" ! HOUSE OF REPRESENTATIVES 105TH CONGRESS

1st Session

REPORT

105–1

House Calendar No. 1

IN THE MATTER OF

REPRESENTATIVE NEWT GINGRICH

R E P O R T

OF THE

SELECT COMMITTEE ON ETHICS

JANUARY 17, 1997.—Referred to the House Calendar and ordered to be

printed
IN THE MATTER OF REPRESENTATIVE NEWT GINGRICH
U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1

37–210

" ! HOUSE OF REPRESENTATIVES 105TH CONGRESS

1st Session

REPORT

1997

105–1

House Calendar No. 1

IN THE MATTER OF

REPRESENTATIVE NEWT GINGRICH

R E P O R T

OF THE

SELECT COMMITTEE ON ETHICS

JANUARY 17, 1997.—Referred to the House Calendar and ordered to be

printed

(III)

LETTER OF TRANSMITTAL

CONGRESS OF THE UNITED STATES,

Washington, DC, January 17, 1997.

Hon. ROBIN CARLE,

Clerk, House of Representatives,

Washington, DC.

DEAR MADAM CLERK: Pursuant to clause 4(e)(3) of Rule 10, and

by direction of the Select Committee on Ethics, I herewith submit

the attached report, ‘‘In the Matter of Representative Newt Gingrich.’’

Sincerely,

NANCY L. JOHNSON,

Chairman.

(V)

C O N T E N T S

Page

I. INTRODUCTION ................................................................................................ 1

A. Procedural Background ....................................................................... 1

B. Investigative Process ........................................................................... 3

C. Summary of the Subcommittee’s Factual Findings .......................... 4

1. AOW/ACTV .................................................................................... 4

2. Renewing American Civilization .................................................. 5

3. Failure to Seek Legal Advice ....................................................... 7

4. Mr. Gingrich’s Statements to the Committee ............................. 8

D. Statement of Alleged Violation ........................................................... 9

II. SUMMARY OF FACTS PERTAINING TO AMERICAN CITIZENS TELEVISION 9

A. GOPAC .................................................................................................. 9

B. American Opportunities Workshop/American Citizens Television ... 11

1. Background .................................................................................... 11

2. Planning and Purpose for AOW/ACTV ........................................ 13

3. Letters Describing Partisan, Political Nature of AOW/ACTV ... 16

4. AOW/ACTV in Mr. Gingrich’s Congressional District ............... 18

5. GOPAC’s Connection to ALOF and ACTV .................................. 19

6. GOPAC Funding of ALOF and ACTV ......................................... 20

III. SUMMARY OF FACTS PERTAINING TO ‘‘RENEWING AMERICAN CIVILIZATION’’ ............................................................................................................ 22

A. Genesis of the Renewing American Civilization Movement and

Course ................................................................................................. 22

B. Role of the Course in the Movement .................................................. 24

C. GOPAC and Renewing American Civilization .................................. 30

1. GOPAC’s Adoption of the Renewing American Civilization

Theme .......................................................................................... 30

2. GOPAC’S Inability To Fund Its Political Projects in 1992 and

1993 .............................................................................................. 31

3. GOPAC’s Involvement in the Development, Funding, and

Management of the Renewing American Civilization Course . 32

a. GOPAC Personnel .................................................................. 32

b. Involvement of GOPAC Charter Members in Course Design ........................................................................................ 35

c. Letters sent by GOPAC ......................................................... 35

D. ‘‘Replacing the Welfare State with an Opportunity Society’’ as

a Political Tool .................................................................................... 38

E. Renewing American Civilization House Working Group ................. 44

F. Marketing of the Course ...................................................................... 46

G. Kennesaw State College’s Role in the Course ................................... 51

H. Reinhardt College’s Role in the Course ............................................. 53

I. End of Renewing American Civilization Course ................................ 55

IV. ETHICS COMMITTEE APPROVAL OF COURSE .................................................. 55

V. LEGAL ADVICE SOUGHT AND RECEIVED ........................................................ 58

VI. SUMMARY OF THE REPORT OF THE SUBCOMMITTEE’S EXPERT ..................... 63

A. Introduction .......................................................................................... 63

B. Qualifications of the Subcommittee’s Expert .................................... 63

C. Summary of the Expert’s Conclusions ............................................... 64

1. The American Citizens Television Program ................................ 65

a. Private Benefit Prohibition ................................................... 65

b. Campaign Intervention Prohibition ...................................... 66

2. The Renewing American Civilization Course ............................. 67

a. Private Benefit Prohibition ................................................... 67

b. Campaign Intervention Prohibition ...................................... 69

D. Advice Ms. Roady Would Have Given ................................................ 70

VII. SUMMARY OF CONCLUSIONS OF MR. GINGRICH’S TAX COUNSEL .................. 70
Page

VI

A. Introduction .......................................................................................... 70

B. Qualifications of Mr. Gingrich’s Tax Counsel .................................... 70

C. Summary of Conclusions of Mr. Gingrich’s Tax Counsel ................. 71

1. Private Benefit Prohibition .......................................................... 72

2. Campaign Intervention Prohibition ............................................. 75

D. Advice Mr. Holden Would Have Given .............................................. 76

VIII. SUMMARY OF FACTS PERTAINING TO STATEMENTS MADE TO THE COMMITTEE ............................................................................................................... 77

A. Background .......................................................................................... 77

B. Statements Made by Mr. Gingrich to the Committee, Directly

or Through Counsel ........................................................................... 78

