac-
tivities. Entities that failure to disclose these lobbying activities or improperly use
of federal funds face severe penalties.

Finally, charitable nonprofit organizations organized under 501(cX3) of the tax
code have limits on the amount of private funds they can use for direct and grass-
roots lobbying, defined as attempts to influence legislation at the local, state or fed-
eral level. (See Attachment B for a comparison of these different lobbying restric-
tions.

If the use of taxpayer money for lobbying was a problem, and there is no evidence
that it is, the real answer would be to enforce existing law, not create a whole new
set of laws with lots of additional red tape.

When pressed on this, the proposal’s sponsors retreat to a concept known as
“fungibility.” According to this argument, nonprofits that receive grants to perform
certain activities take their own money that was previously spent on the activity
and spend it on lobbying. Thus, indirectly, federal grants subsidize lobbying.


68

This argument makes several big assumptions. It assumes that a nonprofit that
receives a grant was already engaged in the grant-related activity using its own
funds. In most instances this is not the case. As a result, it doesn’t “free up” any
money.

Second, it assumes that the nonprofit, once it receives a grant, would in fact de-
cide to spend the money that it previously spent on service delivery on lobbyi g- The
fact is that there is enormous demand for grant-related services. Each year, for ex-
ample, the U.S. Conference of Mayors releases a report addressing the amount of
unmet need. If there was ever any “extra” money, and there isn’t, it goes into carry-
ing out the mission of the organization—in most cases, service delivery.

‘nally, many grants require nonprofits to match the grant with private funding.
This puts more private dollars into the grant project—and these private dollars
must jthen be treated as federal dollars. Accordingly, matching funds cannot be used
for lobbying.

Most importantly, however, we need to remember that what we are talking about
is what a nonprofit decides to do with its own, privately raised money. In no in-
stance are federal funds being used to finance lobbying activity. This was repeatedly
stressed by nonprofit groups who wonder why what they do with their own, pri-
vately raised money is any of the federal governments business.

(2) The definition of advocacy is too broad. Unfortunately, the authors of this bill
did not define advocacy the way the IRS did in its limitations on 501(cX3) nonprofit
organizations. The definition in this proposal is much broader. It expands the defini-
tion of advocacy to include not just attempts to influence specific pieces of legisla-
tion, but virtually any attempt to influence public policy of any kind at any level
of fovernment— federal, state, and local.

ft includes speaking with non-legislative agency personnel about non-legislative
matters—things like talking to a local planning and zoning officer about a building
variance or talking with a local school board member about education policy. Under
this definition, in fact, just applying for a grant is advocacy (even if the application
is turned down). It also includes influencing public policy through the judiciary
(friend of court briefs, class action suits), in cases brought against any level of gov-
ernment, or though the press (press conferences, letters to the editor).

Nonprofits complain that the definition of advocacy is so broad in the Istook
amendment that it will force them to stop many activities deemed important by the
vast majority of people. For example, in Indiana, the state mental health association
worked with the state agency administering mental health services to close down
a residential institution. The process of nonprofits and the state working together
became the basis of state legislation, which, in turn, became the model for other
state legislation. By all accounts, the process was a positive and productive one. Yet
the mental health association and other nonprofits involved in the process receive
federal funds. Under the Istook amendment, these nonprofits would be engaging in
“political advocacy”.

Similarly, there are federal statutes that require advocacy, such as under the Pro-
tection and Advocacy Program authorized under the Developmental Disabilities Act.
Under the Istook amendment, providing such advocacy would be prohibited, forcing

antees into a dilemma—provide the service as required by the law and lose the
federal grant or do not provide the service in order to continue getting the federal
money.

Many nonprofits also express concern that “political advocacy” also includes pro-
viding any resources Gneluding in-kind) to any entity that uses 15% or more of its
total expenditures for political advocacy. For grant recipients to know if they are
providing such resources, they would have to ask every vendor and, perhaps, every
employee about their advocacy activity.

use nonprofit organizations rigorously follow law and regulation, they claim
this will ‘unfainy stop them from associating with those who engage in advocacy for
fear that it will mean that thy are engaging in advocacy. And to be absolutely safe,
they would not participate in local coalitions, panels, and non-governmental commis-
sions, according to many groups.

(3) The proposal’s limitations on private funds for advocacy is chilling. While this
proposal’s impact on federally funded lobbying will be negligible, since such activity
is alrea illegal, it’s new restrictions on privately funded lobbying will have a
chilling effect.

ie lstook amendment bars organizations from receiving federal grants if they
spend more than 5% of their own, non-federal grant money on advocacy activity.
Many nonprofit organizations fear they will exceed the 5% threshold because of the
broad definition of advocacy. Because current accounting practices (for grant audits
and IRS annual reports) have been established to monitor lobbying, not advocacy



26

and Mr. Ehrlich have drafted, I have made the point that I believe
it would impose an intrusive regulatory scheme of political surveil-
lance and suppression on free expression of political views in this
country, the antithesis to the lifeblood of this democracy.

Through this hearing, I believe the new majority in this House
is demonstrating its misuse of power to begin that political surveil-
lance and suppression, even in advance of the enactment of this
misguided legislation. This is a type of hearing that has not been
seen around this place since the heyday of the House Committee
on Un-American Activities in the late 40’s and early 50’s, coinciden-
tally, the last time the Republican party was in control of the

louse.

This is not primarily a hearing looking for an elucidation of the
fine points of the Istook amendment. It is the first salvo in trying
to get at those fundamental values of free political expression.

Why do I say that? The questionnaire that was distributed by the
committee staff to the witnesses this afternoon includes a raft of
questions that, in my judgment, as that of some of the colleagues
on the committee that have already spoken, runs smack into the
restrictions of the Constitution of the United States on the proper
activities of the Congress, questions such as, “in the past 5 years,
has your organization engaged in political advocacy as defined in
the attached legislation?”

By the way, as you know, Mr. Chairman, that legislation defines
political advocacy as virtually any contact with any level of Govern-
ment for any purpose having to do with influencing or attempting
to influence public opinion on any policy matter.

Going on to quote further from the questionnaire, “If so, please
provide a brief description of the type of political advocacy engaged
in and a good faith estimate of the expenditures on each activity.”
Note that this has absolutely nothing to do with political activities
by a group using Federal funds, but with its own funds. This is
precisely the kind of inquiry that no Member of Congress should
dare—should dare—subject free citizens of a free nation.

The questionnaire goes on, “Does your organization allocate, dis-
burse, or contribute any monetary or in-kind support to any indi-
vidual entity or organization whose expenditures for political advo-
cacy in any of the past 5 years exceed 15 percent of its total ex-
penditures for that year?”

Herein lies perhaps one of the most pernicious and, presumably,
intended aspects of this foolishness, because you're not only at-
tempting to curtail the free exercise of speech by individuals with
their own resources, but to set up a secondary boycott against the
derivative use of other organizations or persons with whom anyone
receiving Federal funds or thing of value may choose to do busi-
ness. This directly violates the fundamental principles on which
our American democracy is based.

And lest we have any doubt about what’s really going on here,
the fact that your committee staff has acknowledged producing a
document clearly intended to mislead the press and the public
about origins and content, this is exactly the sort of innuendo, un-
signed attack piece that we should find despicable in the context
of the debate in the Congress of the United States.


78

Mr. McINTOsH. That was in the documents that we read, that
chiefly your lobbying activity was in the area of judicial selection.

Ms. ARON. We engage in many different forms of advocacy, sir,
including lobbying Congress.

Mr. MCINTosH. OK.

Mr. Bass. Mr. Chairman, if I could, on this one issue, since we’re
here to talk about the bill, I’'d like to bring it back to what some
of the grant rules are, because many local nonprofits I met were
concerned about this association concern.

One of the points that they had made to me was that, if they
gave money to someone who did advocacy, or I should say, if they
gave money for something that was not consistent with the purpose
of the grant, they would have to face that problem through their
audit, and that it would be an unresolved audit if it was an ex-
penditure that was not consistent with the purpose of the grant. So
then that grantee would have to repay the money.

So I think that’s an important point, because that is the process
under the current Procedure to capture those problems.

Mr. Mcintosu. I think one of our key points is, the current pro-
cedure is flawed in its ability to do that. And we had testimony
from the Alcohol Policy VIII Conference where they used a Federal

‘ant to sponsor a conference to teach people how to be lobbyists.

id I think there are problems out there that we need to get to
and find the facts on behalf of the taxpayer on that.

Mr. Bass, let me ask you, do you have any interest in this par-
ticular legislation as an institution? Will it affect OMB Watch or
any of our associates or affiliates?

ir. Bass. Sure. No, I think it has an enormous impact on us.
I think it’s at least three or four ways. I think the first way is that
one of our missions is to encourage greater public participation in
the governance process, get more involved in your Government. In
fact, the way we read this bill, it says, get less involved.

I think a second way is that we’re very concerned about improv-
ing service delivery in the country, particularly for those that are
vulnerable populations. At a time of shrinking resources, the non-

rofit sector becomes even more vital. What this says is, do more,
ut don’t talk to us about how you're doing it. I have a concern
about that, because I think it’s going to have an impact on service
delivery.
Mr. McIvrosn. If I might interject, it’s really, don’t talk to us
about spending our.money to do what you should be doing.

Mr. Bass. I’m sorry. I couldn’t hear you on that.

Mr. McINTOsH. The real philosophy—and I think Mr. Ehrlich
went to it—is, don’t spend your money talking to us about how we
should spend Federal money.

Mr. Bass. I think there is a difference in philosophy, because I
think that, from our perspective, there is a very rich history in this
country of nonprofits working with Government at the local, State,
and Federal levels to provide services. And, in fact, most govern-
ments come to the nonprofit community because they know best
about policy gaps, about problems in service delivery, if you will,
how to reinvent government.

Mr. McINTosH. Let me come back to you on that line of question-
ing. In fairness to Mr. Spratt, I think my time is up.


3

are not lobbying, but are real charities. Today’s hearing will bring
out the truth.

Many members of the subcommittee are freshmen. We came here
to Washington to make sure that we put an end to business as
usual. They sent the message. Our voters sent the message to clean
up the special interest mess here in Washington.

When I tell my constituents back in Muncie, IN, that their tax-
payer dollars are being used to subsidize special interest lobbying
activities here in Washington, particularly activities to spend more
money on grants that go to the lobbyists, my constituents are
shocked and outraged.

Congress must be accountable for how the taxpayer dollars are
spent. Are they subsidizing lobbying or political efforts? Are they
being channeled to lobbying groups through secret, back-channel
grants? Our goal is to tear down the veil of secrecy that surrounds
40 years of political patronage.

As G.K. Chesterton said, “Men can always hide, provided they
are behind something that is big enough.” Certainly $39 billion is
big enough. But no longer. We are here today to protect the tax-
payer.

't is important to remember that a key distinction in the
MelIntosh-Istook-Ehrlich Amendment is that it separates real char-
ities who provide services to the community, on the one hand, from
lobbyists who receive Federal grants, on the other hand.

As testimony from Arianna Huffington showed, the Ehrlich pro-
vision will actually strengthen real charities. It also insures that
they are not distracted from helping the poor by being enticed into
becoming lobbying groups. Tax-exempt contributions should go to
those who really need help, not to lobbying efforts.

Unfortunately, the Washington special interest groups don’t want
the American people to find out the truth. Some facts that we al-
ready know: First, the problem clearly exists. We need only to look
at the National Council of Senior Citizens to understand this. The
NCSC receives 96 percent of its funds from the American tax-
payers, six times as much as the Public Broadcasting Corp.

When they receive so much taxpayer funding, they have virtually
become a Government agency, yet the NCSC operates a political
action committee. Clearly, it’s participating in political ad cam-
paigns to stop this Congress from balancing the budget and aggres-
sively lobbies Congress.

Now, I know that President Clinton, in his heart of hearts, would
love to have Federal agencies lobbying and setting up a political ac-
tion committee, but it’s not the American way.

The conflict of interest is enormous. When someone receives $70
million of taxpayer money, how can they possibly separate their
private self-interest from their lobbying activities? The NCSC
should be no more permitted to engage in partisan politics than the
Department of Commerce or the Internal Revenue Service or any
other agency.

Today we will hear from a Member of Congress, one of my fresh-
man colleagues, Jim Longley, who knows firsthand how hard the
NCSC is lobbying.

Second, we have a problem that many legitimate charities that
are not affected by our efforts to end welfare for lobbyists have


2

Mrs. CoLLins. But you said for this one he could? I can’t hear
down here.

Mr. McINTosu. I’m being advised by the full committee that it
probably wouldn’t be a good precedent to do that. He’s welcome to
make a statement and join us for the hearing.

Mr. Skaccs. If I may, Mr. Chairman, I’ll participate on the wit-
ness panel.

Mr. McINTosH. Certainly.

Mrs. COLLINS. Mr. Chairman, before we begin, because I don’t
want to interrupt the flow of the hearing once we get started, Mr.
Skaggs has requested that he receive live audio coverage at this
hearing from a company known as the National Narrowcast Net-
work.

They are on the list of approved companies by the Committee on
Government Oversight, and, as you know or may be aware, the
House Oversight Committee sent a Dear Colleague to all members,
telling them that they could request a service from the list of ap-
proved companies and pay for it out of their own office expense ac-
count.

Now, Mr. Skaggs has been told by the company that the commit-
tee has refused permission for them to broadcast this hearing to
his own office, despite the fact that they are on the approved list
and have covered hearings in our committee for the past 3 years.
Would you mind explaining why you are denying the permission to
broadcast this particular hearing to members’ offices to their own
expense?

Mr. McInrosu. It’s my understanding that the House Oversight
Committee hasn’t made a decision among various vendors for that
type of service. I certainly, in principle, don’t have an objection to
that happening, but we were not given authority to allow that type
of proceeding. Apparently, the room is also not wired for it, and
they would be required to spend funds in order to do that.

Mrs. CoLLins. I see. Thank you, Mr. Chairman.

Mr. McINTosH. If you like, Mrs. Collins, I’ll be glad to take it up
with them, because I think it would be a good idea in the future
to be able to have that type of narrowcast service.

Mrs. CoLLins. Well, i would certainly like, and I would appre-
ciate if you would. Thank you very much, Mr. Chairman.

STATEMENT OF HON. DAVID McINTOSH, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF INDIANA

Mr. McINTosH. Thank you. Mr. Peterson, any other? Thank you
all for coming. Let me begin with opening statements. I do appre-
ciate the witnesses’ coming today. Your testimony will indeed assist
us in examining and putting an end to taxpayer-subsidized lobby-
ing or welfare for lobbyists.

‘here has been a great deal of fiery rhetoric about this issue in
this town for the last month-and-a-half. It’s not surprising. When
Congress sheds light on one of Washington’s best kept dirty little
secrets, the Washington lobbyists are going to scream.

Unfortunately for them, the truth will point out how the tax-
payer is indeed subsidizing Washington lobbying efforts. These
groups are engaged in a massive campaign of disinformation, dis-
tortion, and scare tactics, aimed at riling up the very groups who


15

Mr. Conprt. Reclaiming my time, Mr. Chairman, I'll yield back
to you.

Mr. McInrosH. The gentlelady is correct. I did vote against it.
I mentioned I was in favor of an unrecorded vote to allow it to go
on by voice vote. So that’s the truth. We all know how that hap-
pens in this institution.

Let me turn, now, to any other members on our side of the panel
who would like to make a statement. With us today is also Mr.
Istook, who is a cosponsor, and Mr. Skaggs is joining on that. No
opening statement? At this point, Ms. Slaughter.

STATEMENT OF HON. LOUISE McINTOSH SLAUGHTER, A REP-
RESENTATIVE IN CONGRESS FROM THE STATE OF NEW
YORK

Ms. SLAUGHTER. Thank you, Mr. Chairman. I’m somewhat per-
plexed as to why we're holding this hearing at all today, because
this bill has already gone through the House, except that I know
that you are extraordinarily fond of it. I don’t mean that to be sar-
castic. I understand this is one of your favorites.

But frankly, gentlemen, you're Dogging a dead horse, and I want
to associate myself with the remarks of Mr. Spratt. No one could
be more eloquent than he has been on what the first amendment
to the U.S. Constitution is all about. But let me tell you why you're
flogging a dead horse. These things have all been taken care of.

Now, you've mentioned already that 90 percent of all the Federal
grants go to State and local governments, and they’ve only got one
prohibition on them, only one. They can’t charge the dues or mem-

ership of organizations that have obbying as a substantial organi-
zational purpose. That’s all they’ve got. That’s it. Now, for higher
education institutions, they can go ahead and pay dues any time
they want to and do anything that they please.

jut when we come down to the nonprofits, what are they re-
stricted from doing? Communications with public and direct com-
munications with legislators or staff that attempt to influence the
introduction, enactment, modification, or defeat of new or pending
legislation in Congress or in State legislatures. Only the nonprofits
are prohibited from both Federal and State, I want to add, as well.

They’re also prohibited from legislative liaison activities, includ-
ing attending legislative hearings, gathering information on legisla-
tion, analyzing effects of legislation where they support, lobby, or
ongoing preparation for it.

‘hey may not electioneer, directly or indirectly. It covers both at-
tempting to influence a Federal, State, or local election, referendum
initiative, or similar procedure in establishing, supporting, or ad-
ministering a political campaign, party, political action committee,
or other organization, attempts to influence the outcomes of elec-
tions. What more do you want from them?

I mean they’ve been restricted six ways to Sunday as it is, and,
frankly, nobody has said anything here today about the question-
naire that ouve asked these people to fill out. I can’t imagine
what would happen, Mr. Chairman, that you would go home and
tell your constituents about what the Boy Scouts or the Y are tak-
ing away from them.


5

I know that my colleagues and I want to see a useful dialog. We
know there is a problem that must be addressed. We have crafted
our solution, and we are here today to examine the details. We will
put an end to Washington’s dirty little secret. This Congress will
not go home until there is no more taxpayer welfare for lobbyists.

Thank you very much. Let me turn now to Mr. Peterson for his
opening statement.

STATEMENT OF HON. COLLIN PETERSON, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF MINNESOTA

Mr. PETERSON. Thank you, Mr. Chairman, and I'll be brief so we
can get on with the business of the hearing. I hope that we come
out of the hearing with some more information, which I trust we
will, but I would just like to say that, you know, I’ve been a some-
what reluctant supporter of your legislation.

I support the concept. I have some concerns, as you know, about
the way it’s going to be implemented, but the more I think about
this, I think we all need to step back a little bit and realize that
the Federal Government is broke. I mean we're literally bankrupt.

We are still spending almost $200 billion more than we're taking
in, and, frankly, maybe it’s something we ought to think about,
Why sare we giving out grant money when we are, in fact, having
to borrow the money in the first place? If we end up with a piece
of legislation that makes it so that people don’t want to take grant
money, that might be a good thing in helping us balance the budg-
et.

So I take a little bit a different view of this whole thing, because
I think it really is a legitimate question, and if we're ever going to
get serious—and I am one of those that’s completely, 100 percent
serious about balancing this budget as quickly as possible—this
might be a way that will help us move in that direction.

'm going to continue to work with you, and I hope that, through
this process, we can get some of the concerns that I had in terms
of the reporting and the bureaucracy that I think might be added
because of this, but, given my previous remarks, I think that might
not be all bad, either, because it might wean some people off of this
whole system.

So I appreciate the hearing. I hope that we accumulate some
more good information, and I look forward to hearing the testi-
mony.

Mr. McINTOsSH. Thank you very much, Mr. Peterson. I was going
to turn back and forth between the sides. Is that fine with you,
Mrs. Collins? Thank you.

Let me now turn to a cosponsor of this amendment, representa-
tive from Maryland, Robert Ehrlich.

Mr. EHRLICH. Thank you, Mr. Chairman. I will also forego an
opening statement, because we are here today to listen to what you
have to say and, hopefully, to engage you all in a continually con-
structive dialog.