1. Mr. Gingrich’s December 8, 1994 Letter to the Committee ....... 78

2. March 27, 1995 Letter of Mr. Gingrich’s Attorney to the Committee ........................................................................................... 79

C. Subcommittee’s Inquiry Into Statements Made to the Committee . 80

D. Creation of the December 8, 1994 and March 27, 1995 Letters ...... 81

1. Creation of the December 8, 1994 Letter .................................... 82

2. Bases for Statements in the December 8, 1994 Letter .............. 85

3. Creation of the March 27, 1995 Letter ........................................ 87

4. Bases for Statements in the March 27, 1995 Letter .................. 89

IX. ANALYSIS AND CONCLUSION ........................................................................... 89

A. Tax Issues ............................................................................................. 89

B. Statements Made to the Committee .................................................. 90

C. Statement of Alleged Violation ........................................................... 91

1. Deliberations on the Tax Counts ................................................. 92

2. Deliberations Concerning the Letters ......................................... 92

3. Discussions with Mr. Gingrich’s Counsel and Recommended

Sanctions ..................................................................................... 93

D. Post-December 21, 1996 Activity ........................................................ 96

X. SUMMARY OF FACTS PERTAINING TO USE OF UNOFFICIAL RESOURCES 96

XI. AVAILABILITY OF DOCUMENTS TO INTERNAL REVENUE SERVICE ................. 97

Appendix ................................................................................................................... 99

INDEX TO APPENDIX

SUMMARY OF LAW PERTAINING TO ORGANIZATIONS EXEMPT FROM FEDERAL INCOME

TAX UNDER SECTION 501(c)(3) OF THE INTERNAL REVENUE CODE

A. Introduction ........................................................................................................ 99

B. The Organizational Test and the Operational Test ........................................ 99

1. Organizational Test ..................................................................................... 99

2. Operational Test .......................................................................................... 100

a. ‘‘Educational’’ Organizations May Qualify for Exemption Under

Section 501(c)(3) ................................................................................. 101

b. To Satisfy the Operational Test, an Organization Must Not Violate

the ‘‘Private Benefit’’ Prohibition ...................................................... 102

c. To Satisfy the Operational Test, an Organization Must Not Be

an ‘‘Action’’ Organization ................................................................... 110

(i) If an Organization Participates in a Political Campaign, It

Is an Action Organization Not Entitled to Exemption Under

Section 501(c)(3) .......................................................................... 110

(a) The Prohibition is ‘‘Absolute’’ .............................................. 113

(b) Section 501(c)(3) Organizations May Not Establish or

Support a PAC ..................................................................... 115

(c) ‘‘Express Advocacy’’ Is Not Required, and Issue Advocacy

Is Prohibited if Used To Convey Support for or Opposition to a Candidate .............................................................. 115

(d) Educational Activities May Constitute Participation or

Intervention .......................................................................... 116

(e) Nonpartisan Activities May Constitute Prohibited Political Campaign Participation ................................................ 118

(f) The IRS Has Found Violations of the Prohibition on Political Campaign Participation When an Activity Could Affect or Was Intended To Affect Voters’ Preferences .......... 118

(ii) If a Substantial Part of an Organization’s Activities Is Attempting To Influence Legislation, or Its Primary Goal Can

Only Be Accomplished Through Legislation, It Is an ‘‘Action’’

Organization ................................................................................ 121
Page

VII

B. The Organizational Test and the Operational Test—Continued

2. Operational Test—Continued

c. To Satisfy the Operational Test, an Organization Must Not Be

an ‘‘Action’’ Organization—Continued

(ii) If a Substantial Part of an Organization’s Activities Is Attempting To Influence Legislation, or Its Primary Goal Can

Only Be Accomplished Through Legislation, It Is an ‘‘Action’’

Organization—Continued

(a) Definition of ‘‘Legislation’’ .................................................... 122

(b) Definition of ‘‘Attempting To Influence Legislation’’ ......... 122

(c) Definition of ‘‘Substantial’’ ................................................... 124

(d) Circumstances Under Which an Organization’s ‘‘objectives can be achieved only through the passage of legislation’’ ................................................................................... 125

d. To Satisfy the Operational Test, an Organization Must Not Violate the ‘‘Private Inurement’’ Prohibition ......................................... 126

Exhibits .................................................................................................................... 129
House Calendar No. 1

105TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 105–1

IN THE MATTER OF REPRESENTATIVE NEWT GINGRICH

JANUARY 17, 1997.—Referred to the House Calendar and ordered to be printed

Mrs. JOHNSON from the Select Committee on Ethics,

submitted the following

REPORT

I. INTRODUCTION

A. Procedural Background

On September 7, 1994, a complaint was filed with the Committee

on Standards of Official Conduct (‘‘Committee’’) against Representative Newt Gingrich by Ben Jones, Mr. Gingrich’s opponent in his

1994 campaign for re-election. The complaint centered on a course

taught by Mr. Gingrich called ‘‘Renewing American Civilization.’’

Among other things, the complaint alleged that Mr. Gingrich had

used his congressional staff to work on the course in violation of

House Rules. The complaint also alleged that Mr. Gingrich had created a college course under the sponsorship of 501(c)(3) organizations in order ‘‘to meet certain political, not educational, objectives’’

and, therefore, caused a violation of section 501(c)(3) of the Internal

Revenue Code to occur. In partial support of the allegation that the

course was a partisan, political project, the complaint alleged that

the course was under the control of GOPAC, a political action committee of which Mr. Gingrich was the General Chairman.