One point, however, Mr. Chairman, that we made this morning,
and I want to reiterate today. I congratulate you for inviting two
of the major opponents to this piece of legislation to this hearing

ry.


80

regulations, in carrying out their lobbying and other advocacy ac-
tivities. But we also engage in litigation from time to time, bling
amicus briefs, participating in administrative rulemaking, sending
letters to the editor, calling up officials at agencies at the State,
local, and Federal levels.

So, in fact, we're engaged in an enormous amount of advocacy
which is a direct service, really, to our 30 members.

Mr. Spratt. Ironically, one of the things you're engaged in helps
grantees and others comply with the law, abide by the law, and not
spend more than the legal restricted amount on lobbying activities.

Ms. ARON. That’s absolutely Tight.

Mr. Spratt. And you would restricted from providing that
service if this bill were to become law.

Ms. ARON. That’s right.

_Mr, Spratt. Mr. Bass, what about your membership organiza-
tions?

Mr. Bass, We are not a membership organization. No one pays
us dues. It’s subscription-based. They receive a publication or series
of publications. It would be a problem for us in two ways.

Mr. SPRATT. But it says you can’t purchase—it’s not just mem-
bership; you can’t purchase anything from your organization.

Mr. BASs. There are actually two 15-percent provisions in the
bill. One is, it says I can’t use my grant money, to spend any of
my grant money with any entity that spends 15 percent or more.
The other is, if I, in turn, work with or spend money with anyone
else who spends 15 percent on advocacy, then I, in turn, am doing
advocacy.

Mr. SPRATT. They can’t subscribe to your publication.

Mr. Bass. That would be a problem. It would also be a problem
for many who Participate in, say, coalitions that we help to orga
nize. They may be Federal grantees, and it would be awfully
chilling, from their perspective.

Let me add, Congressman, that I think the reason it’s so chilling,
isn’t just simply that provision; it’s that there is what we have
dubbed the “bounty hunter provision” on this amendment; that is,
under the False Claims Act, anyone can file a suit for violations
under this. So if someone did not certify that they protected the 15
percent, they could be harassed with a lawsuit. That’s why Car-
dinal Mahoney was quoted in the Washington Post as pointing out
that this is a real problem.

Mr. Spratt. Thank you very much indeed, both of you.

Mr. McIntosu. Thank you, Mr. Spratt.

Ms. Slaughter, I have some more questions, but I want to give
you a chance to ask yours.

Ms. SLAUGHTER. Mr. Chairman, I don’t particularly have any
questions to ask of this panel. I thank them very much for being
here. I hope that the testimony brought forth here today will be
made available to everybody in the United States.

Ms. Aron, I don’t know what to say to you. I’ve been in Congress
for 9 years, and in all that time I know of no instance where staff
did such a despicable thing as this. And the idea of talking that
this is sort of a “boys will be boys” thing, that’s not so. This staff
of people work for the United States of America. It’s the highest
calling they will ever answer.


83

agendas that are being furthered that the American citizen doesn’t
agree with in that.

And, frankly, it’s costing us some very good and worthwhile pro-
grams. I like my symphony in Muncie, for example, but we're going
to end up defunding the National Endowment for the Arts because
of some of the abuses.

Ms. ARON. But, sir, that is a different issue.

Mr. McINTosH. No, I understand, but it’s related.

Ms. Aron. No.

Mr. McINTOSH. In the sense that the taxpayer today, I think,
justifiably thinks that we are abusing the way we spend their
money.

Ms. Aron. No. .

Mr. McINTosH. I’m sure of that.

Ms. ARON. For 5 hours, we have heard about the National Coun-
cil of Senior Citizens. I have not heard one statement from anyone
up here or any witness that any Federal dollars are going for im-
proper activities. Not one person has made that allegation. And
isn’t that what we're talking about here today with this legislation,
are Federal dollars being used improperly? If so, we need to rem-
edy that. But, in fact, the law already provides remedies.

jut no one has come forth, even during a discussion of the audit
of the National Council of Senior Citizens, and indicated that one
Federal penny is going for lobbying. That is the subject.

Mr. McINTosH. Let me address that, because, first of all, there
are examples from a previous hearing, the Alcohol Policy VIII Con-
ference which was a clear abuse of that. But as Congressman
Longley pointed out, the audit of the National Council of Senior
Citizens said their viability as an organization could not be sus-
tained without those Federal grants, and we know they are en-
gaged in a very extensive political operation.

0 there is this definite indirect, even by their own internal
audit, indication that, without this Federal grant money, they
couldn’t engage in these political activities.

Ms. ARON. But what’s unlawful about that?

Mr. McINTosH. I don’t think the American citizen is worried
about what's unlawful. In fact, we’re passing this law to change it
so that we put an end to this. It’s a problem. It’s a problem in con-
fidence that the taxpayer thinks that their money is being misused
and that there are lots of groups here in Washington—I now peo-
ple in Washington don’t want to hear this or don’t want to face
this, but they are very worried that there are groups here in Wash-
ington who benefit from that and that we need to cutoff the cycle.

Mr. Bass. I do think we could debate this back and forth about
what the audit indicated, what the audit didn’t indicate. In fact, I
think, most often, I’ve been told, “We’re too heavily dependent on
foundation grants, and we couldn’t carry on our activities if any of
our foundations went a different way.” That’s not an unusual com-
ment for an auditor to put when you have heavy reliance on a sin-
gle source.

I think that what’s important here is that your bill goes so far
to capture too much. You're capturing too much of what community
groups do on a day-to-day basis. So I think you’re erring on the
wrong side here. You're just going too far.


21

I note that Monsignor Schnurr points out in his letter that the Istook amendment
could subject the Catholic Conference to harassing lawsuits by pro-abortion groups
on the ground the Conference had violated the Istook amendment.

Thope the witnesses will address this important issue of harassment.

AMERICAN RED Cross,
Washington, DC, Sept. 11, 1995.
Hon. Sreny H. Hover,
House of Representatives,
1705 Longworth House Office Building,
Washington, DC.

Dear Sreny: The American Red Cross is concerned that language contained in
the House version of the Labor, HHS, and Education Appropriations Bill (H.R. 2127)
would have a detrimental impact on our ability to meet our Congressional Charter
obligations to carry on a system of national disaster relief and to provide emergency
communication between members of the military and their families.

Under the so-called “Istook Amendment,” the definition of political advocacy has
been expanded to include “attempting to influence . . . agency action.” This ex-
panded Tefinition of advocacy includes contact with state and local governments, as
well as federal agencies. We understand that the Amendment was not directed at
the American Red Cross. Nevertheless, its broad language would fundamentally and
adversely affect our ability to work with government agencies at all levels.

Although the Red Cross relies primarily on charitable contributions and hundreds
of thousands of volunteers nationwide to provide disaster relief, we are an integral
part of the national disaster response mechanism. We are not only responsible for
providing mass care whenever the Federal Disaster Response Plan is invoked, but
we also provide services to victims of over 60,000 smaller disasters every year in
communities across America. Under the Istook Amendment, any Red Cross official
contacting a state or local emergency management agency to arrange for shelter fa-
cilities, cots, blankets, generators, or other disaster relief supplies could be defined
asa lobbyist, Even our work with other Federal Response Plan agencies could be
construed as lobbying.

In order to meet our Charter obligations to members of the military and their
families, Red Cross pergonnel ‘are in contact on a daily basis with Department of
Defense officials in Washington, as well as local commanders on bases where Red
Cross provides services here and abroad. Red Cross officials must arrange for use
of office space, equipment and communications technology to make the provision of
our services possible. The Istook Amendment would define Red Cross staff acting
in that capacity as lobbyists, and impose unrealistic limitations and burdensome re-
porting requirements.

Please do all that you can to ensure that the Red Cross and other charitable orga-
nizations which face similar circumstances are exempt from this provision. Current
law prohibiting the use of federal grant money for lobbying purposes is both proper
and adequate, and the American Red Cross complies with its comprehensive report-
ing and auditing requirements. To unduly restrict our ability to work with govern-
ment representatives and agencies through the additional regulation envisioned by
the Istook Amendment would not be in the best interests of the millions of people
who rely on the American Red Cross when Help Can't Wait.

With warmest best wishes,

Sincerely,

ELIZABETH DOLE.

OFFICE OF THE GENERAL SECRETARY
OF THE U.S. CATHOLIC CONFERENCE,
Washington, DC, July 28, 1995.
DEAR REPRESENTATIVE: I write to share the major priorities of the U.S. Catholic
Bishops Conference on the Labor/Health and Human Services Appropriations Bill
coming to the House floor. For the U.S. Catholic bishops, the fundamental measure
of any piece of legislation is to how it touches human life and human dignity and
contributes to the common good. Applying this moral criterion, we urge you to (a)
support measures which prohibit public mandating and funding of abortion, (b)
eliminate proposals which deny federal grants to groups using their own private re-
sources to join in public debate, (c) reject disproportionate cuts in programs which
provide essential services for poor children and vulnerable families, and (d) oppose


THE ISTOOK-McINTOSH-EHRLICH PROPOSAL

HEARING

BEFORE THE

SUBCOMMITTEE ON NATIONAL ECONOMIC GROWTH,
NATURAL RESOURCES, AND REGULATORY AFFAIRS

OF THE

COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS
FIRST SESSION

SEPTEMBER 28, 1995

Printed for the use of the Committee on Government Reform and Oversight

oe

U.S. GOVERNMENT PRINTING OFFICE
26-404 CC WASHINGTON : 1996

For sale by the U.S, Government Printing Office
© Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
2

ISBN 0-16-052980-8


84

Mr. McInrosu. And it’s getting late. Unless Mr. Spratt has any
other questions, let me invite both of you, if you think we're going
too far and should come somewhere other than the status quo,
please submit that to me. What I heard from the testimony was,
you think the current law is sufficient. But if you recognize or de-
cide, for some reason, that maybe we have identified problems,
please—I’m not being facetious—submit suggestions in that area.

Let me close by saying thank you, Mr. Bass, for being candid
about your relationships in this, and I appreciate that, with Fed-
eral grantees. I appreciate both of you being willing to come here
today and to testify. Obviously, we disagree, but I do appreciate
your spending your time in that way.

there are no further questions, this hearing has now come to
an end, and we stand adjourned.

[Whereupon, at 7:05 p.m., the subcommittee adjourned.]

e)


44

ices from 300 to 500 vendors, and a small YMCA from 200 to 300. Each YMCA will
have to determine, based on the activities of a program, which of those suppliers
has any relationship to the grant program, then ask each for a voucher stating that
they do not spend over the prohibited 15 percent on advocacy. Each of those reports
must be Tequested, filed, and reported along with the annual reports described in
the proposal.

The supporters of this proposal assert that the measure would impose only mini-
mal keeping and reporting burdens. Even the most cursory estimates by cur.
rent service providers show that this is simply not the case.

The McIntosh/Istook/Ehrlich proposal would also impose a major administrative
burden on the federal government, which would result in an increase in government
size and activity.

A natural concomitant of the reporting requirements placed on the recipients of
funding is the imposition of a significant administrative burden on the federal gov-
ernment. Federal agencies would receive tens of thousands of annual reports from
grantees, and would be required to (1) establish an audit program to ensure grantee
compliance with the political advocacy restrictions, (2) provide free public access to
all grant applications, grantee reports, and audit files, and (3) prepare a detailed
annual report containing the information provided by individual grantees. The re-
sult of this proposal is contrary to the stated goal of this Congress to remove the
most intrusive acts of government and to cut back on bureaucracy and paperwork.
As one YMCA executive wrote to his Congressman, “You and I both know a ton of
new government employees will be hired to process these reports and enforce the
law also. Not too good if our goal is to reduce the size of government.”

By giving private parties the right to file suit alleging violations of the restrictions
on political advocacy, the McIntosh/Istook/Ehrlich proposal would expose federal
Frantecs to serious risk of harassment. This section of the proposal is a hunting

ficense for anyone dissatisfied with an organization's programs or policies.

This proposal creates the obvious danger that individuals and groups opposed to
any aspect of a grantee’s activities could initiate, or threaten, litigation all leging
violation of the political advocacy restrictions. Grantees would bear a heavy burden
of proof in defending such suits. This section would force YMCAs to spend their re-
sources on lawyers and litigation, instead of programs vital to their communities
across the country.

The McIntosh/Istook/Ehrlich proposal would create an unjustified disparity be-
tween the treatment of federal grantees and federal contractors. This proposal tar-
gets one group of federal fund recipients while exempting another.

‘As this proposal would not apply to federal contractors, they would remain free
to devote their private funds, withont limit, to political advocacy activities. The sup-
porters of the proposal have not provided any convincing rationale as to why their
stated concern—that the receipt of federal grant funds “frees up” the recipient’s pri-
vate funds for political advocacy—is not equally relevant to federal contracts.

‘A programs funded by federal grant dollars provide tangible products—all of
which directly benefit families and communities.

The Mclntosh/Istook/Ehrlich proposal raises serious constitutional concerns which
may take years to resolve.

‘The Congressional Research Service and several constitutional scholars have
raised serious questions about the constitutionality of the proposal. These analyses
conclude that the proposal’s imposition of restrictions on privately-funded advocacy
as a condition for the receipt of federal grants probably violates the so-called “uncon-
stitutional conditions doctrine”—that is, the principle that while the government
need not subsidize the exercise of a First Amendment right, it cannot require a per-
son to give up a First Amendment right as a condition of the receipt of a govern-
mental benefit. At least one commentator has concluded that the proposal’s differen-
tial treatment of federal grantees and contractors also violates the Equal Protection
clause of the Fifth Amendment.

CONCLUSION

‘The supporters of this proposal make the point repeatedly that government fund-
ing allows a non-profit to make use of its non-government funding to advocate for
more funding. This assertion is incorrect for a number of reasons. First, non-profits
advocate first and foremost for issues that affect them and their constituencies. Sec-
ond, government grants rarely “free up” a non-profit’s budget. Quite the contrary
is true since almost all grants require an organization to begin a new program or
expand an existing one, and most require the organization to contribute matching
funds. In the first instance an organization must maintain funding at current levels
for current operation; and in the second, it must raise additional revenue to support


8

erns their lives must not only be tolerated, it must be absolutely
honored and held revered by every American.

Tyield back the balance of my time.

ir. McINTOSH. Thank you very much, Mrs. Collins. Our next
member for an opening statement is Mr. Scarborough. Would you
yield me 15 seconds to just correct one thing in the record?

Mr. SCARBOROUGH. I certainly will, Mr. Chairman.

Mr. McINTosH. It is the purpose of the legislation to cover for-
profit corporations, as well as not-for-profits, who receive a grant,
and whether or not they’re conservative or liberal in their pol itical
agenda, our point simply is, i ey receive taxpayer money, the
shouldn't be fobbying with the taxpayer 's dime. y ¥ y

Mr. Scarborough.

STATEMENT OF HON. JOE SCARBOROUGH, A REPRESENTA-
TIVE IN CONGRESS FROM THE STATE OF FLORIDA

Mr. SCARBOROUGH. Thank you, Mr. Chairman. I just wanted to
briefly align myself with your position and thank you for having
these hearings, and I would also like to commend Congressman Pe-
terson for asking a very important question. When we're $4.9 tril-
lion in debt, why are we providing money to people to lobby Con-
gress to ask for more money?

I just find some Democrats’ position on this to be very curious.
We heard about corporate welfare. Well, I was sitting in this com-
mittee, on another subcommittee, when it was the Democrats who
continued to support corporate welfare and the corporate welfare
that’s contained in the Commerce Department, the last great bas-
tion of corporate welfare in Washington, DC.

And yet it’s the Republicans who are trying to get rid of cor-
porate welfare in the Commerce Department, and it’s some mem-

rs of the liberal Democratic party that continue to support cor-
porate welfare. Now, today, we find that the Democrats have
aligned themselves not only on the side of corporate welfare, but
also, now, are aligning themselves on the side of welfare for lobby-
ists.

I mean, my goodness, it just doesn’t make a whole lot of sense
to me, when were $4.9 trillion in debt, that we’ve got liberal Demo-
crats who still don’t realize that we don’t have money to throw at
corporations for corporate welfare, and we don’t have money to
throw to lobbyist organizations for lobbying welfare.

Yes, this is the people’s House, but the one thing that so many
in the people’s House keep forgetting is, the people’s House spends
the people's money, and today, we still have people that want the
people's House to keep spending the people’s money on welfare for
lobbyists.

It’s beyond me. I don’t understand it. I think we have to be ac-
countable to the taxpayers, and that’s why I support your bill, Mr.
Chairman, and look forward to these hearings.

lL yield back the balance of my time. .

Mr. McINTosH. Thank you very much, Mr. Scarborough. I think
Ill just go in order, if that’s OK on your side, rather than when
people arrive. The next Congressman would be Mr. Waxman for an
opening statement.


7

For example, in 1993, the McDonnell Douglas Corp. was awarded
defense contracts worth $7.5 billion, representing 52 percent of its
total revenues. Lockheed got contracts totaling $6.9 billion that ac-
counted for 53 percent of its revenues. The General Dynamics
Corp. received $2.1 billion in defense contracts at a time when we
were in peace, and that represents a whopping 68 percent of that
company’s total revenues.

Now, I firmly believe this legislation is a bad idea. However, if
it makes sense to restrict the political activities of Federal grant-
ees, it must also make sense to similarly restrict the activities of
Federal contractors.

Why should the YMCA, that provides day care services for chil-
dren, be restricted in its advocacy, while insurers that provide
health services for Government employees aren’t? Federal contrac-
tors of all types lobby heavily. Last year, health insurers, many of
whom received Federal contracts, helped pay for the Harry and
Louise telephone ads that were used to defeat the President’s
health plan.

Private catering firms that operate Government cafeterias also
lobbied heavily against the employer mandate in the health plan,
itself.

There’s another matter that I would like to address, and that is
my concern that these hearings, in fact, not be used to intimidate
groups who oppose the Republican agenda here in this Congress.
Last Friday, just hours after they staged a demonstration in oppo-
sition to the Republican plan to increase Medicare taxes and to cut
Medicare and Medicaid benefits, the National Council of Senior
Citizens was asked to be a witness at this hearing.

Their invitation was faxed to them on Friday afternoon, together
with the same set of questions regarding their tax-exempt status
that was sent to the Alliance for Justice and to OMB Watch. Again,
no explanation was given as to the relevance of the National Coun-
cil’s tax status to this legislation.

Now, the National Council is a Federal grantee. For more than
20 years, it has run a national program for the Department of
Labor that employs low-income senior citizens. It’s this program
that pays the salary of many senior citizens who work in day care
facilities, Head Start, and many other programs designed to serve
our young people.

Yet the National Council does much more than this. It takes po-
sitions and actively participates when issues affecting the elderly
are being considered. The Republican plan to cut Medicare and
Medicaid benefits and to raise the Medicare tax is, without any
question, the most serious and the most important issue facing sen-
ior citizens today.

The National Council of Senior Citizens has every right, in fact
it has a duty, to speak out on the changes Republicans plan to
make in the Medicare and the Medicaid programs.

These programs and these hearings—particularly these hear-
ings—must never be used to restrict participation in this very im-
portant debate by the National Council of Senior Citizens or any
other group. This is the people’s House, and in this House, the
right of every citizen to petition the Federal Government that gov-


57

Mr. EXRLICH. Well, why don’t you finish, since you're more inter-
ested in making a speech. But I’ll have my time later.

Ms. SLAUGHTER. No, I’m not, but I am interested in asking Mr.
Randolph a question, and I would like to get to that, because I
know he has to leave.

Mr. EHRLICH. You certainly can. It’s your time.

Ms. SLAUGHTER. Mr. Randolph, you don’t take Federal money?

Mr. RANDOLPH. Yes, I do, ma’am.

Ms. SLAUGHTER. You do take Federal money?

Mr. RANDOLPH. Yes, ma’am.

Ms. SLAUGHTER. A couple things that you had said here kind of
struck me. One is, “It’s difficult to see how a client benefits from
a dollar he never sees.” Are you referring to the Federal money
that comes in to your agency?

Mr. RANDOLPH. Yes, ma’am.

Ms. SLAUGHTER. Your clients do not benefit from that money?

Mr. RANDOLPH. If the money does not get to the client, and
passes and goes right back to Washington to lobby, they do not see
the direct benefit. Not my clients.

Ms. SLAUGHTER. Is that what you do with your money?

Mr. RANDOLPH. No, ma’am.

Ms. SLAUGHTER. Well, youre talking about all this money flow-
ing back to Washington. You do understand. Obviously, you're op-
erating a nonprofit agency; you know what the IRS regulations are;
correct?

Mr. RANDOLPH. Yes, ma’am.

Ms. SLAUGHTER. And you feel that those are pretty restrictive, so
that people can’t spend unlimited amounts of money, as you point
out, millions of dollars coming back down here to lobby. Do you
have an example of that?

Mr. RANDOLPH. I’m not an attorney, ma’am. I can only speak
based on my opinion, as I stated in my testimony, and my observa-
tions. The perception is—and perception, as you probably know,
madam, is 90 percent of reality.

Ms. SLAUGHTER. Not to me.

Mr. RANDOLPH. The perception is that most of these dollars,
through lobbying, end up back into Washington, without the client
getting direct benefit.

Ms. SLAUGHTER. But you know that’s against the law? You do
understand that’s against the law?

Mr. RANDOLPH. Yes. And there are plenty of things that are
against the law that are still perpetrated.

Ms. SLAUGHTER. Do you also understand that there has not been
a single complaint filed, to the IRS or anybody else, that any non-
profit agency ever violated that law?

Mr. RANDOLPH. I'll have to take your word for it, ma’am.

Mr. McINTOSH. Would the gentlelady yield?

Ms. SLAUGHTER. No, I'd like to ask more.

Mr. RANDOLPH. Go ahead.

Ms. SLAUGHTER. Tell me, you do know that?

Mr. McINTosH. Well, let me make a factual point.

Ms. SLAUGHTER. No, if I could, Mr. McIntosh.

Because if your perception is 90 percent of your reality, and if
I tell you a reality, will you buy that; will you believe that? Do you


40

As a result of these meetings, the whole community is now plan-
ning a comprehensive, community-wide strategy. This type of ef-
fort, which benefits the entire community and is reproduced across
almost every region in this country, would be severely restricted by
this proposal.

In addition, unlike the existing Federal grant and Federal tax
laws, the proposal’s definition of advocacy also includes all efforts
to influence legislation as well as agency action. The boards of di-
rectors of YMCA’s are made up entirely of volunteer community
leaders, and often that means that these leaders have to address
the community needs by speaking up and speaking out about Gov-
ernment and its programs, as wail as establishing all the partner-
ships that it does.

For example, the Delaware YMCA continually works with State
and Federal agencies to improve its programs. It has a relationship
with the Wilmington Housing Authority to develop and deliver pro-
grams for pregnant teens, transitional housing, recreation, and so-
cialization. It has a youth violence initiative in cooperation with
the United Way. It has similar programs with the Department of
Public Instruction, the Family Court, the Department of Public
Safety and Highway Safety. It works with the Coast Guard. It
works with the Air Force.

Developing good relationships with local and State officials is
crucial to what we do in pursuit of our mission. All such contact
under this proposal would constitute political advocacy. Our second
concern is that this proposal imposes major new reporting and rec-
ordkeeping requirements on both Federal grantees and the Federal
Government. It not only restricts our ability to do good works, but
we feel it is a blatant intrusion into the affairs of a private organi-
zation.

Regardless of the size of a Government grant an organization re-
ceives, in relation to its budget, this requirement translates into ex-
pensive and complicated recordkeeping. We have to account for ad-
vocacy expenditures under IRS regulations, under 501(c)(3) regula-
tions, and under this. We have to track things by our own fiscal
year; we have to track things by the Federal fiscal year.

For instance, in Sarasota, FL, they spend $18,000 every single
year, of their private funds, on Federal and State compliance au-
dits. They estimate that this proposal will cost them an additional
$5,000 to $10,000 to comply with, and that’s money directly out of
program.

In addition is the 15-percent requirement that says that we can’t
do business with vendors that spend more than 15 percent of their
budget lobbying. We have, nationally, relationships with vendors
and collaborations of 148,000, Mr. Chairman. That’s statements
that have to be collected, written, filed, and reported.

Our other concerns are enumerated here, including harassment,
the fact that it opens us up for harassment, that it only targets
nonprofits, and that it raises institutional concerns, in addition to
the fact that it is money directly out of our budgets to comply with

“Mr. Chairman, in the YMCA’s opinion, your proposal is far-
reaching and extreme, and we don’t feel it is in the public interest.
Thank you.


81

And to do something like this, under any circumstances, but
somehow when it’s done here in Congress, it’s more egregious to
me. I take it very seriously, and I will try to get to the bottom of
this. I want to make you that pledge.

Ms. ARON. Thank you very much.

Ms. SLAUGHTER. You're welcome.

Mr. McInTosH. Thank you, Ms. Slaughter.

Mr. Bass, you had a third point.

Mr. Bass. Yes. I had actually a third and a fourth. The third is
what I was just alluding to with Congressman Spratt, and that is
that we encourage coalition building. And we also encourage
leveraging public and private resources to build something greater
than what either, on their own, could do. In many respects, because
of this 15-percent issue, it would present a chill.

The fourth point is, we would directly be affected, because we
run an on-line service called RTK NET, the Right-To-Know Com-
puter Network, and our partner in that, which is Unison Institute,
is a Federal grantee. If, in turn, we spend more than 15 percent
on advocacy, they wouldn’t be able to do business with us.

That service was in place since 1989, long before any Federal
funds came in. It’s a service that reaches about 3,000 community
groups around the country, as well as businesses, State and local
governments, to provide them environmental data and housing

lata and various other information. So that would present an ex-
ample of a problem in doing some kind of joint project.

Mr. McINTosH. Let me ask you a little bit more about, is it, RTK
Network, or Right-To-Know Network?

Mr. Bass, RTK NET, yes.

Mr. McINTOsSH. And that is a joint venture with another group,
Unison Institute; is that right?

Mr. Bass, It’s actually a partnership of the foundation commu-
nity, Government, Unison Institute, and OMB Watch. That’s cor-
rect.

Mr. McINTOSH. And you operate on the World Wide Web, so I
take it it’s a computer data base that they maintain?

Mr. Bass, That’s correct.

Mr. McINTosuH. And they receive Federal grants to maintain that
data base?

Mr. Bass. No. I believe their grant is focused on data integration
and data dissemination. One of the issues that their skills are fo-
cused on is how to take disparate data bases and provide a link so
that people can use them.

Mr. McINTosH. And you work with them in providing informa-
tion on some of the activities that you monitor at OMB Watch?

Mr. Bass. Not exactly. Our skill that we bring to that is pri-
marily in training and building the capacity of users to learn how
to use the on-line service, as well as to use the data on the service.
So it’s a marriage, if you will, of two different skills, programming
skills and computer skills with skills around training.

Mr. McINTOSH. So if our legislation were in effect, you would
have to choose either to sever that relationship.

Mr. Bass. Or stop advocacy.

Mr. McINTosH. Or stop advocacy.

Mr. Bass, Correct.


28

Ms. SLAUGHTER. I don’t mind to talk about your bill. I’m happy
to talk about it.

Mr. McInTosu. Reclaiming my time. Mr. Longley.

Ms. SLAUGHTER. But what I—but, Mr. Chairman.

Mr. MCINTOSH. Reclaiming my time.

Ms. SLAUGHTER. Mr. Skaggs held up something that he said the
committee had produced.

Mr. McINTOSH. Ms. Slaughter, would you please wait? I don’t in-
terrupt you on your time.

Ms. SLAUGHTER. I know you don’t, and I do appreciate that.

Mr. McINTosH. Then please let me finish with my time.

Ms, SLAUGHTER. Well, it would only take you a minute to say yes
or no, the committee did it. Did the committee do it?

Mr. MCINTOSH. Please let me finish with my time, and I’ll gladly
address the issue when you're asking questions.

Mrs. SLAUGHTER. I can ask you a question, then?

Mr. McINTosH. You can ask the witness a question.

Ms. SLAUGHTER. Well, they don’t know. Mr. Skaggs told us what
he thought.

Mr. McINTosH. Ms. Slaughter, let me proceed with the hearing.

Ms. SLAUGHTER. And you said he was wrong.

Mr. McIntTosH. And we'll be able to address that on your time.
Mr. Longley.

Ms. SLAUGHTER. Well, I don’t have any way to find that out.

Mr. McINTosH. In your experience in Maine with the National
Council of Senior Citizens, when they were engaged in this political
activity where they were taking out advertisements, did they dis-
close to people that they were a grant recipient that received 96
percent of their funds from the taxpayer?

Mr. LONGLEY. Not at all. Not at all. They pretended to be an ad-
vocacy group for senior citizens.

Mr. McINTosH. And so they didn’t tell the public that they relied
on the Federal Government for 96 percent of their funding?

Mr. LoNncLEY. They made no suggestion whatsoever that they
even received a nickel from the Federal Government.

Mr. McINTOSH. When voters in your district find out that the
had received that much money from the Federal Government and,
in fact, benefit from a lot of the programs that they are complain-
ing about being changed by this Congress, are they surprised by
that? What’s their reaction?

Mr. LoNGLEY. I think the voters work awfully hard for their
money, and they don’t get too excited at the idea that any group
is using taxpayer funds to orchestrate political campaigns.

Mr. McinrosH. Mr. Longley, are you familiar with the earlier
testimony that we had before this committee from Profs. Lillian
Bevire and John Harrison, who are noted constitutional scholars,
about the first amendment aspects of this legislation?

Mr. LONGLEY. No.

Mr. McINTosH. Apparently, along with Tim Flanagan, who is a
former head of the Office of Legal Counsel, the advisor to the Presi-
dent on constitutional issues, they all felt, after reading this bill,
that it preserved first amendment rights because organizations
could either not take Federal grant money and thereby have abso-


45

the project. Added to this is the fact that every dollar that a YMCA spends on gov-
ernment reporting is a dollar taken out of programs—necessary programs that serve
world class athletes to the disabled: prenatal exercise to bereavement counseling;
transitional housing for the homeless to neighborhood civic association planning:
and day care for seniors to infants in countless communities across the country.

By imposing restrictions on grantees’ privately-funded advocacy, and by substan-
tially broadening the range of proscribed political advocacy activities, the Mcintosh
Istook/Ehrlich proposal constitutes an unprecedented—and probably unconstitu-
tional—effort to silence federal grantees. The proposal would impose a significant
administrative burden on both grantees and the federal government and expose
grantees to a significant, risk of harassing litigation. In light of these facts, the sup-
porters of the proposal bear a heavy—and in the judgement of the YMCA—insup-
portable burden in attempting to demonstrate that this extreme proposal is in the
public interest. If the perception of the supporters of this proposal persists that
there is abuse of the current system, then I respectfully suggest stronger enforce-
ment of current rules or the codification of them.

GOALS OF YMCA INVOLVEMENT IN THE PUBLIC POLICY PROCESS

Advance YMCA mission objectives—Through effective public policy advocai
mission-related issues, the YMCA can advance its mission objectives far beyond the
persons YMCAs serve directly through their programs.

Provide nonpartisan education and identify consensus on issues related to the
YMCA mission. —The YMCA is a mainstream community organization encompass-
ing a diversity of political perspectives. The role of the YMCA should be to help de-
velop a consensus position that can command broad support among local associa
tions. YMCA public policy positions will carry far more weight if they can legiti-
mately be said to represent the consensus views of a thousand local YMCAs rather
that merely the national leadership. In order to encourage and facilitate participa-
tion, the YMCA public policy process will provide reliable, balanced, and “user
friendly” resource materials on the issues under consideration. The resource mate-
rials should be nonpartisan and assist YMCAs to make informed priority decisions
about how to allocate public resources and YMCA advocacy efforts.

Encourage participation in the political process.—At a time when millions of
Americans are increasingly disaffected from the political process, a further impor-
tant objective is simply to encourage understanding of and participation in the polit-
ical process, As a movement whose stated objectives include helping individuals to
develop their leadership eapacities and to grow as responsible citizens, the YMCA
has a special responsibility in the regard.

Strengthen the mission focus of YMCA leadership—Involving local YMCA leaders
in a sustained, well-informed discussion about major public policy issues related to
the YMCA mission can significantly strengthen their ability to provide effective,
mission-focused leadership for their YMCAs and for their communities. By discuss-
ing and evaluating major public policy issues related to the YMCA mission, local

ICA leaders will develop both a broader understanding and a renewed sense of
the importance of YMCA activities.

Preserve the ability of the YMCA to accomplish its mission —Through effective
public policy involvement on mission-related issues, local YMCAs will reinforce the
public's perception of the YMCA as a mission driven community service organiza-
tion. YMCA leaders will also develop advocacy skills and strengthen important, polit-
ical relationships at all levels of government. The experience gained through this
effort will prepare local associations to better respond to issues which may effect
YMCAs' abllity to serve their communities.

‘Adopted by the National Board of YMCAs on March 19, 1989.

YMCA INVOLVEMENT IN FEDERAL CHILD CARE LEGISLATION

General PrinciplesStrengthening families and meeting the needs of children
have always been, and remain, central to the YMCA mission. YMCAs have re-
sponded quickly and energetically to families’ rapidly growing need for affordable,
quality child care, and now provide care for approximately 500,000 children each
year.

Based on this experience, YMCAs believe that government and the private sector
should work together to develop policies that assist families in their primary task
of raising children. These policies need to respect the diversity of family structure
that exists today. These policies should support parents who choose to and are able
to stay at, home and care for their children as well as those who must work to pro-
vide for the general well-being of their children. General tax relief for low-income
families, through refundable tax credits, or otherwise, may provide a partial means



27

It flies directly in the face of the pronouncements of the Speaker
of the House of Representatives on the floor last week, making it
clear that we do not want unsigned, unacknowledged flyers floating
around, especially if you are concerned about the misuse of tax-
payer money, Mr. Speaker, done with the resources of your commit-
tee.

Mr. McINtosH. Mr. Skaggs, let me take my own time to say that
I think it would serve us aa well if you had a chance to read the
legislation.

ir. SkAGGs. I have.

Mr. McINTosH. Well, maybe we read English differently, but
where we make a clear statement that no one’s first amendment
rights will be abridged, that it doesn’t apply to individuals, it
seems to me that perhaps we don’t understand the same language.

Mr. Skaccs. Well, perhaps Groucho Marx wrote that line in the
legislation.

Mr. McINTosH. I think what happens is, when people have noth-
ing to offer to help solve this problem, they cry “foul” and scare
people to say things that aren’t indeed happening, and it’s a shame
that that takes place in the body politic, but I don’t think we need
to respond to things that patently aren’t true.

Mr. Skaccs. Did the committee staff prepare that document, Mr.
Chairman?

Mr. McINTosH. Let me turn now to Representative Longley, and
I have a question for him about the National Council of Senior Citi-
zens. By the way, we will be having a hearing when we return
from the October break in which we will invite them to testify and
participate in this.

Ms. SLAUGHTER. Mr. Chairman. Mr. Chairman, if you would hear
me for just a second. I’m concerned that my colleague, Mr. Skaggs,
who said that the committee had produced that document un-
signed—is that correct, Mr. Skaggs?

ir. SkaGcs. That was the information that I received.

Mr. McINTosH. Ms. Slaughter.

Ms. SLAUGHTER. But you have implied, Mr. Chairman, that he
told a lie.

Mr. McINTosu. Ms. Slaughter.

Ms. SLAUGHTER. Well, at least—all I want to know from you is
did your committee prepare that document or not? That’s easy
enough to know.

Mr. McINTosH. Ms. Slaughter, let me finish with my time, and
T'll gladly allow you to address that during your time to question
witnesses.

Ms. SLAUGHTER. Well, I would be happy to do that, but it seems
to me that you owe it to Mr. Skaggs, to whom you've just said that

e lied.

Mr. McINTosH. No, I made a statement that there are a lot of
misrepresentations about what our bill says. In this case, it’s not
true.

Ms. SLAUGHTER. We're not talking about your bill. We're talking
about whatever that thing was.

Mr. McINTosu. Well, I’m talking about my bill. I understand you
don’t want to talk about my bill, because you don’t want the people
to know what it says.


64

I know we've heard the dialog between the two of you that you
would be well within the amount of money for lobbying, so this bill,
the 5 percent would not trouble you; correct?

Ms. VANPELT. Yes, ma’am.

Ms. SLAUGHTER. Now, as the bill is written, Ms. VanPelt, you
won't know that unless you interrogate every one of the people you
do business with; right?

Ms. VANPELT. Yes.

Ms. SLAUGHTER. Because you've got to make sure how much of
their own money they spend over the 15 percent.

Ms. VANPELT. That’s right.

Ms. SLAUGHTER. So you've got to do the questionnaire. You've got
to interrogate, in your case, over 140,000 vendors and add that all
up together to make sure that you're still within your 5 percent.

Ms. VANPELT. That’s correct.

Mr. McINTosH. Ms. Slaughter, no further questions?

Ms. SLAUGHTER. Yes.

Mr. McINTosH. Mr. Ehrlich,

Mr. EHRLICH. Ma’am, I’m interested in your testimony because
you're out there, real life, doing this stuff. And I appreciate your
consideration today, I really do. I’m just intrigued by your com-
ment, in answer to my question with respect to the burden placed
on “Y’s” out there to meet the new requirements, and I keep hear-
ing the term “onerous,” et cetera.

d you specifically cited—and correct me if I’m wrong—local
government contacts, councils, et cetera. That struck something in
my mind. I checked, under the (h) regulations, and you've taken
the (h) election, you are already covered by that; you have to report
that. And I'll read from the IRS Code: “The term ‘legislation’ in-
cludes action with respect to acts, bills, resolutions, or similar
items by the Congress, any State legislature, any local council, or
similar governing body, or by the public in a referendum, initiative,
constitutional amendment, or similar procedure.”

So we keep going back to the level of burden placed upon organi-
zations such as yours. I’m just really trying to quantify it, because
I understand the charge is out there, but I’m trying to get straight
in my own mind how real the charges are and how much additional
burden would be placed on you by this particular piece of legisla-
tion,

Ms. VANPELT. Well, first of all, Mr. Ehrlich, right now there is
no reporting requirement similar to yours in the 501(h) election.
It’s a good faith estimate, as I understand, and we do end up re-
porting it. So it’s not a specific data-gathering as would be required
under your amendment. In addition, we still have to add all the
school superintendents and all the other people, the lower local
elected officials. So it is an expansion.

Mr. EHRLICH. I'll go with your answer, but I don’t think it’s a sig-
nificant one.

Thank you.

Mr. McINTosuH. Thank you, Mr. Ehrlich.

Mr. Spratt, do you have any questions?

Mr. Spratt. No.

Mr. McINTosH. No questions. Seeing no further questions, thank
you for staying with us all day, Ms. VanPelt. I appreciate that.


4

been scared into believing that their voices will be silenced. Noth-
ing can be further from the truth. We have worked hard in crafting
the Istook amendment to insure that legitimate charities don’t be-
come lobbyists.

Certain activities, such as testifying before city councils or before
Congress or representing individuals who are having a case work
problem before an agency are simply not covered in our definition
of advocacy, and, in our bill, with its 5 percent de minimis excep-
tion, many groups can spend millions of dollars on lobbying.

For example, based on IRS data provided by the independent sec-
tor, we estimated that even under our amendment, for example—
and I'll point to this chart behind me right here—the Red Cross
can spend at least $17.7 million in lobbying. The Boy Scouts can
spend at least $1.6 million in lobbying.