Mr. Gingrich responded to this complaint in letters dated October 4, 1994, and December 8, 1994, but the matter was not resolved before the end of the 103rd Congress. On January 26, 1995,

Representative David Bonior filed an amended version of the complaint originally filed by Mr. Jones. It restated the allegations concerning the misuse of tax-exempt organizations and contained additional allegations. Mr. Gingrich responded to that complaint in a

letter from his counsel dated March 27, 1995.

On December 6, 1995, the Committee voted to initiate a Preliminary Inquiry into the allegations concerning the misuse of tax-exempt organizations. The Committee appointed an Investigative
2

Subcommittee (‘‘Subcommittee’’) and instructed it to: determine if

there is reason to believe that Representative Gingrich’s activities

in relation to the college course ‘‘Renewing American Civilization’’

were in violation of section 501(c)(3) or whether any foundation

qualified under section 501(c)(3), with respect to the course, violated its status with the knowledge and approval of Representative

Gingrich * * *.

The Committee also resolved to appoint a Special Counsel to assist in the Preliminary Inquiry. On December 22, 1995, the Committee appointed James M. Cole, a partner in the law firm of

Bryan Cave LLP, as the Special Counsel. Mr. Cole’s contract was

signed January 3, 1996, and he began his work.

On September 26, 1996, the Subcommittee announced that, in

light of certain facts discovered during the Preliminary Inquiry, the

investigation was being expanded to include the following additional areas:

(1) Whether Representative Gingrich provided accurate, reliable,

and complete information concerning the course entitled ‘‘Renewing

American Civilization,’’ GOPAC’s relationship to the course entitled

‘‘Renewing American Civilization,’’ or the Progress and Freedom

Foundation in the course of communicating with the Committee,

directly or through counsel (House Rule 43, Cl. 1);

(2) Whether Representative Gingrich’s relationship with the

Progress and Freedom Foundation, including but not limited to his

involvement with the course entitled ‘‘Renewing American Civilization,’’ violated the foundation’s status under 501(c)(3) of the Internal Revenue Code and related regulations (House Rule 43, Cl. 1);

(3) Whether Representative Gingrich’s use of the personnel and

facilities of the Progress and Freedom Foundation constituted a use

of unofficial resources for official purposes (House Rule 45); and

(4) Whether Representative Gingrich’s activities on behalf of the

Abraham Lincoln Opportunity Foundation violated its status under

501(c)(3) of the Internal Revenue Code and related regulations or

whether the Abraham Lincoln Opportunity Foundation violated its

status with the knowledge and approval of Representative Gingrich

(House Rule 43, Cl. 1).

As discussed below, the Subcommittee issued a Statement of Alleged Violation with respect to the initial allegation pertaining to

Renewing American Civilization and also with respect to items 1

and 4 above. The Subcommittee did not find any violations of

House Rules in regard to the issues set forth in items 2 and 3

above. The Subcommittee, however, decided to recommend that the

full Committee make available to the IRS documents produced during the Preliminary Inquiry for use in its ongoing inquiries of

501(c)(3) organizations. In regard to item 3 above, the Subcommittee decided to issue some advice to Members concerning the proper

use of outside consultants for official purposes.

On January 7, 1997, the House conveyed the matter of Representative Newt Gingrich to the Select Committee on Ethics by its

adoption of clause 4(e)(3) of rule X, as contained in House Resolution 5.

On January 17, 1997, the Select Committee on Ethics held a

sanction hearing in the matter pursuant to committee rule 20. Following the sanction hearing, the Select Committee ordered a report
3

to the House, by a roll call vote of 7–1, recommending that Representative Gingrich be reprimanded and ordered to reimburse the

House for some of the costs of the investigation in the amount of

$300,000. The following Members voted aye: Mrs. Johnson of Connecticut, Mr. Goss, Mr. Schiff, Mr. Cardin, Ms. Pelosi, Mr. Borski,

and Mr. Sawyer. The following Member voted no: Mr. Smith of

Texas.

The adoption of this report by the House shall constitute such a

reprimand and order of reimbursement. Accordingly, the Select

Committee recommends that the House adopt a resolution in the

following form.

HOUSE RESOLUTION —

Resolved, That the House adopt the report of the Select Committee on Ethics dated January 17, 1997, In the Matter of Representative Newt Gingrich.

Statement Pursuant to Clause 2(l)(3)(A) of Rule XI

No oversight findings are considered pertinent.

B. Investigative Process

The investigation of this matter began on January 3, 1996, and

lasted through December 12, 1996. In the course of the investigation, approximately 90 subpoenas or requests for documents were

issued, approximately 150,000 pages of documents were reviewed,

and approximately 70 people were interviewed. Most of the interviews were conducted by Mr. Cole outside the presence of the Subcommittee. A court reporter transcribed the interviews and the

transcripts were made available to the Members of the Subcommittee. Some of the interviews were conducted before the Members of

the Subcommittee primarily to explore the issue of whether Mr.

Gingrich had provided the Committee, directly or through counsel,

inaccurate, unreliable, or incomplete information.

During the Preliminary Inquiry, Mr. Cole interviewed Mr. Gingrich twice and Mr. Gingrich appeared before the Subcommittee

twice. Several draft discussion documents, with notebooks of exhibits, were prepared for the Subcommittee in order to brief the Members on the findings and status of the Preliminary Inquiry. After

receiving the discussion documents, the Subcommittee met to discuss the legal and factual questions at issue.

In most investigations, people who were involved in the events

under investigation are interviewed and asked to describe the

events. This practice has some risk with respect to the reliability

of the evidence gathered because, for example, memories fade and

can change when a matter becomes controversial and subject to an

investigation. One advantage the Subcommittee had in this investigation was the availability of a vast body of documentation from

multiple sources that had been created contemporaneously with the

events under investigation. A number of documents central to the

analysis of the matter, in fact, had been written by Mr. Gingrich.

Thus, the documents provided a unique, contemporaneous view of

people’s purposes, motivations, and intentions with respect to the

facts at issue. This Report relies heavily, but not exclusively, on an
4

analysis of those documents to describe the acts, as well as Mr.

Gingrich’s purpose, motivations, and intentions.

As the Report proceeds through the facts, there is discussion of

conservative and Republican political philosophy. The Committee

and the Special Counsel, however, do not take any positions with

respect to the validity of this or any other political philosophy, nor

do they take any positions with respect to the desirability of the

dissemination of this or any other political philosophy. Mr. Gingrich’s political philosophy and its dissemination is discussed only

insofar as it is necessary to examine the issues in this matter.

C. Summary of the Subcommittee’s Factual Findings

The Subcommittee found that in regard to two projects, Mr.

Gingrich engaged in activity involving 501(c)(3) organizations that

was substantially motivated by partisan, political goals. The Subcommittee also found that Mr. Gingrich provided the Committee

with material information about one of those projects that was inaccurate, incomplete, and unreliable.

1. AOW/ACTV

The first project was a television program called the American

Opportunities Workshop (‘‘AOW’’). It took place in May 1990. The

idea for this project came from Mr. Gingrich and he was principally

responsible for developing its message. AOW involved broadcasting

a television program on the subject of various governmental issues.

Mr. Gingrich hoped that this program would help create a ‘‘citizens’

movement.’’ Workshops were set up throughout the country where

people could gather to watch the program and be recruited for the

citizens’ movement. While the program was educational, the citizens’ movement was also considered a tool to recruit non-voters

and people who were apolitical to the Republican Party. The program was deliberately free of any references to Republicans or partisan politics because Mr. Gingrich believed such references would

dissuade the target audience of non-voters from becoming involved.

AOW started out as a project of GOPAC, a political action committee dedicated to, among other things, achieving Republican control of the United States House of Representatives. Its methods for

accomplishing this goal included the development and articulation

of a political message and the dissemination of that message as

widely as possible. One such avenue of dissemination was AOW.

The program, however, consumed a substantial portion of GOPAC’s

revenues. Because of the expense, Mr. Gingrich and others at

GOPAC decided to transfer the project to a 501(c)(3) organization

in order to attract tax-deductible funding. The 501(c)(3) organization chosen was the Abraham Lincoln Opportunity Foundation

(‘‘ALOF’’). ALOF was dormant at the time and was revived to sponsor AOW’s successor, American Citizens’ Television (‘‘ACTV’’).

ALOF operated out of GOPAC’s offices. Virtually all its officers and

employers were simultaneously GOPAC officers or employees.

ACTV had the same educational aspects and partisan, political

goals as AOW. The principal difference between the two was that

ACTV used approximately $260,000 in tax-deductible contributions

to fund its operations. ACTV broadcast three television programs
5

in 1990 and then ceased operations. The last program was funded

by a 501(c)(4) organization because the show’s content was deemed

to be too political for a 501(c)(3) organization.

2. RENEWING AMERICAN CIVILIZATION

The second project utilizing 501(c)(3) organizations involved a

college course taught by Mr. Gingrich called Renewing American

Civilization. Mr. Gingrich developed the course as a subset to and

tool of a larger political and cultural movement also called Renewing American Civilization. The goal of this movement, as stated by

Mr. Gingrich, was the replacement of the ‘‘welfare state’’ with an

‘‘opportunity society.’’ A primary means of achieving this goal was

the development of the movement’s message and the dissemination

of that message as widely as possible. Mr. Gingrich intended that

a ‘‘Republican majority’’ would be the heart of the movement and

that the movement would ‘‘professionalize’’ House Republicans. A

method for achieving these goals was to use the movement’s message to ‘‘attract voters, resources, and candidates.’’ According to Mr.

Gingrich, the course was, among other things, a primary and essential means to develop and disseminate the message of the movement.

The core message of the movement and the course was that the

welfare state had failed, that it could not be repaired but had to

be replaced, and that it had to be replaced with an opportunity society based on what Mr. Gingrich called the ‘‘Five Pillars of American Civilization.’’ These were: (1) personal strength; (2) entrepreneurial free enterprise; (3) the spirit of invention; (4) quality as

defined by Edwards Deming; and (5) the lessons of American history. The message also concentrated on three substantive areas.

These were: (1) jobs and economic growth; (2) health; and (3) saving the inner city.

This message was also Mr. Gingrich’s main campaign theme in

1993 and 1994 and Mr. Gingrich sought to have Republican candidates adopt the Renewing American Civilization message in their

campaigns. In the context of political campaigns, Mr. Gingrich used

the term ‘‘welfare state’’ as a negative label for Democrats and the

term ‘‘opportunity society’’ as a positive label for Republicans.