The Girl Scouts can spend at least $1.3 million in lobbying. The
American Lung Association can spend at least $1 million on lobby-
ing. The American Heart Association can spend at least $5 million
on lobbying. The United Way can spend at least $1 million on lob-
bying, and the YMCA, which is joining us today, can spend $1.2
million on lobbying.

By the way, under our bill, if they don’t take Federal funds, they
can spend any amount they want on lobbying and political activity.
Hopefully, they tell their donors about this activity, but, in any
case, it’s OK under our bill, because it’s only a small part of their
total program. They have not become primarily big lobbying outfits.

These are the facts that we know. This hearing can help us learn
even more. We've invited two of the most vocal opponents of our
legislation, OMB Watch and Alliance for Justice, to share with us
their concerns. We will have a chance to examine the specific con-
cerns that these witnesses have with our amendment. Hopefully,
we will better understand how they would craft the legislation.

We welcome constructive comments, and are here today to listen.
In preparation for today’s hearing, we sent each of the witnesses
a series of questions regarding their funding and engagement in
political activities.

Some of the witnesses have objected to the questions and refused
to respond on certain points. Now, I will honor the right to keep
private donor lists secret if they choose to, but not if that secrecy
is used to cover up a paper trail that leads back to taxpayer sub-
sidies for lobbying efforts.

They have said they don’t receive taxpayer subsidies, but seem
to be unwilling to share with us what type of joint ventures they
have with Federal grant recipients, how much of their money and
operational support comes from other groups who, in turn, received
taxpayer grants. I would like to know what they’re hiding.

ur goal in asking these questions is the same as our goal for
this hearing. We want to protect the taxpayers’ hard-earned dol-
lars. We want to insure that public money is not being used to sub-
sidize political activities. The only way to be sure of that is to be
fully accountable to the taxpayer, to examine where these Federal
grants go and how they are spent. ;

I hope our witnesses will agree that when it comes to public
money, taxpayer dollars, disclosure is not only reasonable, but the
duty of everyone who benefits from these taxpayer subsidies.


18

Mrs. MEEK. Yes, yes.

Mr. McInTosu. I have the New York Times article you referred
to in front of me. The article then goes on to point out, “If there
are groups out there speaking out, I think the public ought to know
if they’re benefiting from their positions.”

Our goal, really, is to find out what the taxpayer dollar is being
used for and to protect the public’s interest to know what’s happen-
ing in this. Really, in terms of people in their own private capac-
ities and not receiving Federal assistance or indirect subsidies, I
agree with you totally. I think we should respect their privacy
right, but when you start receiving that mone: from the taxpayer,
I think the public does have a right to know how it’s being spent
and what it’s being spent on.

Mrs. MEEK. I couldn’t agree with you more, but being one that’s
always opposed to discrimination, Mr. Chairman, I would hate to
see you be indiscriminate about the groups whom you put this par-
ticular limitation on. If it’s on just the regular nonprofit groups
that don’t have a high profile and not against the large groups,
particularly the large corporate groups, including the military es-
tablishment, the large universities.

We know where the money’s going. I served on appropriations for
2 Heats, and you know that old saying about a billion here and a
billion there, soon enough you're talking about real money. Well,
these people aren’t talking about real money. They aren’t getting
real money.

But, for example, last year, the AMA received $655,000 in six
Federal grants. These grants include sponsoring a conference on
family violence, giving demonstrations to prevent injuries, and set-
ting up an education program to protect people from the hazards
of environmental tobacco smoke.

I support the American Medical Association getting these Fed-
eral grants, and I also support the right of the AMA to lobby both
the Federal Government and State and local governments on such
topics as health care legislation. What would happen if we couldn’t
get information from these groups? They pass on to us very perti-
nent information regarding health care legislation. I think we
would be derelict if we could not hear from these groups.

As another example, the International Business Machines Corp.
says that it received about $92 million in Federal grants last year.
I support IBM getting Federal grants to do research. That is impor-
tant to the Nation’s future.

T also support the right of IBM to lobby both the Federal Govern-
ment and State and local governments. I’ve been there, Mr. Chair-
man, both on the State level and now I’m here on the Federal level.
We need this kind of input.

I think, even though your intent may be good—sometimes I
doubt it, but you're kind of cute, you know, so I can kind of take
some of the things you say, even though I’m against a lot of them.
But your cuteness helps a lot.

Mr. McINTosH. Thank you, Mrs. Meek.

Mrs. MEEK. But anyway, what I’m trying. to say is that some of
the things, I do think the impact of your bill is going to be more
far-reaching than you ever thought it would be. I think you're going
to perhaps prohibit or perhaps sort of keep people who really woul


82

Mr. McINTosu. So I understand you’ve got some interest in the
outcome of this legislation. Does that materially affect your advo-
cacy efforts?

Mr. Bass. I don’t believe so. I would say in no way.

Mr. McINTosuH. If you had to sever.

Mr. Bass. No. No. I do think that that example, however, Mr.
Chairman, is part of the problem of some of the pieces of the bill,
because our example is not unique. That happens a great deal at
the local level where these partnerships have developed.

The example I gave where I was speaking of Spokane is just one
place. Yesterday I was in Ohio where the Community Shelter
Board was created, and how that was created was that the busi-
ness community requested it. It gets city money, which also carries
with it commingled Federal dollars to provide homeless issues.

They actually not only provide services, but they work with the
business sector to develop policy objectives to push, if you will, the
city to do more in the area of hunger and homelessness. So it’s an
example where that kind of partnership becomes more problematic.

Mr. McINTosH. Do you see any problem with groups that receive
essentially 95 percent of their funds from the Federal Government
also maintaining a political action committee? Is there a problem
of confidence?

Mr. Bass. Let me be clear. I can’t speak to the National Council
on Senior Citizens. But, in a hypothetical situation, the important
thing is to abide by the practice and principles of what is currently
law. If that hypothetical organization that is 96 percent or 94 per-
cent, let’s take 96 percent, federally funded, if they go 4.5-percent
above in spending on Federal or State lobbying activities, that is,
attempts to influence legislation, then they should be fully charged
with not abiding by the law.

I want to be real clear about that.

Mr. McINnTosuH. I understand that from your earlier testimony, as
well, and we're going to try to find out whether that happens. But
the question is, let’s assume that they stay below that. Let’s create
a hypothetical. They get 96 percent of Government funds and they
get 4 percent from the private sector, and they spend all 4 percent
of it engaged in fairly partisan political activities. Don’t you think
that the taxpayer has a right to be somewhat upset about that con-
nection?

Mr. Bass. I don’t. I think that that’s a decision of the Federal
agencies in giving the grants to that entity, if they are providing
a service that is of value to the agency. In this hypothetical agency
that we made up, one might recall that it might have been 12 years
of Republican administrations or 50 years of Democratic. It doesn’t
matter. If the agency is deciding that the service that they are pro-
viding is of value, that’s good for the country.

Mr. McIntTosu. I think it’s probably most related to 40 years of
majority control in Congress.

Ms. ARON. But sir.

Mr. McInTosH. Let me just say, I do think there’s a problem
there for the American taxpayer, and especially today when we're
being asked to be very careful and judicious in how we're spending
their moneys. And there are a lot of perceptions where there are


55

YMCA’s. And it’s not Government that brings that. Oftentimes it’s
another party, and we have to defend ourselves.

In many cases, it is in our interest to file an amicus curiae brief,
which would be not permitted under this. So you would be consid-
erably restricting our right to defend ourselves and our tax-exempt
status in this current climate.

Mr. McINTOSH. Would the gentleman yield?

Mr. EHRLICH. Yes, I will.

Mr. McINnrosu. It’s my understanding that an amicus curiae
brief is when you don’t have any self-interest in the case; you're a
friend of the court just advocating a position.

Mr. Enruicu. And defending—if the chairman would yield—de-
fending your tax exempt status is specifically exempted under the
bill; correct?

Ms. VANPELT. It is my understanding, if it is brought by a Gov-
ernment entity, defending our tax exempt status. However, I can’t
argue these fine legal points with you. I am not a lawyer.

Mr. EHRLICH. OK. Well, that leads me into my second question,
because it’s more philosophical in nature. I really read your testi-
mony, and you have been able to inform me about what the YMCA
does these days. And I see, just from your report, from your 1994
tax return, and I quote, you “continue to mobilize aggressive advo-
cacy efforts to enact youth development block grants.”

Public policy took an active role in task forces sponsored by the
Independent Sector that worked on Federal tax issues, I read from
you testimony. You support Government policy with respect to

local initiatives that reduce hand gun accessibility, Government

policy that supports public education campaigns, that explain the
cost-effectiveness of offering community-based youth development
programs, and on and on and on.

I go back to my local “Y’ in Towson, MD, and I wonder, if I
walked in there, and I have, and I have lots of friends that belong
to that organization, if I walked in there and asked the average
guy at the nautilus machine if they knew that the YMCA actually
was much more than I think the average person thought it was—
and that is not to denigrate what you do.

Everything you've discussed, everything in this report is wonder-
ful. As my colleague from South Carolina said, it certainly impacts
on a lot of the issues we talk about in state legislatures and in this
Congress. But I believe the point the chairman made, and the point
that we continually harp on, and the point the gentleman made as
well, the real philosophical basis behind this debate is, we're trying
to return organizations in our society to a sense of mission, to actu-
ally doing things in the community to help people, rather than be-
coming advocates.

I understand you have a different position. You’ve been very elo-
quent in expressing that position. But I really think your testimony
has touched on the real foundation of this debate. And I see my
light is red, but you can certainly comment on it.

Ms. VANPELT. Well, my comment, Congressman, is that that is
exactly what YMCA’s are doing. The reason that we advocate those
issues is because we do a national survey of YMCA’s and ask them
what they are dealing with and what they would like to see us ad-


79

Mr. Bass. I'd also like to mention one other way we're affected,
though.

Mr. McINTosH. I will come back and give you time to do that.

Mr. Spratt, do you have any questions for the witnesses?

Mr. Spratt. Let me ask the two witnesses, first of all, Ms. Aron,
would you simply clarify your position? As I understand it, this is
public information.

Ms. ARON. I’m sorry.

Mr. Spratt. The grant information here, I don’t know if it’s right
or wrong, but somebody derived this information from some source,
so that it’s not necessary to obtain it from you in the first place.

Ms. Aron. Oh, sure. Right. You can certainly get this informa-
tion from any of these organizations by simply asking them. But
we're not really in a position at this point to go down, group by
group. But this is information that’s a matter of public record. As
a matter of fact, it’s on the forms that they fill out.

Mr. Spratt. So nothing is being hidden then.

Ms. ARON. Nothing is being hidden.

Mr. Spratt. And this document speaks to the fact that nothing
is being hidden. Some things are being mistaken, but nothing i
being hidden, because the information is available from public
sources.

Ms, ARON. And I would also like to add that we are not hidin,
anything. We have provided this subcommittee with our 990’s, witl
an audited statement, which also contains all the financial infor-
mation that this subcommittee needs to know for the purposes, I
think, of this hearing. So we have provided all the information that
is a matter of public record about the Alliance for Justice.

Mr. SpraTT. Now, let me ask each of you, if this bill were to be-
come law, there’s a provision in it which prohibits grantees from
purchasing anything or procuring any services from any entity that
spends more than 15 percent of its expenditures on political advo-
cacy. Would each of you be spending more than 15 percent of your
expenditures each year on what would be considered | political advo-
cacy under this bill?

Ms. ARON. We certainly would, I think, spend well over 15 per-
cent on advocacy, as defined in this legislation.

Mr. Spratt. As defined in this bill.

Mr. Bass.

Mr. Bass. I would speculate that we would, but I should tell you
that we have no accounting mechanism in place right now to mon-
itor advocacy. We monitor lobbying.

Mr. Spratt. So there would E be at least a number of firms, not
all, but a number of firms in your coalition or membership group
who could not participate any longer because you would be a non-
qualified entity. What services do you provide these people? As I
understand it, among them is a road map on how to comply with
the law.

Ms. Aron. Right.

Mr. Spratt. How to stay abreast of the law and how to comply
with the law, and how to engage in advocacy without running afoul
of Internal Revenue restrictions.

Ms. ARON. We actually do produce some booklets that lay out the
rules and regulations that nonprofits need to know, IRS rules and


62

I think that indirectly they get all the information they need about
the full range of activities that the Y carries on.

Mr. MCINTOSH. Let me ask you about some of the Federal grants
that the Y receives. Are they primarily in the area of child care,
providing child care services?

Ms. VANPELT. We receive several types of Federal—we have re-
sponded to several requests for proposals and also receive different
types of Federal moneys through our programs through different
ways. Primarily, the biggest source is through the child care and
development block grant funds that subsidize child care for work-
ing poor parents. We get those through the voucher system, but it’s
the parents that make the decision to use the Y.

ir. McINTOosH. I’m familiar with that legislation, which I think
the voucher works pretty well to give the parents choice. But that’s
primarily where the Federal grant money that you're receiving is
coming into the YMCA.

Ms. VANPELT. Well, that along with juvenile justice and delin-
quency prevention money, HUD substance abuse prevention
grants, help with immunization from the Centers for Disease Con-
trol, those types of things.

Mr. McINTosH. OK.

Ms. VANPELT. Very program-related.

Mr. McINTOSH. ‘And. we discussed earlier that, in all likelihood,
the Y would not meet the 5-percent threshold on funds spent for
advocacy, at the national level.

Ms. VANPELT. At the national level.

Mr. McINTOSH. Within that 5 percent, though, are the moneys
that you're spending for advocacy related to those grant programs?
Do they tend to be in favor of continuing those programs that the
YMCA receives money for?

Ms. VANPELT. Well, I think, when we talk about those types of
things, it’s not a black-and-white issue, “Yes, we need. more
money,” and that’s the end of our position. What we really advocate
for is how the program is working and whether the program meets
the needs of its recipients, and that’s mostly the type of informa-
tion that we give. If you were to read any of our alerts, you would
see that they are directed at our national public policy position pa-
pers, and we have only taken positions that are in accord with
those positions.

Mr. McINTosH. And one of the things I noticed in the material
ou_ had sent to us, it said that they have affirmed the YMCA’s
leadership role in advocating for high-quality, affordable school-age

child care before the administration, Congress, and the ABC coali-
tion.

Ms. VANPELT. Yes, sir.

Mr. McINTOSH. So, historically, has the YMCA been active in
promoting legislation to provide for child care, the voucher system
that you had described earlier?

Ms. VANPELT. Well, if the question is, sir, does the YMCA pro-
mote bigger Government, you need to be aware that YMCA’s
boards of directors are probably 90-percent conservative Repub-
licans. One of their main concerns, when we began talking about
advocacy at the YMCA, was that in no way would we advocate for
larger Government.


35

ability. That’s why there’s a lot of diversification going on in this
country on the defense side right now.

Mr. GUTKNECHT. If we could get a yes or no. I mean, is this a
problem? I mean, do you acknowledge that there is a problem? Be-
fore you can ever solve a problem, you have to acknowledge that
there’s a problem.

Mr. Skaccs. No. I think, if the National Council is properly car-
rying out responsibilities that they have agreed to as a grantee of
an agency of the Federal Government, in furtherance of Federal
law passed by this Congress, the fact that that may be the lion’s
share of what the Council does may be a problem for them if that
grant goes away. As long as they are conducting themselves other-
wise in compliance with law, that’s their problem, not ours.

Mr. EHRLICH. Would the gentleman yield?

Mr. GUTKNECHT. I’m not getting to the answer, but I yield to the
gentleman.

Mr. EHRLICH. Would my colleague yield, just as a brief followup?

Mr. GUTKNECHT. Yes.

Mr. ExRLICH. Thank you.

On the basis of the evidence you’ve heard today, do you have an
opinion as to whether they’re following the letter of the law?

Mr. Skaccs. I came here to testify about the unconstitutional
proposal that you and Mr. McIntosh and Mr. Istook are trying to
ram through this place. I’m not here as an expert on the National
Council.

Mr. EHRLICH. Thank you for your answer.

Mr. McINTosH. Mr. Gutknecht, if you have no further questions,
I think we will stand in recess. I’m told there are two votes and
they will be the last votes of the day, and we can return at the end
of the second vote. If there are any members who have not had
questions, who have them for you, are you able to return after that,
both of you?

Mr. Skaccs. You bet.

Mr. LONGLEY. Yes.

Mr. McINTosH. Thank you. We will stand in recess.

[Recess.]

Mr. McINTOSH. The subcommittee is in order.

I have no further questions for this panel. Ms. Slaughter has no
further questions. We appreciate your coming and participating
today. We will leave the record open for 3 days, if you have any
additional comments you would like to put in there.

I appreciate your giving us your analysis, Mr. Skaggs. We will
look at it and respond to you if there are any points where we in-
terpret the language differently, and take a look at it from there.

Mr. Sxaccs. Mr. Chairman, if I might ask, at this time, to sub-
mit for the record a letter from the counsel for the Northern Colo-
rado Water Conservancy District, with his legal analysis of this leg-
islation as it pertains to recipients of Bureau of Reclamation water.

Mr. McINTOSH. Seeing no objection, we will include that in the
record.

Mr. Skaccs. Thank you.

(The information referred to follows:]


75

members do receive Federal money, but most of the grants that our
members receive are pretty minimal in amount.

None of our members use their Federal funds to pay their dues,
and all of our membership dues, including dues from members who
do not receive Federal grants, make up less than 10 percent of our
overall budget. The rest of our money comes from grants from foun-
dations and individuals that they themselves receive no Federal
funds whatsoever. The rest come from private law firms, and they
perhaps may receive some Federal money in the form of a Federal
contract.

That, sir, is information about the Alliance for Justice which I
think should provide you with an idea as to what we are about and
what our status is with respect to this legislation.

[The provided material follows:]

ALLIANCE FOR JUSTICE,
Washington, DC, Sept. 26, 1995.

Hon. Davip M. McINnTosH,
‘hairman, House Subcommittee on

th,
Natural Resources and Regulatory Affairs,
B377 Rayburn House Office Building,
Washington, DC.

DEAR CHAIRMAN MCINTOSH: I am writing you in response to your memorandum
dated September 20, 1995 in which you requested that the Alliance for Justice pro-
vide the Subcommittee with certain information and documents which you state are
relevant to the Subcommittee’s “oversight investigation.” ‘You also stated that upon
receipt of this information, Subcommittee counsel may contact the Alliance to set
up a meeting to ask follow-up questions.

As an organization dedicated to advancing the cause of justice for all Americans
and to strengthening the public interest community’s ability to influence public pol-
icy, the Alliance recognizes the importance of the issues raised in the Subcommit-
tee’s prior hearings and is concerned about the threat to advocacy and speech posed
by the amendment under consideration. We are now deeply disturbed by the man-
ner in which you seek to obtain information pertaining to these issues.

Based on prior hearings by your subcommittee and based on the September 13,
1995 invitation to us to testify, we were led to believe that it was to be a hearing
‘on our concerns with the Istook legislation, not, as you now describe it, an “over-
sight investigation.” Indeed, we do not know what you are investigating

'o the best of our knowledge, no organization that has previously testified before
the Subcommittee on the Istook amendment has been requested to submit informa-
tion of the type demanded in your memorandum. Nor has any group been asked to
be available to meet with Subcommittee counsel prior to the hearing to review re-
sponses to questions. The questions and implicit threats to which the Alliance has
been subjected are objectionable and beyond any proper scope of the hearing. Rather
than making a bona fide effort to explore the issue of lobbying by federal grantees,
the Subcommittee now seems determined to pursue a new course of undefined “in.
vestigations” seeking to chill legitimate opposition to your position by making bur-
densome and intrusive demands for largely irrelevant information.

The Alliance, like other opponents of the Istook amendment, conducts its advocat
activities in a wwhally appropriate and legal manner, and the various publicly avail-
able materials that I am providing with this letter will demonstrate that.