As General Chairman of GOPAC, Mr. Gingrich decided that

GOPAC would use Renewing American Civilization as its political

message and theme during 1993–1994. GOPAC, however, was having financial difficulties and could not afford to disseminate its political messages as it had in past years. GOPAC had a number of

roles in regard to the course. For example, GOPAC personnel

helped develop, manage, promote, and raise funds for the course.

GOPAC Charter Members helped develop the idea to teach the

course as a means for communicating GOPAC’s message. GOPAC

Charter Members at Charter Meetings helped develop the content

of the course. GOPAC was ‘‘better off’’ as a result of the nationwide

dissemination of the Renewing American Civilization message via

the course in that the message GOPAC had adopted and determined to be the one that would help it achieve its goals was broadcast widely and at no cost to GOPAC.

The course was taught at Kennesaw State College (‘‘KSC’’) in

1993 and at Reinhardt College in 1994 and 1995. Each course con-
6

1 As general management and support fees, KSCF kept 2.5% of any money raised and KSC’s

Business School kept 7.5% of any money raised.

sisted of ten lectures and each lecture consisted of approximately

four hours of classroom instruction, for a total of forty hours. Mr.

Gingrich taught twenty hours of each course and his co-teacher, or

occasionally a guest lecturer, taught twenty hours. Students from

each of the colleges as well as people who were not students attended the lectures. Mr. Gingrich’s 20-hour portion of the course

was taped and distributed to remote sites, referred to as ‘‘site

hosts,’’ via satellite, videotape and cable television. As with AOW/

ACTV, Renewing American Civilization involved setting up workshops around the country where people could gather to watch the

course. While the course was educational, Mr. Gingrich intended

that the workshops would be, among other things, a recruiting tool

for GOPAC and the Republican Party.

The major costs for the Renewing American Civilization course

were for dissemination of the lectures. This expense was primarily

paid for by tax-deductible contributions made to the 501(c)(3) organizations that sponsored the course. Over the three years the

course was broadcast, approximately $1.2 million was spent on the

project. The Kennesaw State College Foundation (‘‘KSCF’’) sponsored the course the first year. All funds raised were turned over

to KSCF and dedicated exclusively for the use of the Renewing

American Civilization course. 1 KSCF did not, however, manage the

course and its role was limited to depositing donations into its

bank account and paying bills from that account that were presented to it by the Dean of the KSC Business School. KSCF contracted with the Washington Policy Group, Inc. (‘‘WPG’’) to manage

and raise funds for the course’s development, production and distribution. Jeffrey Eisenach, GOPAC’s Executive Director from June

1991 to June 1993 was the president and sole owner of WPG. WPG

and Mr. Eisenach played similar roles with respect to AOW/ACTV.

When the contract between WPG and KSCF ended in the fall of

1993, the Progress and Freedom Foundation (‘‘PFF’’) assumed the

role WPG had with the course at the same rate of compensation.

Mr. Eisenach was PFF’s founder and president. Shortly after PFF

took over the management of the course, the Georgia Board of Regents passed a resolution prohibiting any elected official from

teaching at a Georgia state educational institution. This was the

culmination of a controversy that had arisen around the course at

KSC. A group of KSC faculty had objected to the course being

taught on the campus because of a belief that it was an effort to

use the college to disseminate a political message. Because of the

Board of Regent’s decision and the controversy, it was decided that

the course would be moved to a private college.

The course was moved to Reinhardt for the 1994 and 1995 sessions. While there, PFF assumed full responsibility for the course.

PFF no longer received payments to run the course but, instead,

took in all contributions to the course and paid all the bills, including paying Reinhardt for the use of the college’s video production

facilities. All funds for the course were raised by and expended by

PFF under its tax-exempt status.
7

3. FAILURE TO SEEK LEGAL ADVICE

Under the Internal Revenue Code, a 501(c)(3) organization must

be operated exclusively for exempt purposes. The presence of a single non-exempt purpose, if more than insubstantial in nature, will

destroy the exemption regardless of the number or importance of

truly exempt purposes. Conferring a benefit on private interests is

a non-exempt purpose. Under the Internal Revenue Code, a

501(c)(3) organization is also prohibited from intervening in a political campaign or providing any support to a political action committee. These prohibitions reflect congressional concerns that taxpayer

funds not be used to subsidize political activity.

During the Preliminary Inquiry, the Subcommittee consulted

with an expert in the law of tax-exempt organizations and read

materials on the subject. Mr. Gingrich’s activities on behalf of

AOW/ACTV and Renewing American Civilization, as well as the activities of others on behalf of those projects done with Mr. Gingrich’s knowledge and approval, were reviewed by the expert. The

expert concluded that those activities violated the status of the organizations under section 501(c)(3) in that, among other things,

those activities were intended to confer more than insubstantial

benefits on GOPAC, Mr. Gingrich, and Republican entities and candidates, and provided support to GOPAC.

At Mr. Gingrich’s request, the Subcommittee also heard from tax

counsel retained by Mr. Gingrich for the purposes of the Preliminary Inquiry. While that counsel is an experienced tax attorney

with a sterling reputation, he has less experience in dealing with

tax-exempt organizations law than does the expert retained by the

Subcommittee. According to Mr. Gingrich’s tax counsel, the type of

activity involved in the AOW/ACTV and Renewing American Civilization projects would not violate the status of the relevant organizations under section 501(c)(3). He opined that once it was determined that an activity was ‘‘educational,’’ as defined by the IRS,

and did not have the effect of benefiting a private interest, it did

not violate the private benefit prohibition. In the view of Mr. Gingrich’s tax counsel, motivation on the part of an organization’s principals and agents is irrelevant. Further, he opined that a 501(c)(3)

organization does not violate the private benefit prohibition or political campaign prohibition through close association with or support of a political action committee unless it specifically calls for

the election or defeat of an identifiable political candidate.

Both the Subcommittee’s tax expert and Mr. Gingrich’s tax counsel, however, agreed that had Mr. Gingrich sought their advice before embarking on activities of the type involved in AOW/ACTV

and the Renewing American Civilization course, each of them

would have advised Mr. Gingrich not to use a 501(c)(3) organization as he had in regard to those activities. The Subcommittee’s tax

expert said that doing so would violate 501(c)(3). During his appearance before the Subcommittee, Mr. Gingrich’s tax counsel said

that he would not have recommended the use of 501(c)(3) organizations to sponsor the course because the combination of politics and

501(c)(3) organizations is an ‘‘explosive mix’’ almost certain to draw

the attention of the IRS.
8

Based on the evidence, it was clear that Mr. Gingrich intended

that the AOW/ACTV and Renewing American Civilization projects

have substantial partisan, political purposes. In addition, he was

aware that political activities in the context of 501(c)(3) organizations were problematic. Prior to embarking on these projects, Mr.

Gingrich had been involved with another organization that had direct experience with the private benefit prohibition in a political

context, the American Campaign Academy. In a 1989 Tax Court

opinion issued less than a year before Mr. Gingrich set the AOW/

ACTV project into motion, the Academy was denied its exemption

under 501(c)(3) because, although educational, it conferred an impermissible private benefit on Republican candidates and entities.

Close associates of Mr. Gingrich were principals in the American

Campaign Academy, Mr. Gingrich taught at the Academy, and Mr.

Gingrich had been briefed at the time on the tax controversy surrounding the Academy. In addition, Mr. Gingrich stated publicly

that he was taking a very aggressive approach to the use of

501(c)(3) organizations in regard to, at least, the Renewing American Civilization course.

Taking into account Mr. Gingrich’s background, experience, and

sophistication with respect to tax-exempt organizations, and his

status as a Member of Congress obligated to maintain high ethical

standards, the Subcommittee concluded that Mr. Gingrich should

have known to seek appropriate legal advice to ensure that his conduct in regard to the AOW/ACTV and Renewing American Civilization projects was in compliance with 501(c)(3). Had he sought and

followed such advice—after having set out all the relevant facts,

circumstances, plans, and goals described above—501(c)(3) organizations would not have been used to sponsor Mr. Gingrich’s ACTV

and Renewing American Civilization projects.

4. MR. GINGRICH’S STATEMENTS TO THE COMMITTEE

In responding to the complaints filed against him concerning the

Renewing American Civilization course, Mr. Gingrich submitted

several letters to the Committee. His first letter, dated October 4,

1994, did not address the tax issues raised in Mr. Jones’ complaint,

but rather responded to the part of the complaint concerning unofficial use of official resources. In it Mr. Gingrich stated that

GOPAC, among other organizations, paid people to work on the

course. After this response, the Committee wrote Mr. Gingrich and

asked him specifically to address issues related to whether the

course had a partisan, political aspect to it and, if so, whether it

was appropriate for a 501(c)(3) organization to be used to sponsor

the course. The Committee also specifically asked whether GOPAC

had any relationship to the course. Mr. Gingrich’s letter in response, dated December 8, 1994, was prepared by his attorney, but

it was read, approved, and signed by Mr. Gingrich. It stated that

the course had no partisan, political aspects to it, that his motivation for teaching the course was not political, and that GOPAC neither was involved in nor received any benefit from any aspect of

the course. In his testimony before the Subcommittee, Mr. Gingrich

admitted that these statements were not true.

When the amended complaint was filed with the Committee in

January 1995, Mr. Gingrich’s attorney responded to the complaint
9

2See September 6, 1996 letter from the tax counsel Mr. Gingrich hired during the Preliminary

Inquiry, James Holden, at page 41: ‘‘Contributions made to organizations described in section

501(c)(3) qualify generally as charitable deductions under section 170(c)(2). In contrast, contributions made to section 501(c)(4) and section 527 organizations do not qualify as charitable deductions. For this reason, exempt organizations that are described in section 501(c)(3) enjoy the subContinued

on behalf of Mr. Gingrich in a letter dated March 27, 1995. His attorney addressed all the issues in the amended complaint, including the issues related to the Renewing American Civilization

course. The letter was signed by Mr. Gingrich’s attorney, but Mr.

Gingrich reviewed and approved it prior to its being delivered to

the Committee. In an interview with Mr. Cole, Mr. Gingrich stated

that if he had seen anything inaccurate in the letter he would have

instructed his attorney to correct it. Similar to the December 8,

1994 letter, the March 27, 1995 letter stated that the course had

no partisan, political aspects to it, that Mr. Gingrich’s motivation

for teaching the course was not political, and that GOPAC had no

involvement in nor received any benefit from any aspect of the

course. In his testimony before the Subcommittee Mr. Gingrich admitted that these statements were not true.

The goal of the letters was to have the complaints dismissed. Of

the people involved in drafting or editing the letters, or reviewing

them for accuracy, only Mr. Gingrich had personal knowledge of

the facts contained in the letters regarding the course. The facts in

the letters that were inaccurate, incomplete, and unreliable were

material to the Committee’s determination on how to proceed with

the tax questions contained in the complaints.