I am enclosing copies of the Alliance's Annual Information Return filed with the
Internal Revenue Service for fiscal years 1993 and 1994. However, as provided
under section 6104(e) of the Internal Revenue Code, the names and addressed of Al-
liance contributors are not included. I am also providing copies of the audited finan-
cial statements for 1993 and 1994. This documentation should be sufficient.

The Alliance is exempt from federal income taxation under section 501(c)(3) of the
Internal Revenue Code and, as reflected on the Form 990s, has made the lobbyi:
election provided in section 501(h) of the Code. Our lobbying activities, as defrned
in section 4911 of the code, are reflected in Schedule A of Form 990 for each year.

‘You have asked certain questions about “political advocacy.” The definition of “po:
litical advocacy” set forth in the Istook amendment is much broader that the defini-
tion of lobbying in the Internal Revenue Code or any other current provision of law.



36

Hosss, TROUT, & RALEY, P.C.,
ATTORNEYS AT Law,
Denver, CO, Sept. 21, 1995.
Hon. Bos LivINGsTON,
2406 Rayburn House Office Building,
Washington, DC.
Re: H.R. 2127, Restrictions on Political Advocacy by Federal Grant Recipients

Dear REPRESENTATIVE LIVINGSTON: I have had the opportunity to examine the po-
litical advocacy restrictions added to H.R. 2127, particularly from the standpoint of
its potential a plicabilty to my client, the Northern Colorado Water Conservancy
District and Municipal Subdistrict.

T conclude that the bill, though it would exempt state and local governments
would apply to recipients of water from the District and Subdistrict, including agri.
cultural ditch companies, rural domestics, and businesses, for the purposes of re
tricting speech and advocacy by them in’ federal, state, and local governmental fo-

rums.

The District and Subdistrict are political subdivisions of the State of Colorado es-
tablished under Colorado’s Water Conservancy Act, C.R.S. §37-45-101, et seq.

H.R, 2127 includes an exemption for state and local governments by which no pro-
vision of that bill would apply to such entities (see p. 87, lines 1-5, definition of
“grantee” in relation to lines 12-25, p. 78). H.R. 2127 does not define the term “local
pevernment,” thereby leaving that term to be determined on a case by case basis.

sumably, state law would determine what is “local government” in that state.

In Colorado, water conservancy districts constitute “local government” in that
they are governmental entities with local jurisdiction established by the State of

olorado.

‘Accordingly, under H.R. 2127 as presently constituted, the provision of the bill
would not apply to the District or the Subdistrict.

However, the exception for local government does not extend to recipients of a
“grant” from a local government (see lines 3-5, page 87). The delivery of water by

e District and Subdistrict to its contracts could be viewed as a grant which would
gubject the recipient of the water to the provisions of H.R. 2127, because grant is
defined as “the provision of any . . . other thing of value to carry out a public pur-
pose of the United States” (see lines 15-18, p. 86).

District and Subdistrict water is delivered through the Colorado-Big Thompson
Reclamation Project, which was constructed pursuant to federal reclamation law, for
the purpose of carrying out the public purpose of the United States to provide water
for multi-purpose agricultural, municipal, industrial, and recreational uses.

Accordingly, I conclude that H.R. 2127 would apply to the agricultural ditch com-

anies, rural domestic water suppliers, and business which receive water from the

istrict and Subdistrict and, perhaps, also to the cities which receive water from
the District and Subdistrict, in that the general exclusion for local government (lines
1-3, p. 87) may be overcome by the specific provision which subjects a recipient of
a local government grant to the terms of H.R. 2127 (lines 3-5, p. 87).

The provisions of H.R. 2127 are very comprehensive and intrusive. They are de-
signed to include the regulation of non-federal funds expended in the course of exec-
utive, judicial, and legislative Federal, State, and Local governmental forums for the
purpose of presenting a case or point of view (see lines 20-25, p. 78). Violation of
the provisions of the bill would be attended by criminal and civil penalties. The ac-
counting, auditing, and enforcement of the provisions is likely to be costly and in-
timidating.

The precedent of utilizing a federal statute to regulate the right to speech and
advocacy, were this bill to become law, is appalling. Debate on the Federal, State
and Local level—the surest tool to sound government—would be throttled.

I ung defeat of this legislation.

‘incerely,

Grecory J. Hopss, Jr.

Mr. McINTOSH. Thank you both for coming and participating.
Thank you for coming back after the vote.

Let’s move on now to our next panel of witnesses. There are two
representatives of the charitable sector. The first is Isaac Ran-
dolph, who is executive director of St. Florian Center, and the sec-
ond. is C.J. VanPelt, director of public policy for the YMCA of the
United States of America.


51

should be in the clients’ best interest. It could happen, if there are
no guarding factors, whether they are internal or external.

Mr. McIntosu. Let me thank you for addressing the questions
from the committee that we had provided to all of the witnesses in
advance. On that, you had indicated that you received some Fed-
eral grant money, as a recipient through the city of Indianapolis,
from their Department of Youth and Family Services, for a fairly
small amount of your budget each year.

So, therefore, you would be, technically, covered by our legisla-
tion, Yet, in your testimony, you said you supported it, and I take
it it’s because, in the rest of your responses, you indicate you don’t

e in lobbying activities as a charitable group.
r. RANDOLPH. No, sir, I don’t.

Mr. MCINTOSH, Do you feel you are able to accomplish your mis-
sion, in terms of the St. Florian Center, without having to be an
advocate group?

Mr. RANDOLPH. For my mission, there is no need to lobby. I’m
in the business and our organization is in the business of develop-
ing leadership within our youth, particularly in the inner-city. I do
not need to lobby to do that. I need to concentrate on the mission
at hand.

Mr. McINTOosH. Did you know that it’s roughly 93 percent of the
organizations that are organized as 501(c)(3)’s, charitable groups,
don’t receive Federal grant assistance, and therefore would not be
covered by this bill?

Mr. RANDOLPH. I wasn’t made aware of that.

Mr. MCINTOSH. So we’re talking about 7 percent. You are in that
7 percent, and I appreciate your perspective that you don’t need to
be able to spend more than 5 percent of your money lobbying in
order to. accomplish your mission, which sounds like a very honor-
able and worthwhile one.

Let me now ask Ms. VanPelt a couple questions about your testi-
mony. First of all, do you agree that, under the 5 percent formula
in our bill, that the MICA would be able to spend approximately
$1.2 million each year in lobbying or advocacy efforts?

Ms. VANPELT. if current law were repealed, because right now
there is a cap of $1 million.

Mr. McInTosH. Oh, I see. So under the current IRS limits, you
would have an even lower threshold than our legislation.

Ms. VANPELT. Yes. And I’m not sure which supersedes.

Mr. McINToSH. Although I understand their definition of “advo-
cacy” is more limited, so you may be able to spend some additional
moneys on advocating to the executive branch, the White House
staff, which I think the IRS Code does not cover in their limits.

Ms. VANPELT. Your definition is much broader.

Mr. McINTosH. So there would be that $1.2 million. Do you an-
ticipate, at any time, that the YMCA would want to spend more
than $1.2 million of its private resources in advocacy efforts?

Ms. VANPELT. No, sir, I don’t, but I’m not primarily concerned
about the YMCA of the USA meeting the cap. My concern is the
small YMCA’s across the country who will very easily make that

cap.
Mr. McINTosH. Explain to me how that’s likely to happen. If you
could, give me an example of a local YMCA that meets that cap?


24

lowing the election, that, in fact, they were the recipient of signifi-
cant Federal funds.

At that point, I had an opportunity to see a copy of their tax re-
turn and was just outraged at the suggestion that they had filed
a tax return which indicated that their total receipts from the Fed-
eral Government were approximately 95 or 96 percent of total re-
ceipts collected.

They again came to my attention about 2 weeks ago, when I be-
came aware of an affiliate of the National Council, which had re-
leased a newsletter severely attacking me on my stands on fiscal
and budget issues here in Washington, as well as issues pertaining
to Medicare.

What I particularly took offense at was not the fact that I was
being attacked, because I understand that oes with the territory,
but the fact that this was a group that had never approached me
or my office, had never asked for a meeting.

There had been no attempt whatsoever to present their views in
any type of format until I came across this particular attack. Then
I became aware of the fact that not only were they launching a
pretty strong attack against me, but they were also orchestrating
a demonstration, including picketing, outside my office.

Now, again, I have no problem with any group that wants to ex-
ercise its first amendment rights and demonstrate or object or pick-
et outside of my office. Candidly, hardly a week goes by that some-
body isn’t objecting to something.

But when I discover that a group that’s receiving the amount of
money that they receive from the Federal Government is attempt-
ing to do that, and not only putting my office and my staff throu;
the difficulties of dealing with a large group, but also all of the
businesses and all of the people who frequent that area of the city
of Portland, causing interruption, disturbances, involving the police
department, et cetera, then, again, I became somewhat concerned.

I went back to try to recover some of the information that I had
come across earlier. I managed to obtain a copy of their tax return.
I want to just illustrate this for the benefit of the committee.

If you'll note—and I’m going to speak loudly, I hope this gets
picked up and responded to. Now, this is a copy of their tax return
for the year ending June 30, 1994. It is the return of an organiza-
tion exempt from income tax, National Council of Senior Citizens,
1331 F Street, Northwest, here in Washington, DC.

Under the line that indicates statement of revenue and expenses,
there are Government contributions in the form of grants,
$72,910,930 out of a total budget of about $75,956,000. In effect, al-
most $73 million, almost 96 percent of their total revenues.

Now, the story gets a little bit more interesting. I had an oppor-
tunity to do some research on this group, and I came across a copy
of an internal audit conducted by the organization.

With respect, Ms. Slaughter, to your comments, and Mr. Spratt,
I want to point out that this is not my testimony as to the critical
role that Federal grants play in their ability to function as an orga-
nization. This is a copy of page 6 of their own internal audit by
their own auditor. I would be happy to make the complete record
available to the committee, but I’ll read the auditor’s quote:


54

You don’t mean to imply by your testimony that—and I tried to
write some of your testimony down—that this proposal is really the
first time the Federal Government placed restrictions on the use of
Federal funds? I mean, you’re a 501—you’ve made the (h) election;
correct?

Ms. VANPELT. Certainly.

Mr. EHRLICH. And by that, you have limited yourself to $1 mil-
lion; correct?

Ms. VANPELT. Certainly.

Mr. EHRLICH. ‘Twenty-fve percent grassroots; correct?

Ms. VANPELT. Yes.

Mr. EHRLICH. Ma’am, you also made a comment—I’m trying to
interpret it in context with what the bill actually does—I believe
you used the term “dramatically increases the range of activities
that qualify as political advocacy.”

As you know, I’ve gone over this bill a number of times. I found
two specific expansions: one, lobbying of the executive branch. And
I guess my question to you is, do you think that’s kind of a no
count when you lobby the executive branch, or “lobbying” only
means lobbying the legislative branch?

Ms. VANPELT. I’m sorry. ’'m not understanding your question,
Mr. Congressman.

Mr. EHRLICH. Do you count lobbying as lobbying the President of
the United States, a Governor, a county executive? When you go
and advocate on behalf of a position, do you believe that is lobby-
ing, when you do it with respect to an executive branch as com-
pared to the legislative branch?

Ms. VANPELT. We provide information to anybody that asks, and
we also provide information to anyone that has the ability to affect
what we do. Now, whether or not we count it as lobbying, you're
talking in a philosophical sense rather than a reporting sense?

Mr. EHRLICH. Yes, ma’am.

Ms. VANPELT. Well, I guess that we see that it is our duty to talk
to people and inform them about how these things will affect the
YMCA, regardless of where they sit and who they represent.

Mr. EHRLICH. No qualms with that statement. But the fact is,
whether you're lobbying the executive or legislative branch, you are
lobbying. And that certainly is one specific increase or at least the
range of increase that this bill contemplates with respect to politi-
cal advocacy.

The only other expansion I have been able to find in the bill is
third-party lawsuits. As you know, our bill in no way limits your
ability to sue anyone. I just don’t think groups that take taxpayer
money should be able to go out and hire lawyers with tax dollars
to file suits on behalf of third parties, and we certainly limit that.

But those two specific examples are the only examples I’ve been
able to find in our bill that correspond to your term “dramatic in-
crease.” Can you cite me any other examples?

Ms. VANPELT. Yes, sir. If I may also address the lawsuit provi-
sion. The YMCA certainly does not use tax dollars, in any case, to
file lawsuits, third-party or otherwise. We use our own funds. Actu-
ally, we are very sensitive to that, because across the country there
are organizations that regularly challenge the tax-exempt status of


63

Mr. McINTosH. I understand that. And I think your spending is
well within the 5 percent, so I don’t think our bill would change
the level of funds you could commit to it. But was it directed at
that program, historically, to encourage the child care bill?

Ms. VANPELT. To encourage?

Mr. McINTosH. Congress and the White House to pass and enact
into law the child care program.

Ms. VANPELT. Well, we were very active in the ABC bill, yes, sir.
And we were concerned, if Congress was going to pass a bill, that
it have standards in it that were suitable for us and protected the
children.

Mr. McINTosu. I keep repeating this, because I want to make
sure that I’m not saying we're addressing this in the legislation,
that you’re well within the 5-percent threshold. But don’t you see
that there’s the sense out there where the taxpayer could be nerv-
ous if you're receiving these Federal grant moneys and yet set up
part of your private funds to advocate that these programs be set
up? I mean, there seems almost like an inherent conflict of interest
that would occur.

Ms. VANPELT. Well, I know that our volunteers and our boards
of directors are very concerned about the quality of the child care,
because they are very concerned about the children that come to
YMCA’s at all levels. So they are very concerned that Government
also be concerned about children and that Government have the
best input from people who know best about what child care pro-
grams need and what children need.

Mr. McIntosu. And I have to share with you, I have been very
mild in the way I put the conflict of interest; other people have put
it, we'd rather see them spend their private money taking care of
children rather than trying to get the Government to. And that
may go to what Mr. Ehrlich had said was a difference in philoso-
phy.

Nis. VANPELT. Well, Mr. McIntosh, most of the YMCA’s money is
not the Government provision of services; it is our own. As a mat-
ter of fact, we spend a substantial amount of our own money un-
derwriting parents who can’t afford to put their children in child
care at the full price.

Mr. McINTosuH. And, as I say, that’s why I think the YMCA
wouldn’t be affected by our bill, in terms of the amount of advocacy
you do, because you do spend the vast majority of your private
TMmoney in that way. If you put in the list of good guys and bad guys
in the world, I would put you definitely in the list of good guys.

Ms. VANPELT. Thank you, sir.

Mr. McInTosu. I wanted to make that clear in that question but
point out to you how that conflict of interest is something that the
taxpayers are nervous about in today’s world.

Ms. VANPELT. Well, I think the taxpayers that belong to the
YMCA are concerned that where the Government does intrude on
YMCA in partnership that the standards be high.

Mr. McINTosH. My time has expired.

Ms. SLAUGHTER. Mr. Chairman, could I ask Ms. VanPelt one
question.




43

to restrict advocacy by organizations that receive federal funding would substan-
tially impair the ability of these volunteers to make their views known and to sug-
gest ways in which administration of programs could be improved.

‘YMCAs are engaged in collaborative activities with a broad range of federal, state,
and local government agencies. For instance, the Delaware YMCA continually works
with state and federal agencies to improve its programs. It has built a relationship
with Wilmington Housing Authority to develop and deliver programs for pregnant
teens, recreation and socialization for youth, ransitional housing, and the United
Way’s Youth Violence Initiative. This YMCA has also worked with the state Depart-
ment of Public Instruction to provide better prevention programs for substance
abuse and conflict resolution; with the state Family Court to serve as a resource
for first-time offenders charged with substance abuse violations; and with the state
Department of Public Safety and the Division of Highway Safety for a manageable
system for background checks of child care and youth workers. The Delaware YMCA
also works with the US Coast Guard, for boating safety and training for camps
throughout the northern Chesapeake Bay, and the Air Force, working with Dover
Air Force Base during the Gulf War to help with additional logistical needs such
as increased shower space. Developing geod relationships with local and state offi-
cials is crucial to the pursuit of the ‘A mission of serving the entire community.
All such contact would constitute political advocacy under this proposal.

The McIntosh/Istook/Ehrlich proposal would impose major new reporting and
record-keeping burdens on federal grantees. The enormous record-keeping burden
not only restricts the YMCA’s ability to do good works, but is also a blatant intru-
sion into the affairs of a private organization.

The philosophy behind this proposal is antithetical to encouraging the community
cooperation and coordination so vital to the success of community-based initiatives
and programs. Regardless of the size of « government grant an organization receives
in relation to its budget, grantees that engage in political advocacy would bear the

urden of proving “by clear and convincing evidence” that they have not violated
the proposal’s restrictions on political advocacy. For grantees, this requirement
translates into having to establish and maintain accounting systems to track, in
considerable detail, their political advocacy expenditures. Because of the difference
between the proposal’s definition of “political advocacy” and the tax law definition
of “influencing legislation,” YMCAs and other 501(cX3) grantees would be required
to account for advocacy expenditures under both definitions. In addition, because
the proposal requires tracking expenditures by the federal fiscal year, the vast ma-
jority of YMCAs that maintain financial records on a calendar year basis or which
use a different fiscal year would incur additional costs in tracking reporting expend-
itures.

The Montgomery Alabama YMCA highlights the difficulty of aquantifying the
amount of time an organization spends in “political advoc: In Montgomery, the
YMCA’s board of directors includes city council members and county commissioners.
Further, the YMCA executive director chaired the city’s Job Corps Center, and holds
key volunteer positions in a variety of community initiatives. Around the country,
YMCA board members and staff are frequently asked to accept volunteer positions
for governmental task forces. The difficulty of attempting to accurately report the
myriad of exchanges between local elected officials regarding the many programs
and services the YMCA provides is daunting.

Besides the difficulty in identifying expenditures for “political advocacy,” record-
keeping and reporting create a substantial new financial burden on YMCAs. For ex-
ample, the Sarasota, Florida, YMCA is the central provider for subsidized child care,
and operates a transitional living program for homeless teens, a runaway shelter
for troubled youths a host of prevention/early intervention programs for teens and
families, and an alternative school for expelled middle school and high school stu-
dents. All of these programs utilize some federal and state funding. Currently the
Sarasota YMCA pays $18,000 of their private funds every year for federal and state
compliance audits. Based on their experience with current government compliance
audits, they estimate that the additional cost of reporting under this proposal would
be between $5,000 and $10,000.

Further, under this proposal, all grantees even, those that do not engage in “po-
litical advocacy”—must determine whether individuals or organizations from which
they purchase goods or services. or to which they make subgrants or provide in-kind
assistance, incurred political advocacy expenditures in the previous federal fiscal
year in excess of 15 percent of their total expenditures. To be sure that. they could
meet the clear and compelling evidence standard, grantees would be obliged in a
written statement on this point from each individual and organization to which the
grantee made a significant transfer of funds or services. To put this into perspective,
our national office estimates that a typical large YMCA purchases goods and serv-



41

[The prepared statement of Ms. VanPelt follows:]
PREPARED STATEMENT OF C.J. VAN Ra ,Piector OF PUBLIC POLICY FOR THE

C.

Mr. Chairman, Members of the Committee:

My name is GJ. VanPelt, and I'am the Director of Public Policy for the YMCA
of the USA. The YMCA in America, which will soon celebrate ite 150th anniversary,
hagas ite mission, “To put Christian principles into practice through programa thal
build healthy spirit, mind, and body for all.“ Currently there are YMUAs operating
in more than 2,000 communities in this country with 6.2 million members nation,
wide, one-third of whom ere children and youth. Each YMCA is autonomous and
is supported and maintained by its community.

‘The YMCA of the USA is the national organization, governed by a national volun-
ter board, which sets policy and priorities for the national movement. 'The YMCA
of the USA exists solely to serve its member associations. It offers assistance with
all aspects of running @ YMCA. including programming, management, training, in-
surance, and many other services. It also leads the movement by directing those na-
tional and international activities that are too large for ay, one association or that
cleary’need ¢ uniform approach across the movetent. Public policy advocacy it
small but vitelly important part of the mission of the YMCA of the USA.

Tam appearing before vou today primarily to diacoss the YMCA's concerns about
the impact that the MelntoslVistook/Ehrich proposal would have on YMCAspar-
ticipation in the development of public policy. YMCAs are nonpartisan organizations
whose primary focus is providing @ broad range of social services from health and
Fitness to anti-gang programs. No matter what the program or service, from child
care to senior arthritis classes, the YMCA's main focus fe service to the community
in parma of tg mission. Boeabse YMCAa primarily’are service organizations, adv
cacy, particularly as that term is defined in the Melntosh/Istook/Ehrlich. proposal,
is an inextricable part of our day-to-day activities.

Other major human service organizations share the YMCA’s concerns. Attached
ta my testimony i's Teller signed by the chief executive officers of 22 of this coun
trys leading charities. We, and they, believe that the proposal is unnecessary, exces.
sively burdensome, intrusive, undemocratic, and will reduce services to those in
need.

OVERVIEW OF YMCA ADVOCACY

YMCAs have a long-standing commitment to participation in public policy. The
national board of the YMCA of the USA has developed five goals for YMCAs’ in.
volvement in the public policy process. These five goals, which guide the actions of
YMCAs at the national, state, and local levels, are intended torensure that YMCA
advocacy is consistent with the YMCA mission. ‘The goale are:

* to advance YMCA mission objectives:

to provide nonpartisan education and identify consensus on issues related to the

mission;

* to encourage participation in the political process;

* to strengthen the mission focus of YMCA leadership; and

* to presorve the ability of the YMCA to accomplish its mission.

Nationally the YMCA of the USA monitors and advocates on behalf of our mem-
ber associations on five priority issues: child care; juvenile justice, crime and gangs;
substance abuse; youth health and fitness; and youth, service. Our national pronty
issues are derived from a periodic national survey of YMCAs to determine their in.

latest survey was completed in the pring of 1994, The national board
the survey results and formulates position papers that guide the actions of
Public Policy offi, The portion papers on aur current priorities are appended
to this testimony. The YMCA of the UBA also monitors and advocates on issues that
affect the non-profit sector in such areas as governance, operations, and charitable
contributions.

'YMCAs are also actively involved in building constructive relationships with state

cies, state elected and appointed officials, as well aa local elected and non-elect

ed community leaders. The heart of these relationships ie continuing discussions

about the services we provide, and the children, youth, and families we serve. The

Purpose of these dieeutsions {sto help YMCAs, workdog alone and in cogporation

ith other community organizations, better serve their’ communities and to help
government and community leaders understand and support the YMCA.

"The full statement of the YMCA of the USAVs goals for the public policy process
and our position papers on our current priorities are appended to this testimony.
These documents make it clear that mission-related and mission-impelled advocacy



66

I went to the Federal Assistance Award Data System to take a
look at how much money we're talking about. And I found that, in
fiscal 1994, there was actually $226.4 billion in grants, far in ex-
cess of what you describe as $39 billion or $40 billion. I also broke
out in a chart how those grants go, both by type and by entity.

And in the next chart where there is a pie graph. I noted that
89 percent of the grants go to State and local governments or tribal
governments. Another portion, about 6 percent, go to higher edu-
cation facilities, some of which would be onstrued as State univer-
sities, and, as you said earlier today, Mr. Chairman, they would be
excluded as State entities.

But including all of that, we're talking roughly about $24.5 bil-
lion, from what I can understand, is covered. If we take another
look on the next chart and compare that $24.5 billion to contracts,
we see a huge difference in scope, all the way from $196.4 billion
for contracts to $24.5 billion that would be covered under the
Istook amendment.

Really, in my mind, the issue comes down to, if there is any wel-
fare for lobbyists, where is it? We have not heard about any evi-
dence of Federal grantees using any Federal funds for lobbying. On
the other hand, it’s fascinating, if you look at this next chart, that
undocumented payments to contractors from the Pentagon each
year run, according to the General Accounting Office, between $500
million and $750 million per year.

Now, the total charitable lobbying per year, that is for the entire
charitable sector, spends $72 million per year. That translates, by
the way, into roughly $12,520 per charity. Frankly, I would like to
sort of put this ait in perspective. There has been a lot of innuendo
that nonprofits, particularly charities, spend a lot of money on lob-
bying. Two Pentagon coffee pots, $15,200, is actually greater than
the average expenditure of charities that lobby, $12,520 per year.

In my written testimony—I have traveled around the country
talking to, oh, about 1,000 to 1,500 nonprofits now, in the last 2
weeks to describe the bill—in the testimony are a range of com-
ments that they have placed and told me of problems the amend-
ment raises. One of the key issues that has been repeatedly men-
tioned by other witnesses is this notion of partnership between the
nonprofit community and Government, at the local, State, and Fed-
eral levels.

In Spokane, I heard about how the business community works
with the nonprofit community and the local government to deal
with housing redevelopment initiatives. Under that effort, their ob-
jective is to encourage the city and the state to do more on housing
redevelopment. That would b2 advocacy under this and would be
a problem.

In conclusion, in a world of Davids and Goliaths, if you will, this
bill seriously sides with the Goliaths against the Davids of the non-
profit community and the millions of Americans represented by the
nonprofit community.

Thank you.

(The prepared statement of Mr. Bass follows:]


11

STATEMENT OF HON. RANDY TATE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WASHINGTON

Mr. TaTE. Thank you, Mr. Chairman, and I appreciate your ef-
forts on this. By the way, if I’m not mistaken, this is the fourth
hearing that we've had on this particular issue to date.

A couple of things. When I was home—I told this story, actually,
when I was on the House floor when we had the debate on this
particular issue—I was talking to a gentleman named Chris.

He had heard me on the radio, talking about this issue, and he
said, “Randy, let me see if I got this right. I work hard, and I own
a small business, and I send my money to the Federal Government.
Then the Federal Government, or some bureaucrat, grants the
money out to some organization that turns around and lobbies for
things I don’t even believe in, with my money. Now I understand
what you mean by welfare for lobbyists.”

I heard the phrase, “imperial.” What could be more imperial of
a Congress than to take the hard-working people’s money in my
district and spend it for causes they don’t even believe in. Even if
they believed in it, it would be wrong, because you shouldn’t use
taxpayers’ money to subsidize causes.

My daughter, Madeleine, in her lifetime, will have to spend
$187,150 just in taxes, just to the Federal Government, just to pay
the interest on the national debt, if we don’t balance the budget.
We're serious about balancing the budget, and I think it’s out-
Tageous that we would be spending money to subsidize these sort
of things.

I’ve heard a lot of talk about free speech. To me there’s nothing
more dangerous than taking the money of the hard-working tax-
payers and individuals in the 9th District of Washington and send-
ing it back to Washington, DC, to give it out to some organization
that turns around and lobbies for different causes. To me there’s
nothing more dangerous than that.

And a gag rule—hey, do it on your own dime if you want to
lobby. Do it on your own time, not on my dime, not on a taxpayer’s
dime, not on the people of my district’s dime. Intimidate—nothing
could be more intimidating to me than some tax collector taking
my money, giving it to the Federal Government so they can give
it to some other organization. Give me a break. Intimidate—we’re
trying to empower people to spend their own money.

‘We don’t need these organizations that go out and lobby, engage
in partisan political activities for the Republicans or for the Demo-
crats, for Newt Gingrich or for Dick Gephardt. To me it doesn’t
matter. It’s wrong. You shouldn’t use the taxpayers’ money in this
capacity.

The people back in my district can understand it, that we should
be spending money this way, and it’s time that we changed this
House. This is serious lobbying reform, and I commend the chair-
man for having the guts to take on the special interests.

Mr. McIntTosH. Thank you very much, Mr. Tate. Our next mem-
ber with an opening statement is Mr. Spratt.


53

Mr. Spratt. Do you have a copy of it handy? Could you read off
the 22 charities?

Ms. VANPELT. I’m sorry, m: copy appears to be missing also. But
I know that they are groups like the Boys and Girls Clubs, the Boy
Scouts, the Girl Scouts. Gordon Raley, who is the executive director
of the National Collaboration for Youth is here, and he would be
happy to supply the names.

Mr. Spratr. Mr. Chairman, if we could have the consent of the
committee to hold open the record for the receipt of that letter, I
would appreciate it.

Mr. McINTosH. Certainly. I think I saw it at some point, so it
should be in our possession. We will make sure it is included in the
record.

Mr. Spratt. Fine. Thank you very much.

What kinds of political advocacy—would you go over that again—
does the Y engage in? We don’t tend to think of the Y as being a
political advocate for many things, until you start to think about
the breadth of definition of “political advocacy” under this bill.

Ms. VAN PELT. Mr. Spratt, what we do at the YMCA is, on the
national level, we come and talk to you about child care, substance
abuse, youth health and fitness, youth service, juvenile justice
crime and gangs. At the local level, our YMCA’s are very concerned
about quality child care standards. They are very concerned about
criminal background checks. They are very concerned about the in-
cidence of murder and violence with youth. Those are all the things
that YMCA’s come and talk about.

Mr. Spratt. These, interestingly enough, are all things that con-
cern us. So, if we want to go to organizations like yours, who are
in communities across this country and in contact with the prob-
lems that are really troubling this country, we’re going to be re-
stricted in our access to you or your access to us, if we want to find
out if crime prevention programs can be fashioned that will work,
or child care programs can be established that will afford welfare
mothers security, if they can find jobs, the countless things you do.

I think the point was well made in your testimony, if we don’t
have agencies like yours and a free interchange of information,
then we are simply going to restrict. ourselves from the kind of in-
formation we need to make sensible legislation.

I think you made an eloquent defense of your position and a ver
measured but still eloquent criticism of the bill before us. I than
you for coming.

Ms. VANPELT. Thank you very much.

Mr. Spratt. Mr. Randolph, I thank you for your testimony, also.
I lived in Indianapolis for a while, on Arlington Road. From m
short experience there, I’m sure the good that you do is very mucl
needed in that city.

Mr. RANDOLPH. Thank you, Mr. Spratt.

Mr. McINTOosH. Thank you, Mr. Spratt.

Mr. Ehrlich.

Mr. ERLICH. Ms. VanPelt, you have been very eloquent. I want
to get into a couple things that you've said, because I really believe
you ‘ve put your thumb on the philosophical basis of this whole de-

ate today. But before I do, let me ask you a couple things in fol-
lowup to a few points the chairman made.


59

Ms. SLAUGHTER. That's all right. I see my time has expired.

Mr. McINTosH. Let me now turn to Mr. Gutknecht.

Let me ask, real quickly, Mr. Randolph, you had said you had
a flight this evening, what time is your flight?

Mr. RANDOLPH. 7:10.

Mr. McINTosH. If you could stay with us a few more minutes, I
think we'll make it through one round of questions.

Mr. Gutknecht.

Mr. GUTKNECHT. Mr. Chairman, I would yield 2 minutes to m:;
colleague from Maryland to followup on this incredible report that’s
going to be required.

Mr. ERRLICH. Thank you.

Ma’am, I just want to ask you a question. I’m reading from Sec-
tion 602 of the bill.

Ms. VANPELT. Yes.

Mr. EHRLICH. These are the reporting requirements verbatim:

A statement that the grantee did not engage in political advocacy; two, a state-
ment that the grantee did engage in political advocacy, setting forth each grant, the
identification number, the amount of the grant, a brief description of the grant; the
identity of each Government entity awarding or administering the grant; the name
and grantee identification of each entity to whom the grant was made; a brief de-
scription of the grantee’s advocacy; and a good faith estimate of the grantee’s pro-
hibited political advocacy threshold.

Now, is there something that I don’t know, or are you telling me
that is an onerous burden?

Ms. VANPELT. Well, if I may compare it. When you fill out your
income tax report every year, especially if you file the short form,
it’s usually only one page; if you file a longer one, it’s a smaller
one. However, the backup documents that go along with it are con-
siderably more than what you turn in to the IRS.

I would submit that the backup documents, especially the one
that says that we have to outline the type of activity that we have,
and if I can go back to your original question about how the activ-
ity is expanded, Mr. Ehrlich, local YMCA’s would now have to
maintain records regarding their local contacts with school boards,
recreation departments, city councils, county councils, and mayors,
which they don’t now have to do. So all of that would have to be
counted and tallied before it could be put on that piece of paper.

Mr. EHRLICH. Is it your testimony that you believe this is an on-
erous burden because this information is not readily available?

Ms. VANPELT. It is an onerous burden because of the expense
that it would require and also because of the different ways that
it has to be reported and accounted. And yes, sir, the amount of
time that we would have to spend tracking down all of the things
that we do that now count as advocacy under that would be oner-
ous.

Mr. ExRLICH. Thank you, ma’am.

Mr. McINTosH. The time of the gentleman has expired. It’s now
3 minutes for Mr. Gutknecht.

Mr. GUTKNECHT. Well, Mr. Chairman, I don’t have a whole lot
of questions. I want to thank both the witnesses for coming for-
ward,

It’s interesting, though, I mean, it’s like the two sides look at this
thing, and one says—maybe I should ask this, Ms. VanPelt, is it


13

in a skewed order, that we’re finally taking up an analysis of this
bill by some of the organizations whom it will affect.

Mr. McINTosH. Thank you, Mr. Spratt. On our side, Mr. McHugh
is here. Do you have an opening statement?

Mr. McHucu. In the interest of time, I will not make an opening
statement, Mr. Chairman, other than to say I appreciate your con-
tinued leadership on this issue, and I’m looking forward to today’s
testimony.

Mr. McIntosu. Let me, if I may, ask you to lend me 15 seconds
to interject.

Mr. McHucu. I yield to the chairman, 30 seconds.

Mr. McINTOoSH. Just so everyone knows the history of the earlier
hearings, we did hear testimony from several law professors, two
of whom, from the University of Virginia, having read the bill, as-
sured us that it did meet first amendment muster.

I was very struck by Mr. Spratt’s very eloquent analysis of the
historical antecedents of the right to petition the Government, and
I agree, that is a dear and important liberty. But I don’t think the
couriers who went to the King of England, demanding their right
to petition the Government, also demanded that the King tell his
excl equer to pay for their ability to do that, and that’s the key
issue that we're at today.

For another opening statement, let me turn now to Mr. Condit.

Mr. Conpit. Mr. Chairman, because of the time, and we want to
get through here, I won’t make an opening statement. I just simply
would like to identify myself with Mr. Peterson’s remarks and
maybe take just a minute and ask you a direct question.

'e see this chart up here. I thought I heard you earlier say that
these folks on this chart—Lockheed, Xerox, the people down the
list—were covered under the legislation. Can you give me a direct
answer? Are they or are they not covered under the legislation?

Mr. McINTOSH. Would the gentleman yield?

Mr. Conpir. Yes.

Mr. MCINTOSH. They are covered if they receive a Federal grant,
which usually comes in the form of a grant to conduct research,
even though they are a for-profit institution. They are not covered
if they receive a ‘Federal contract.

And, so that people know the distinction, I believe most of those
entities there are on the list because they receive research grants
and would, therefore, be covered. We can look in the data base that
we have of Federal grants and confirm that and put it into the
record.

Mr. Conpit. Well, should we make some distinction, and should
we correct that if that is the case, in your opinion?

Mr. McInTosu. I do think we've gone a long way toward covering
for-profit corporations by including them in this Bilt as a grant re-
cipient.

Mrs. Schroeder had an amendment to the Defense appropriations
bill that would have also applied it to defense contractors. There
was an effort to reach an agreement to accept that amendment by
voice vote, which I would have approved of. That did not end up
happening. There was a recorded vote, and it was defeated.

The point that we have is really one of taking on the world.
We've taken on about 40 billion dollars’ worth of Federal grants


CONTENTS

Hearing held on September 28, 1995
Statement of:
Bass, Gary D., executive director, OMB Watch; and Nan Aron, president,

Alliance for Justice .. 65
Collins, Hon. Cardiss, a Representative in Congress from the State of
inois 6
Gutknecht, Hon. Gil, a Representative in Congress from the State of
Minnesota 23
Longley, Hon. Jim, a Representative in Congress from the State of
faine .... 23
McIntosh, Hon. David, a Representative in Congress from the State of
Indiana . 2
Meek Hon. Carrie, a Representative in Congress from the State of Flor-
ida 17
Peterson, Hon. Collin, ‘ongress from the State of
Minnesota .... 5
Randolph, Isaac E., Jr., executive director, St. Florian Center, Tadianap. -
‘lis, IN; and C.J. Van Pelt, director of public policy, YMCA of the
USA .... 37
Scarborough, Hon. Joe, a Representative in Congress from the State
of Florida 8
Slaughter, Hon. Louise
the State of New York 15
Skaggs, Hon. David E., a Representative in Congress from the State
lorado 25
Spratt, Hon. John M., Jr., a Representative in Congress from the State
of South Carolina 12
Tate, Hon. Randy, a Representative in Congress from the Stat
ington 11
Waxman, Hon. Henry A., a Representative in Congress from the State
of California 9
Letters, statements, etc., submitted for the record by:
Aron, Nan, letter dated Sept. 26, 1995, concerning the Istook-McIntosh-
Ehrlich amendment .. 15
Bass, Gary D., Ph.D., executive
ment of .. 67
Meek, Hon. Carrie P., a Representative in Congress from the State of
lori
Letter dated July 28 1995, from Rev. Msgr. Dennis M. Schnurr
concerning the Istook-McIntosh-Ehrlich amendment .. 21
Letter dated Sept. 11, 1995, from Elizabeth Dole concerning the
Tstook-McIntosh-Ehrlich amendment . 21
Prepared statement of .. 20
Skaggs, Hon. David E., letter dated Sept. 21, 1995, from Hobbs, Trout,
ley, P.C., attorneys at law, concerning H.R. 2127, Restrictions
on Political Advocacy by Federal Grant Recipients 36

Van Pelt, C.J. director of public policy for the YMCA, prepared statement
41

amy


34

Ms. SLAUGHTER. Well, I just want to make this one statement,
because what concerns me is, when Mr. Skaggs, who is a perfectly
reputable Member of the Congress of the United States, said that
your staff had prepared this thing, you said that was a lie, didn’t
you?

Mr. McINTOSH. Ms. Slaughter, if you would yield.

Ms. SLAUGHTER. Yes.

Mr. McINTosH. I did not say that. And I apologize if it’s con-
strued to have implied that. My implication was that there’s a lot
of misinformation about the substance of our legislation, not about
the source of this document, which I was unaware of until you
asked me the question.

Ms. SLAUGHTER. And I appreciate that, but do you think this is
misinformation? Are you maybe producing some of the misinforma-
tion that’s going around?

Mr. McInTosH. I’m pretty confident that it’s accurate informa-
tion. I think we should put a disclosure on it, and we'll gladly col-
lect all the copies and reissue it with that type of disclosure.

Ms. SLAUGHTER. I’m not going to ask any questions, but I cer-
tainly want to close with what Mr. Skaggs said. Frankly, I think
that your use of taxpayers’ equipment and time and money and a
staff of people paid by the U.S. taxpayers to do something like this
is pretty reprehensible. And, frankly, maybe we ought to write leg-
islation to keep you from doing that.

Mr. McINTosH. Let me turn now to Mr. Gutknecht.

Mr. GUTKNECHT. Mr. Chairman, I want to come back to Mr.
Skaggs, and I want to see if I understand exactly what your point
of view is on this. Going back to this tax return that Mr. Longley
has presented here, is it your position that that is not a problem,
that the arithmetic is wrong, or is it your position that what has
happened here is clearly a violation of the law right now, and those
people should be prosecuted?