D. Statement of Alleged Violation

On December 21, 1996, the Subcommittee issued a Statement of

Alleged Violation stating that Mr. Gingrich had engaged in conduct

that did not reflect creditably on the House of Representatives in

that by failing to seek and follow legal advice, Mr. Gingrich failed

to take appropriate steps to ensure that activities with respect to

the AOW/ACTV project and the Renewing American Civilization

project were in accordance with section 501(c)(3); and that on or

about December 8, 1994, and on or about March 27, 1995, information was transmitted to the Committee by and on behalf of Mr.

Gingrich that was material to matters under consideration by the

Committee, which information, as Mr. Gingrich should have

known, was inaccurate, incomplete, and unreliable.

On December 21, 1996, Mr. Gingrich filed an answer with the

Subcommittee admitting to this violation of House Rules.

The following is a summary of the findings of the Preliminary Inquiry relevant to the facts as set forth in the Statement of Alleged

Violation.

II. SUMMARY OF FACTS PERTAINING TO AMERICAN CITIZENS

TELEVISION

A. GOPAC

GOPAC was a political action committee organized under Section

527 of the Internal Revenue Code. As such, contributions to

GOPAC were not tax-deductible.2 GOPAC’s goal was to attract peo-
10

stantial advantage of being able to attract donations that are deductible on the tax returns of

contributors.’’ 3 Citations containing a ‘‘Tr.’’ indicate the page of the transcript from a witness’s interview.

The date of the interview is also provided in the citation.

ple to the Republican party, develop a ‘‘farm team’’ of Republican

state and local public officials who might one day run for Congress

and, ultimately, create a Republican majority in the United States

House of Representatives. (12/7/96 Callaway Tr. 9; 7/12/96

Eisenach Tr. 21; 7/17/96 Gingrich Tr. 17–20).3 GOPAC did not undertake any projects that were not directed toward achieving that

goal. (7/18/96 Gingrich Tr. 362; 12/7/96 Callaway Tr. 33).

GOPAC’s mission was defined as follows:

GOPAC’s mission for the 1990’s is to create and disseminate the doctrine which defines a caring, humanitarian reform Republican Party in such a way as to elect candidates, capture the United States House of Representatives and become a governing majority at every level of

Government.

(Ex. 1, GOPAC3 137). This aspect of GOPAC’s activities was further explained in a draft document from November 1989:

As important as the creation of new doctrine is its dissemination. During the 1980s GOPAC and Newt Gingrich

have led the way in applying new technology, from C–

SPAN to video tapes, to disseminate information to Republican candidates and political activists.

* * * * * * *

But the Mission Statement demands that we do much

more. To create the level of change needed to become a

majority, the new Republican doctrine must be communicated to a broader audience, with greater frequency, in

a more usable form. GOPAC needs a bigger ‘‘microphone.’’

(emphasis in the original).

(Ex. 2, 283). GOPAC continued to support this approach to achieving its goals in subsequent years. For example, as stated in its Report to Shareholders dated April 26, 1993:

While both ‘‘message’’ and ‘‘mechanism’’ are important,

GOPAC’s comparative advantage lies in developing new

ideas—i.e. in the ‘‘message’’ part of the equation. GOPAC

will thus continue to focus its efforts on developing and

communicating our values in a way voters can understand

and support.

(Ex. 3, Eisenach 2539).

From approximately 1986 through 1995, Mr. Gingrich served as

the General Chairman of GOPAC. (7/17/96 Gingrich Tr. 15). In this

role he came up with the ideas GOPAC used for its political messages and themes, as well as its vision, strategy, and direction.

(7/17/96 Gingrich Tr. 20; 7/15/96 Gaylord Tr. 21–22; 6/26/96 Hanser

Tr. 81; 7/12/96 Eisenach Tr. 22–23; 7/3/96 Rogers Tr. 54–56;

6/27/96 Nelson Tr. 22–23; 12/7/96 Callaway Tr. 6, 9).
11

4The Committee’s Special Counsel, James Cole, interviewed Mr. Gingrich on July 17, 1996;

July 18, 1996; and December 9, 1996. Mr. Gingrich appeared before the Investigative Subcommittee to give testimony on November 13, 1996, and December 10, 1996.

B. American Opportunities Workshop/American Citizens Television

1. BACKGROUND

In early 1990, GOPAC embarked on a project to produce a television program called the American Opportunities Workshop

(‘‘AOW’’). The idea for this project came from Mr. Gingrich and he

was very involved in developing the message it used. (12/7/96

Callaway Tr. 11, 12, 14; 7/12/96 Eisenach Tr. 16; 12/5/96 Eisenach

Tr. 10; 12/9/96 Riddle Tr. 14; 12/9/96 Gingrich Tr. 12).4 AOW was

broadcast on May 19, 1990, on the Family Channel and was hosted

by Mr. Gingrich. (Ex. 4, GOPAC3 181).

One of the purposes of the program was to build a citizens’ movement that would communicate the principles of Entrepreneurial

Free Enterprise, Basic American Values, and Technological

Progress. (Ex. 5, FAM 0011; 12/7/96 Callaway Tr. 14). These principles were called the ‘‘Triangle of American Success.’’ (Ex. 4,

GOPAC3 181). AOW consisted of workshops set up throughout the

country where activists could gather to watch the broadcast and,

in the words of those responsible for AOW, help build a citizens’

movement and increase citizen involvement. (12/7/96 Callaway Tr.