Mr. Skaccs. I do not hold myself out as an expert on the inter-
nal workings of the National Council of Senior Citizens. There is
no substantive difference between their dependence on Federal
funds for their grant activities, as Mr. Spratt was pointing out, and
the dependence of a Lockheed-Martin on Federal contracts for the
lion’s share of their Government-supported activities.

My problem with this legislation is that it reaches way beyond
any effort to prohibit the use of Federal moneys for purposes that
the Congress, in its wisdom, may find inappropriate. It goes to the
use of private funds. It goes to the private associations of free citi-
zens of this country, where they can do their business, to whom
they have to report, to whom they are accountable for activities
protected by the first amendment to the Constitution. That’s what’s
wrong with this legislation.

Mr. GUTKNECHT. I understand that you don’t like this legislation,
but are you willing to acknowledge that this is a problem that
needs to be solved?

Mr. Skaccs. Well, the problem that my colleague from Maine
pointed out was a problem that any auditors could write, for in-
stance, again, about the Lockheed-Martin Corporation. If you are
dependent unduly on one source of funds, that indicates a vulner-


76

Since we do not maintain records showing the amount of time we spend on activities
outside of the IRC or other currently applicable definition, we are unable and it is
inappropriate for us to provide you with information about time spent on categories
like “political advocacy” or “political activity” that have no legal definition or com-
mon understanding up to this point in time. In accordance with section 501(cX3),
the Alliance does not participate or intervene in any political campaign on behalf
of or in opposition to any candidate for public office.

The Alliance does not have any “atpliated” organizations as that term is com-
monly understood. We do have 30 members, the great majority of whom are exempt
from federal taxation under section 501(c\3). As set forth in the Annual Information
Return, less than 10% of the Alliance’s revenue comes from membership dues. Also,
as set forth in the Returns, the Alliance has not received business or other income
which is unrelated to its exempt purposes, nor has it been compensated for endors-

ing any or services.

“fine Alliance has never sought nor received federal grant assistance of any kind.
Moreover, most of our members do not seek or receive federal grant assistance. The
Alliance’s primary source of income is gifts and grants from individuals, law firms,
private foundations and public charities. We have no way of knowing whether any
of our individual donors including foundations and law firms receive federal grant
assistance.

Finally, the breathtaking scope of your questions regarding our activities and
those of our members, donors and colleagues, as well as the inappropriate fallow-
up activities of your staff, implicate associational activities protected by the First
Amendment. Indeed, this “inquiry” to which you are subjecting witnesses and the
threat it poses to First Amendment rights, is itself a reflection of the dangerous
chilling effect posed by the “political advocacy” legislation.

Y

sincerely,

NAN ARON,
President.

Mr. McINToSH. Thank you for joining us today.

Let me ask, Ms. Aron, since you have raised this now, a couple
questions. Is it true that the American Arts Alliance receives a
Federal grant?

Ms. ARON. Well, let me say this, sir. We took the position in our
response to your questionnaire that this information was really in-
formation protected by the first amendment. However, since we are
here, and since American Arts Alliance is here also, they did give
me their permission to disclose to you the fact that, in fact, con-
trary to the information contained in the document prepared by
your staff, they, in fact, receive no Federal grants. And I believe,
sir, they have never received Federal grants.

Mr. McInrosu. OK. I will check that out. Our data base indi-
cates that they do receive the grant. We'll check into the data base.

I think to say that something is a first amendment right when
it’s a public document.

Ms. ARON. But sir.

Mr. McINTOsH. Let’s ask you about the Center for Law in the
Public Interest, do they receive a Federal grant?

Ms. ARON. Sir, I will not—I will not go into the amounts of Fed-
eral moneys that my members receive.

Mr. McINTOSH. Because you're trying to hide the way the Fed-
eral Government is spending its money and where it’s being spent.

Ms. ARON. I do not consider that an appropriate question.

Mr. McINTosH. I think that’s a very indicative response, that
you're trying to hide.

Ms. ARON. No, I have nothing to hide.

Mr. McINTosu. It goes to your financial interest in this.

Ms. ARON. Less than half of our members.


22

any floor amendments that would further condition assistance under the bill on an
individual's immigration status.

This bill contains four important pro-life provisions: (1) The Istook amendment,
to allow states to follow their own state laws and constitutions when these require
a stricter abortion funding policy than that of the Clinton Administration (See At-
tachment A); (2) The DeLay amendment to prevent government discrimination
against doctors and hospitals that refuse to perform abortions (see Attachment B);
(3) the Dickey Amendment to deny federal funds for destructive experiments on live
human embryos (see Attachment C); and (4) the Livingston amendment redirecting
Title X funds, previously earmarked to projects required to counsel and refer for
abortions, to comprehensive health programs which better serve the needs of the
poor (see Attachment D). Such funding limitations will be called “extremist” by
abortion advocates, because that is how they describe any proposal that does not
endorse their pro-abortion stance. But these are modest and overdue measures to
get government out of the business of promoting and subsidizing abortion—in fact,
two of them prevent federal coercion toward involvement in abortion. Please help
defend these provisions from any effort to strike or weaken them.

The section in the bill relating to political advocacy by recipients of federal grants
is objectionable for several reasons and should be stricken from the bill. First, be-
cause the section is overly broad and penalizes privately funded speech, our legal
counsel has advised that there is a substantial likelihood that the section, if en-
acted, will be found unconstitutional under the First Amendment of the Constitu-
tion. Second, the “private attorney general” enforcement provision will expose count-
less numbers of federal grantees to potentially harassing litigation by individuals
who disagree with their positions on public issues. Our Conference has firsthand ex-
perience with this sort of harassment when it was forced to endure ten years of very
expensive litigation after pro-abortion groups and individuals brought suit, ulti-
mately dismissed for a lack of standing, to have the Conference's tax exemption re-
voked because of its advocacy in defense of unborn children. New legislation is not
necessary to prevent federal grant funds from being used for political advocacy, at
Jeast insofar as applied to organizations exempt under section 501(cX3) of the Inter-
nal Revenue Code, because federal law and regulations already prohibit lobbying
and election campaign activities with federal grant funds (see Attachment E).

We are aware of an amendment that Representative Frank Riggs may offer on
the House floor that would place new restrictions on ‘undocumented ‘immigrants’ ac-
cess to services funded under this Act. We strongly oppose this amendment. Un-
documented immigrants are already ineligible for virtually all programs funded in
this bill. The few that such immigrants are eligible for are important services such
as elementary-secondary education and child nutrition services—services that
should not be provided or denied on the basis of an individual’s immigration status.
Adoption of the Riggs amendment would require all federal entities, as well as pri-
vate, charitable entities, to conduct immigration checks before providing necessary
services. Most such entities are ill-equipped to make complex determinations about
immigrant status. We urge defeat of the Riggs amendment or any other such
amendment that might be offered during floor consideration.

Finally, this legislation disproportionately cuts programs that help poor families,
vulnerable children and the elderly such as Head Start, youth employment, help for
dislocated workers, home energy assistance, and nutrition and other help for the el-
derly. Other cuts affect the NLRB, OSHA, and efforts to prevent striker replacement
which could undermine worker rights and dignity. Major cuts in education—Title
I granta and capital expenses for disadvantaged students, Title II development for
teachers, Title safe and drug free schools, and Title VII bi-lingual education—
would do serious harm, especially to disadvantaged students. We urge the House
to “put children and families first” by supporting amendments to restore funding for
these important human practices.

Sincerely,

Rev. Mscr. DENNIS M. SCHNURR,
General Secretary.
Mr. McINTosH. Let me now turn to Mr. Gutknecht, who is, I
think, the only other member who has come today who hasn’t had
a chance to have an opening statement. Would yor like to make
one now, before we vote, or afterwards, or pass so we can get to
the witnesses?


COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
WILLIAM F. CLINGER, JR., Pennsylvania, Chairman

BENJAMIN A. GILMAN, New York CARDISS COLLINS, Mlinoia
DAN BURTON, Indiana HENRY A. WAXMAN, California
J. DENNIS HASTERT, Ilinois ‘TOM LANTOS, California
CONSTANCE A. MORELLA, Maryland ROBERT E. WISE, JR., West Virginia
CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York
STEVEN SCHIFF, New Mexico EDOLPHUS TOWNS, New York
ILEANA ROS-LEHTINEN, Florida JOHN M. SPRATT, JR., South Carolina
., New Hampshire LOUISE McINTOSH SLAUGHTER, New
New York York
ifornia PAUL E. KANJORSKI, Penneylvania
JOHN L. MICA, Florida GARY A. CONDIT, California
PETER BLUTE, Massachusetts COLLIN C. PETERSON, Minnesota
THOMAS M. DAVIS, Virginii KAREN L. THURMAN, Florida
DAVID M. MCINTOSH, Indiana CAROLYN B. MALONEY, New York
JON D. FOX, Pennsylvania THOMAS M. BARRETT, Wisconsin
RANDY TATE, Washington GENE TAYLOR, Mississippi
DICK CHRYSLER, Michigan BARBARA-ROSE COLLINS, Michigan
GIL GUTKNECHT, Minnesota ELEANOR HOLMES NORTON, District of
MARK E. SOUDER, Indiana Columbia
WILLIAM J. MARTINI, New Jersey JAMES P. MORAN, Virginia
JOE SCARBOROUGH, Florida GENE GREEN, Texas
JOHN B. SHADEGG, Arizona CARRIE P. MEEK, Florida
MICHAEL PATRICK FLANAGAN, Illinois CHAKA FATTAH, Penneylvania
CHARLES F. BASS, New Hampshire BILL BREWSTER, Oklahoma
STEVEN C. LATOURETTE, Ohio TIM HOLDEN, Penneylvania

MARSHALL “MARK” SANFORD, South —
Carolina BERNARD SANDERS, Vermont
ROBERT L. EHRLICH, JR., Maryland (Independent)
James L. CLARKE, Staff Director
KEVIN SABO, General Counsel
dupimt McCoy, Chief Clerk
BuD MYERS, Minority Staff Director

SUBCOMMITTEE ON NATIONAL Economic GROWTH, NATURAL RESOURCES, AND
REGULATORY AFFAIRS

DAVID M. MCINTOSH, Indiana, Chairman

JON D. FOX, Pennsylvania COLLIN C. PETERSON, Minnesota
J, DENNIS HASTERT, Illinois. HENRY A. WAXMAN, California
JOHN M. MCHUGH, New York JOHN M. SPRATT, JR., South Carolina
RANDY TATE, Washington LOUISE McINTOSH SLAUGHTER, New
GIL GUTKNECHT, Minnesota York
JOE SCARBOROUGH, Florida PAUL E. KANJORSKI, Pennsylvania
JOHN B. SHADEGG, Arizona GARY A. CONDIT, California
ROBERT L. EHRLICH, JR. Maryland CARRIE P. MEEK, Florida

EX OFFICIO

WILLIAM F. CLINGER, JR., Pennsylvania. © CARDISS COLLINS, Mlinois
MILDRED WEBBER, Stoff Director
JON PRAED, Chief Counsel
KAREN BARNES, Professional Staff Member
Davip WHITE, Clerk
BRUCE GWINN, Minority Professional Stoff

an


46

of addressing this concern. However, the YMCA does not regard such general tax
relief as an adequate substitute for a targeted child care irategy that assists low-
income working parents and serves the developmental, social, and educational needs
of their children.

YMCAs believe that federal child care policy should respect the following general
principl

Provide Federal Leadership.—The federal government should provide strong lead-
ership in addressing the rapidly growing need for affordable, quality child care.

Provide Safe, Quality Child Care.—Safe, quality child care should be available to
children of working parents regardless of their ability to bay. Effective regulation
is a necessary component of safe, quality care, and federal policy should actively en-
courage state regulation of child care.

Target Low-Income Families.—Limited federal dollars for child care should be tar-
geted primarily to low-income families. The federal government should not directly
subsidize targeted child care for upper-income families.

Allow State Flexibility—Federal child care policy should allow the states to con-
centrate the limited federal resources most effectively to assist families working to-
ward self-sufficiency.

Foster Parental Choice——Federal policy should maximize the child care choices
available to families by supporting the diversity of the existing child care delivery
system. States should be given the flexibilty to use federal child care funds to assist
families using for-profit, nonprofit, church- and school-based providers, and famil;
day care homes. None of these providers should be given an exclusive rele in provid.
ing services to any age group of children.

ssist Child Care Providers.—Federal policy should support efforts to strengthen
the child care delivery system, including training for child care providers, resource
and referral programs, and grants for building and expanding child care programs.

Support State Initiatives—A federal child care program should encourage, not
discourage, states in establishing child care initiatives of their own.

Encourage Program Diversity—Federal child care assistance should be delivered
through really, ‘ethnically, and economically diverse programs that serve handi-
cal chil

\dren.
CA National Board Position —In accordance with the YMCA’s general prin-
ciples for federal child care legislation, the YMCA National Board approves the fol-

ion—1. The YMCA National Board supports prompt enactment of fed-
eral child care legislation consistent with the general principles set forth.
Act for Better Child Care.—2. As set forth above, the Act for Better Child Care
rovides an effective framework for advancing the YMCA’s general principles for
federal child care legislation. The YMCA National Board continues to endorse this
legislation.

‘ax Credits for Low-Income Families—3. The National Board expressly con-
cludes, however, that the enactment of the Act for Better Child Care does not and
should not preclude enactment of tax credit proposals aimed at giving income
supplementation to low-income families.

dopted by the YMCA National Board, March 17, 1989.

YMCA PUBLIC POLICY POSITION ON JUVENILE JUSTICE, CRIME, AND GANGS

Promoting healthy mind, body, and spirit is central to the YMCA mission. YMCA
programs nurture self-esteem and encourage positive behavior in youth. Such traits
are essential to helping youth develop into healthy, productive adults.

The YMCA believes that a greater public and private investment should be made
in the lives and well-being of our nation’s youth. Government and the private sector
should develoy jatives that strengthen the family, build self-esteem, and help
youth make the right choices in lif e YMCA believes government policy shoul
reflect the following fundamental principles:

Acknowle: that everyone is at risk—The problem of youth crime and violence
is not limited to urban areas, nor is it exclusive to minority communities, Programs
should recognize that all youth are susceptible. Government policy should support
programs that target youth from all types of communities—cities and small towns,
suburbs and rural areas—and from all economic backgrounds.

‘Target special-needs communities —Although no community is immune to the
problem of crime, some are particularly at risk for crime and other social ills, such
as high unemployment, high numbers of single parent households, areas of high
drug activity, and high rates of poverty. Government policy should focus particular
attention on these communities.



30

Mr. McINTosu. And it strikes me that, in a case where an entity
receives 96 percent of its funds from the Federal Government, it is
very much an entity that is like an agency of the Government, and
yet they are empowered to go out and raise funds to set up a politi-
cal action committee.

Mr. LONGLEY. I think this is what’s a very important issue. I cer-
tainly believe that, in many cases, a nonprofit organization can
more effectively administer Federal programs than the Federal
Government itself. They are freer; they are more autonomous. In
many cases, they've got stronger and closer connections to the com-
munity.

That’s one reason why I think that perhaps the weakness, in
terms of supervision, is one that there is a need for legislation to
address so that we don’t have any risk, as these groups operate
independently, that they get too actively engaged in partisan poli-
tics.

Again, coming back to the point on the first amendment, I think
someone needs to make a choice, do they want to be a political par-
tisan, or do they want to administer a Federal grant. And I don’t
think you can do both, and certainly not do both using the re-
sources of the Federal Government.

Mr. McInTosH. Thank you both. I have no further questions at
this time.

Let me turn now to Mr. Skaggs, if you have any questions for
this panel. I’m sorry. Mr. Spratt. Pardon me.

Mr. Spratt. It’s all right. Mr. Chairman, with respect to Mr.
Skaggs, you asked if he had read the bill, and I would like to offer
a copy of his excellent summary of this bill for the record. It’s
called, “The Istook Amendment, A Fact Sheet,” dated August 31,
1995.

Mr. McINTOsH. Seeing no objection, we will include that in the
record. I will request that the staff review that and see if we have
any comments on it.

ir. SPRATT. Thank you very much.

{The material referred to can be found in the subcommittee files.]

Mr. Spratt. Mr. Longley, the program under which this organi-
zation, the National Council of Senior Citizens, operates as a grant-
ee is known as the Senior Community Service Program.

Mr. LONGLEY. I believe that’s one of the programs they admin-
ister, maybe the bulk of the money.

Mr. Spratt. That’s my understanding. You may be right; there
may be others. I think it’s the principal program. They are a grant-
ee of that, along with about nine other grantees of the Department
of Labor. It’s Title V of the Older Americans Act, adopted 30 years
ago. It has enjoyed bipartisan support.

Right now, I think they have, to their credit, the placement of
about 67,000 older Americans, over 55, many of whom have re-
cently received a pink slip, they have been displaced, and these
folks go out and help them find a job, usually a community service
job. Seventy percent are women; 40 percent are minorities; all of
them are low-income.

The Labor Department has found their services useful.

Mr. LONGLEY. You mean the National Council or the nine
groups?


39
icy counsel, Janne Gallagher, is also with me today in the audi-

ence.

The YMCA of the USA will soon celebrate its 150th anniversary.
Its mission is to put Christian principles into practice through pro-
grams that build healthy spirit, mind, and body for all. Currently,
there are YMCA’s operating in more than 2,000 communities in
this country, with 6.2 million members, one-third of whom are chil-

ren.

The YMCA certainly shares St. Florian’s commitment to serving
kids in community, and I am appearing before you today to be sure
that the scarce resources that we all share are not spent on addi-
tional useless recordkeeping.

Specifically, I am here to discuss the YMCA of the USA’s concern
about the impact that the Mclntosh-Istook-Ehrlich amendment
would have the YMCA’s participation in public policy. It is because
YMCA’s primarily are service organizations that advocacy, particu-
larly as that term is defined in this proposal, is an inextricable part
of our day-to-day activities. I might add, Mr. Chairman, that other
major human services organizations share our concerns. Attached
to my testimony, which you have before you, is a letter signed by
the chief executive officers of 22 of the country’s leading charities.
We and they believe that this proposal is unnecessary, excessively
burdensome, intrusive, undemocratic, and, most important to us,
will reduce services to those in need.

YMCA’s have a long-standing commitment to participation in
public policy, but let me state, unequivocally, that the YMCA does
not spend taxpayer money to lobby. Rather, YMCA’s across the
country are actively involved in building constructive relationships
with State agencies, State elected and appointed officials, local and
nonelected community leaders.

The heart of these relationships is the discussions that we have
with these leaders about the services we provide and the children
and the families that we serve. The purpose of these discussions is
to help YMCA’s better serve their communities, including their
Government. And it is also to have Government officials and com-
munity leaders better understand and support us and our pro-
grams.

Our specific concerns with the amendment are, No. 1, that we
feel that this proposal is an unprecedented effort to restrict a Fed-
eral frantee's use of private funds for advocacy activities. This pro-
posal would seriously undermine our organization’s ability to fulfill
our mission.

Let me reiterate that grantees are barred, under current rules,
from using grant funds to pay the direct or indirect costs of lobby-
ing. Current law, as well, upholds the right of a grantee to engage
in advocacy with its private funds. This proposal, we feel, strikes
directly at the heart of that right.

YMCA’s can’t do their job if this measure passes. For example,
in Baltimore, the YMCA became very concerned about the growing
gang problem, and they convened an interest group that consists
of Government representatives, community leaders, and elected of-
ficials to discuss the need to develop community-wide gang preven-
tion programs.


25

In closing, we, the auditors, feel that we would be remiss in our responsibilities
if we did not make some points we believe are of considerable importance to the
future viability and effectiveness of the National Council of Senior Citizens, We offer
these thoughts as long-time members and supporters of the Council, whose only
wish is for NCSC to flourish and grow.

And it goes on to say, with reference to the heavy reliance on
Federal grants,

Absent such grants, the council would be unable to continue its current level of
operations without seeking new revenue sources.

Tl end on this note. I also became aware through the FEC that
the National Council contributed approximately $417,000 to Demo-
cratic candidates for Congress in the last two election cycles, not
a single red cent to a Republican candidate.

But whether it’s Republican or Democrat, it’s irrelevant. A group
that’s this heavily dependent on Federal funds has no business
whatsoever getting engaged in partisan political activity. I would
make that statement with reference to any Democratic group or
any Republican group. It’s unconscionable that the taxpayers are
subsidizing this organization and its partisan activities to the ex-
tent that they are.

Tll be happy to answer further questions as we move on with the
hearing. Thank you, Mr. Chairman.

Mr. McINTosH. Thank you, Mr. Longley. I'm sure you would
agree with me that it wouldn’t matter whether it was liberal or
conservative, Republican or Democrat, that these partisan activi-
ties were directed at.

Mr. LONGLEY. Absolutely.

Mr. McINTosH. Let me turn now to our second witness on this
panel and ask Mr. Skaggs, who has made his views known here at.
this committee and on the floor, to please share with us further on
your view on this bill.

STATEMENT OF HON. DAVID E. SKAGGS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF COLORADO

Mr. Skaccs. Thank you very much, Mr. Chairman. I wanted to
give you the op) ortunity of cutting me short, in that I was encour-
aged by the exchange that you had with Mrs. Meek just before we
left for one of the earlier votes, in which you, I believe, stated that
you wanted to work with her on perhaps arriving at some mutually
acceptable solution here.

That suggests that it might be appropriate to drop the effort to
include the present language in the Treasury Postal bill, and I'll
make a deal with you. I won’t take up any more of the committee’s
time if my understanding of your exchange with Mrs. Meek was
correct.

Mr. MCINTOSH. No, I’m afraid it didn’t quite go that far. I think
we can find a lot of common ground, but we're still going to have
it in the Treasury Postal bill.

Mr. Sxkaccs. I was afraid of that. Mr. Chairman, I believe that
when the State, as represented by the Congress of the United
States, starts to police speech, constitutionally protected political
expression, then we flirt dangerously with a police state.

And so I am here today to protest the conduct and the methods
of this hearing. In opposing the legislation that you and Mr. Istook


9

STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. WaxMAN. Thank you, Mr. Chairman. I believe a very dan-

erous trend is occurring in the Congress, and I call it the rise of
the imperial Congress, and this hearing is a Part of it. Again and
again, we are witnessing the Republican leadership try to quash
debate and ram legislation through without hearings. The ruling
principle seems to be to silence those who disagree with the new
ideological agenda.

The legislation on Medicare and Medicaid is one example. Un-

recedented changes to these programs are being proposed by the
publicans, but when the Democrats ask for hearings and an op-
portunity to air our concerns, Speaker Gingrich turns them down,
saying, “I don’t have any interest in playing debate games.”
jespite the overwhelming importance of Medicaid, the public is
given no opportunits to voice its views on the radical Republican
proposals. Indeed, the Democrats are even denied a room in which
to hold our hearing on the legislation.

Todays hearing is another example of this same principle at
work, The gag rule we are considering is the first, time Congress
has ever tried to restrict political expression paid for with private
donations.

The nonprofit organizations subject to the gag rule aren’t being
harassed because they lobby with Federal funds. We already have
laws making this illegal. Rather, these organizations are being tar-
geted because they don’t pass the new majority’s political correct-
ness test.

Some nonprofit organizations have been courageous enough to
speak out inst the gag rule. The subcommittee’s response has
been to escalate the intimidation. The witnesses testifying today
against the gag rule have suddenly found themselves targeted by
subcommittee investigators seeking confidential information about
their membership lists and political activities. The message is
blunt and appalling. If you dare to speak out against us, we will
make you the subject of a congressional inquiry.

There are many other examples of this imperial Congress at
work. The chairman of this subcommittee has accused the Adminis-
trator of the Environmental Protection “Agency of criminal conduct
for speaking out against Republican efforts to gut our environ-
mental laws.

The House majority leader has sent a letter to large U.S. cor-
porations to protest their contributions to “liberal advocacy
groups,” and the House majority whip and the chairman of the Na-
tional Republican Congressional Committee have threatened
groups that gave to Democratic candidates in 1994.

A single goal unites these seemingly disparate actions. The new
Majority wants to create an imperial Congress that intimidates
those who disagree into silence and that railroads major policy
changes into law without hearings. This is, Mr. Chairman, an
abuse of power, and it is dangerous. .

As a member of the minority party, we have some rights that
cannot be taken away. One of these rights is to call for an addi-
tional day of hearings. Currently, there’s not even a pretence of
even-handedness in these hearings on political advocacy.


61

Mr. McInrosH. Yes, we can do that, definitely. It was in one of
the hearings in July, and we will be able to get that.

Ms. SLAUGHTER. Was it a case of someone who had actually done
it or hearsay?

Mr. McINTosH. It was actually a case where a Federal grant was
used to set up a conference to teach the participants how to lobby,
I think it was State government, it may have been Federal Govern-
ment, on different provisions relating to restrictions on drinking.

Ms. SLAUGHTER. I would like to see that. Thank you.

Mr. McINTosH. We'll get you that information.

Ms. SLAUGHTER. Mothers Against Drunk Driving?

Mr. McIntosu. I don’t believe they were the grant recipient.

Ms. SLAUGHTER. They don’t get Federal money, do they? I don’t
know that they even get any.

Mr. McINTosH. Ms. Slaughter, that was not the recipient, but it
was another group that was involved in this.

Let me ask Ms. VanPelt, real quickly, Mr. Gutknecht had
asked—and I understand you don’t want to comment on another
organization—but is it at all troubling to you that there are organi-
zations that receive 95 percent of their money from the Federal
Government, and yet they have a political action committee set up
that they say they use their private sector funds to fund?

Ms. VANPELT. The issue that I am concerned about with this leg-
islation is that primarily we are dealing with how a private organi-
zation uses its private funds. That is my concern.

Mr. McINTOsH. Even when those private funds are such a small
percentage of what they are all about.

Ms. VANPELT. I think that an organization has a right to use its
private funds as its board of directors sees fit.

Mr. MCINTOSH. Well, let me ask you another couple questions in
that line. Do you disclose to your private sector donors, especially
at the local level, that you want to spend more than 5 percent of
the funds on lobbying or advocacy activities?

Ms. VANPELT. At the local level, the YMCA’s make their own de-
cisions, but most YMCA’s have local political action committees or
political advocacy committees that specifically address the things
that I talked about in the beginning of my oral testimony.

Mr. MCINTOSH. So, as a general practice, they are encouraged to
disclose to donors that that’s one of the programs that their money
will be funding?

Ms. VANPELT. I have not run a YMCA, and I have no YMCA di-
rector here to ask, but I would assume that the board of directors
knows what’s going on at the YMCA and approves of it; otherwise,
they wouldn’t be a member of the board.

ir, MCINTOSH. Do you think it’s appropriate for donors who may
not be on the board to receive that information?

Ms. VANPELT. Well, I think that YMCA’s—have you ever be-
longed to a YMCA, Mr. McIntosh?

ir. McINTOSH. As a member, yes.

Ms. VANPELT. OK. And so you do know the amount of mailings
that you get from your YMCA. As a matter of fact, probably lon;
after you left membership you continued to receive mailings.
think that, if anything, we probably give our donors more informa-
tion than they need. And it’s probably not stated so directly, but


77

Mr. McINTOosH. The taxpayers have a right to know where money
is spent.
foe Aron. Less than half of our members, sir, receive Federal

nds.

Mr. MCINTOSH. Now, you indicated to me that.

Ms. ARON. Could you please let me finish?

Mr. MCINTOSH. No, you let me finish. You indicated to me in ear-
lier testimony that you were aware that none of your members
used Federal grant money to pay the dues that they pay to you.

Ms. ARON. That’s correct.

Mr. McINTosu. Now, in order to know that, you have to deter-
mine whether they receive a Federal grant.

Ms. Aron. That's correct.

Mr. McINnTosH. OK. Does the Center for Law in the Public Inter-
est receive a Federal grant?

Ms. ARON. I will not answer that question.

Mr. McINTosH. Are you taking the fifth amendment?

Ms. ARON. I am saying that you have no right to ask me that
information.

Mr. McINTosH. Are you taking the fifth amendment?

Ms. ARON. That right is protected by the right of association, as
spelled out in NAACP. And I am not taking the fifth amendment.

‘ou have no right to get that information from me.

Mr. McINTOSH. You're simply obfuscating.

Ms. ARON. No, I am not. I am telling you, sir, that only a small
number of our members receive Federal money, and not one penny
of that Federal money goes to our dues for the Alliance for Justice.
I would also like to add, sir, that most of the members of the Alli-
ance for Justice raise most of their money from private sources;
that is, contributions from individuals and foundations. So to the
extent they have Federal funds, they are very minimal.

Mr. McInrosu. Let me say, my concern is for the taxpayer mon-
eys at this point. Does the Consumers Union receive a Federal
grant?

Ms. ARON. I will not comment on that.

Mr. McIntosH. Does the Food Research and Action Center re-
ceive a Federal grant?

Ms. Aron. I also will not comment on that, sir, or that of the
funding of any of our members,

Mr. McINTOSH. Does the National Education Association receive
a Federal grant?

Mr. Spratt. Mr. Chairman, I think the witness has made her po-
sition clear. She feels that this information is confidential. And if
it can be obtained, you can submit a request to these individual
grantees and find out if they wish to disclose it.

Mr. Bass. Mr. Chairman, also, if I could describe a little of the
grant procedure.

Mr. McINTosH. Let me make it clear here, it’s my position that
Ms. Aron is trying to hide our ability to trace back the way the tax-
payer moneys are used to subsidize lobbying efforts. She has come
in and told us, quite candidly, her main activity is lobbying, and
particularly on judicial selection issues.

Ms. ARON. No, sir, I don’t believe I said that.


AT

Emphasize prevention efforts.—Prevention should be a key element in the na-
tion’s strategy to reduce youth involvement in crime and gang-related activity. Pre-
vention programs are the most cost-effective method of dealing with juvenile delin-
quency. Therefore. government policy should support initiatives that promote the
positive development of our nation’s youth.

Intervene early.—For those outh beyond the reach of prevention programs, both
the public and private sector should encourage intervention programs. The primary
goal of such programs should be to reach youth before they become chronic juvenile
offenders. Research shows that there are simply not enough appropriate mecha-
nisms in place within the juvenile justice system to deal adequately, and soon
enough, with youth who have already committed crimes. Government policy should
support the development of early intervention programs.

pport the family.—Families have the greatest influence in the lives of their
children, Parents and other caregivers must take the primary responsibility for fos-
tering the positive development of their children. Therefore, government policy
should support families by promoting initiatives that will ensure the economic via-
bility of America’s families, encourage parents to be positive role models for youth,
and involve parents and youth in planning and implementing youth development

ro}

P mcourage community collaboration.—The public, private, and nonprofit sectors
must work together to provide comprehensive programs for youth. Partnerships
should involve nonprofit youth- and family-serving organizations, churches, schools,
the medical community, businesses, and government. Neighborhoods and commu-
nities should be involved in developing programs that meet community needs and
program delivery ms that reduce unnecessary duplication of services. Govern-
ment policy should support community partnerships and encourage programs in-
volving public-private ventures at the state and local level.

Support creative programs.—Community-based organizations evolve to meet com-
munity needs. Such organizations develop new and creative ways of meeting the
needs of youth and their families. Government policy should recognize and encour-
age such creativity, and the unique ability of community-based groups to evaluate
programs and to distinguish those that are effective from those that are not.

Support initiatives that reduce handgun accessibility —No organization that is se-
rious about addressing the epidemic of youth crime and gang activity can ignore the
influence of handguns. Handguns today are not only more readily available gen-
erally but are far too accessible to our nation’s youth. Government policy should
support local initiatives that reduce handgun accessibility.

Increase public information about the cost of juvenile delinquency.—When youth
are involved in crime and/or gang related activity, we all pay the cost—not only in
terms of the high cost of incarcerating youth but also in lost wages, lost potential,
and wasted young lives. Therefore, government policy should support public edu-
cation campaigns that explain the cost effectiveness of offering community-based
youth development programs.

Adopted by the YMCA of the USA National Board, November 18, 1994.

YMCA PUBLIC POLICY POSITION ON SUBSTANCE ABUSE

General Principles—Building self-esteem, developing healthy lifestyles, instilling
positive values, and strengthening families are central to the YMCA mission ani
are important elements of a national substance abuse policy. YMCA programs offer
Pegple ‘opportunities to grow mentally, physically, and spiritually.

ie YMCA is one of the largest youth-serving organizations in the country. Over
6 million children and teenagers Participated in YMCA programs last year. Young
people come to the YMCA for a variety of reasons, but once there, they find a whole-
some environment where they can learn about themselves, develop positive life
skills and values, and have fun.

YMCAs believe that today’s substance abuse problem requires a coordinated strat-
egy involving government and the private sector. YMCAs’ major efforts will continue
to focus on youth development as a primary prevention strategy.

However, YMCAs are also committed to working in partnership at the local, state,
and federal levels, not only to help young people stay away from drugs, but also to
help kids stop who may be experimenting with drugs, and to ensure adequate treat-
ment for people in need of recovery. YMCAs believe that drug policy should reflect
the following principles:

Recognize Alcohol and Tobacco as Key Elements of the Substance Abuse Problem:
Government policy should recognize that tobacco, alcohol, and other legal drugs re
resent a significant threat to the health of all children and youth. Government pol-



49

health problems due to lack of regular Physical exercise and poor diet. For example,
close to 50% of school children between five and eight years of age suffer from one
or more of the following risk factors associated with future heart disease: elevated
blood cholesterol level, obesity, hypertension, and sedentary lifestyle. Second, among
6- to 11-year-olds, there has been a 54% increase in the prevalence of obesity, an:
a 98% increase in the prevalence of superobesity since 1969. Finally, compared to
other countries, American children are much less fit: 44% of American children
failed a flexibility test, compared with 6.1% of Italian and 8.4% of Swiss, and 9.1%
of Austrian children. In addition, too many infants and young children suffer from
preventable illness because they lack access to health services.

YMCAs believe a greater public and private investment needs to be made in the
health of America’s children. Government and the private sector should develop ini-
tiatives to strengthen the health and fitness of children and youth. These initiatives
should emphasize Prevention and reflect a holistic approach to healthy lifestyles.
Therefore, (CAs believe the government policy should reflect the following prin-

8:

mphasize prevention efforts: Prevention should be a key element in the nation’s
strategy to reduce health care costs, avert disease and disability, and help children
develop into productive adults. Government policy should support prevention pro-
grams and efforts that foster the healthy development and improve the physical fit-
ness of children, youth, and families.

‘Support the family: Families have the greatest influence on the behavior of young
children. Parents anW/or primary care givers must take the rineipal responsibility
for the health and positive development of their children. Therefore, government
policy should support families, encourage parents andor primary eare givers to be
positive role models for their children, and involve them in development programs.

Increase public information about the importance of healthy lifestyles: The costs
of inadequate health care, poor diet, and lack of exercise demand that efforts be ex-
panded to promote healthy lifestyles. Most important, public education programs
should clearly yporray the consequences of unhealthy habits and lack of concern for
one’s health. Government policy should support health information campaigns that
communicate the need for youth and families to accept responsibility for their health
by adopting health-enhancing behaviors.

Encourage community collaboration: The nation’s commitment to its children’s
health should be supported by the public and private sectors. Partnerships should
involve nonprofit youth- and family-serving organizations, churches, schools, the

ical community, businesses, and government. Neighborhoods and communities
should be involved in the development of programs reflective of community needs
and delivery systems that reduce the unnecessary duplication of services. Govern-
ment policy should support community collaborations and support programs involv-
ing public/private partnerships at the local and state level.
vide for a coordinated delivery system: Government agencies, schools, and non-
profit community-based organizations all operate successful program models. Pri-
mary health care services, health education, and fitness activities all share a com-
mon goal—to promote healthy lifestyles. These Brograms often target specific needs
or populations. Coordination among providers should be a high priority in the de-
sign and delivery of health services and fitness programs. Therefore, government
policy should promote coordination among youth and family services and support in-
centives to increase the effectiveness of these programs within the community.

Foster innovation: Developing a nation of healthy children will require innovation
and creative programming. Government policy should encourage states and commu-
nities to establish initiatives that improve youth health and promote healthy life-
styles. Government policy should encourage the discovery and replication of success-
ful models that emphasize participation of all youth and provide for a sustained
commitment to supporting these model programs.

Approved by the YMCA National Board, May 1992.

PUBLIC POLICY POSITION ON YOUTH SERVICE

General Principles.—The YMCA is our nation’s largest charitable voluntary serv-
ice organization. It has 140 years of experience with volunteer activities that reflect
the interest and commitment of those who serve the needs and expectations of those
who are served.

The YMCA mission is to build healthy body, mind, and spirit in the individuals
and families it serves. The YMCA puts Christian principles into practice through
Rrograms that promote good health, strong families, youth leadership, community

jevelopment, and international understanding, Y's believe that people’ are respon-
sible for their own lives and actions and that they should join tbgether in positive



12

STATEMENT OF HON JOHN M. SPRATT, JR., A REPRESENTA-
TIVE IN CONGRESS FROM THE STATE OF SOUTH CAROLINA

Mr. Spratt. Mr. Chairman, the first amendment is not just the
first numerically, it’s the first in order of importance. Indeed, if we
rank the kinds of free speech, I think the right to petition our Gov-
ernment for redress of grievances would probably rank at the very
top. It’s the seed of this institution in which we serve.

he commoners and burghers and knights of the realm used to
gather in the square at Westminster and petition the curia regis
for redress of grievances in England, and from that sprang the Par-
liament, which is our mother institution. It is that ancient and fun-
damental right that we tread and trample upon today.

Now, I’ve served here 13 years, and I don’t sit here as any purist
on the Constitution. I have participated and voted for things before
where we were skirting the Constitution.

There have been occasions when we've treaded upon what were
likely constitutional violations with insouciance, saying, in effect,
“Let the courts work it out. We’re going to make this statement,”
but this is one of the most emphatic and wholesale assaults upon
the first amendment that I’ve witnessed in the 13 years that I have
been in the Congress.

Indeed, as I read this statute last night—this bill, thank God,
this bill, not this statue—last night, it occurred to me as I con-
cluded that the only worthy purpose it would serve is to submit it
for a law school examination to first-year students in constitutional
rights to see how many constitutional flaws, how many Sherber v.
Verner and whatever other precedents you could find are violated
by the legislation before us.

Tll-conceived, sloppily prepared, overbroad, and it addresses a
problem which is a nonproblem. You're striking a straw man today.
You say, Mr. Chairman, that your constituents in Muncie are out-

raged.

Well, tell them that nobody is spending, legally, their grant
money on lobbying, that, in fact, OMB Circular A-122, issued in
1984, 31 U.S.C. Section 1352, passed in 1989, explicitly prohibits
it, and it is a serious violation of the law, subject to substantial
penalties if anyone is caught violating that. That’s the answer to
your constituents,

Indeed, I don’t know about your constituents, but mine don’t
come to me with the perception that the YMCA and the Red Cross
and the Natural Resources Defense Council or the Environmental
Defense Fund or the Alliance for Justice are the ones who have
undue influence in this institution. You’re picking on the wrong
lobby.

M McINTosH. They may be when they find out.

Mr. Spratt. Well, you’re talking about the perception of your
constituents. In 13 years, I’ve never had a one of them finger these,
but they do suspect that maybe the NRA or the bankers or the big
defense firms, that they do have undue influence, but not these or-

anizations, these grassroot lobbying organizations that are a fun-

lamental part of America.

Tm glad we’re having this hearing. I think you've got the cart
way before the horse, passing this legislation without ever giving
it any scrutiny at all, and I’m glad today that, even if it does come