14, 15; 12/9/96 Riddle Tr. 12, 13). Approximately 600 workshop

cites were established where approximately 20,000 people watched

the program. (Ex. 6, Eisenach 0359). The target group for the program was non-voters. (Ex. 7, WGC2–01025).

As stated by GOPAC’s then-Executive Director, Kay Riddle, the

purpose of creating the citizens’ movement and attempting to increase citizen involvement was to get people to solve their own

community problems and not look to the federal government for

help. (12/9/96 Riddle Tr. 13). Ms. Riddle went on to say, ‘‘Another

product of that would be, of course, if we got people interested

* * *, we hoped and believed that eventually they would vote Republican.’’ (12/9/96 Riddle Tr. 13). ‘‘[W]e [at GOPAC] truly believed

that the more we could involve people and educate people, the more

likely we were to have people vote Republican.’’ (12/9/96 Riddle Tr.

14–15). Similarly, Mr. Callaway characterized the message of AOW

as follows:

But I think, fundamentally * * * it was a message that

Republican principles are sound principles, that everything

does not need to be done by government, that you can do

better by trusting individuals to act for themselves than

you can by having government tell individuals what they

must do, that a smaller government is frequently better

than a larger government, that it is better to reduce taxes

than raise taxes. I think it is Republican kinds of issues.

(12/7/96 Callaway Tr. 12–13).

Producing AOW was very expensive. (12/7/96 Callaway Tr. 16;

6/14/96 Callaway Tr. 21–22). It cost over $500,000 and consumed

approximately 62% of GOPAC’s budget for the first half of 1990.

(Ex. 8, 1273). It was envisioned that the project would continue beyond May 19, 1990 (12/5/96 Eisenach Tr. 46; Ex. 4, GOPAC3 181)
12

5 A 1989 draft GOPAC document indicates that one of GOPAC’s projects designed to ‘‘create

and disseminate the new Republican doctrine for the 1990’s’’ would be the Education Choice Coalition. (Ex. 2, 284).

and prior to its airing, Mr. Gingrich, Mr. Callaway and others decided to have the project’s follow-on activities transferred to a

501(c)(3) organization. (Ex. 9, Eisenach 3909; 12/5/96 Eisenach Tr.

49; 12/7/96 Callaway Tr. 80). The organization chosen was the

Abraham Lincoln Opportunity Foundation (‘‘ALOF’’). The project

was transferred to ALOF so that it could be funded with tax-deductible money. (12/9/96 Riddle Tr. 19).

ALOF was established in 1984 in Colorado by Mr. Callaway to

fund programs for inner city youth. (6/14/96 Callaway Tr. 26). It

had been inactive for some time prior to 1990 and was revived for

the purpose of taking over the successor activities of AOW. (12/7/

96 Callaway Tr. 84). Under ALOF the project became know as

American Citizens’ Television (‘‘ACTV’’). Mr. Callaway was the

President of ALOF and Kay Riddle was the Secretary. Mr.

Callaway was also GOPAC’s Chairman and Ms. Riddle was also

GOPAC’s Executive Director. ALOF hired some GOPAC employees

on a full-time basis, used other GOPAC employees and consultants

on a part-time basis, and used GOPAC offices and facilities. (12/7/

96 Callaway Tr. 7, 11, 13, 14, 73–75).

ACTV was designed to continue AOW’s work of building a citizens’ movement based on the ‘‘Triangle of American Success’’ and

had the same goals as AOW. (Ex. 5, FAM 0011; 12/7/96 Callaway

Tr. 14; 12/9/96 Riddle Tr. 16; 12/9/96 Gingrich Tr. 8). In order to

ensure a smooth transition, materials concerning ACTV were given

to all AOW participants on May 19, 1990. (Ex. 6, Eisenach 0361).

ACTV produced three television programs in 1990—one on July

21 which discussed the use of local access cable television for activist movements; one on September 29 which discussed educational

choice;5 and one on October 27 which was about Taxpayers’ Action

Day. The last program was primarily the responsibility of the

Council for Citizens Against Government Waste (‘‘CCAGW’’), a

501(c)(4) organization. This was due to the fact that the content of

the program was deemed to be inappropriate for ALOF to sponsor

as a 501(c)(3) organization. (Ex. 10, FAM 0024). While CCAGW

paid for all of the out-of-pocket expenses (e.g., production expense

and broadcast time), ALOF still provided support through its staff.

(Ex. 11, Eisenach 4254; 12/5/96 Eisenach Tr. 5, 67). Each program

was broadcast on the Family Channel.

In setting up ACTV it was understood that Mr. Gingrich would

maintain his involvement and control over the programs. (Ex. 12,

WGC2–01337). While some say that he was not very involved when

it became ACTV, (e.g., 12/7/96 Callaway Tr. 14), there is evidence

that his involvement continued. Mr. Gingrich hosted the first

ACTV program. Mr. Gingrich also introduced and closed the second

program in September. The host was Pete DuPont, but Mr. Gingrich was featured for a significant portion of the program. While

the last program in October was paid for primarily by CCAGW, Mr.

Gingrich approved its use on ACTV. (Ex. 11, Eisenach 4254).

Both AOW and ACTV were described to the public as non-partisan. (Ex. 6, Eisenach 0361). Much of the documentation that was

either internal to GOPAC or sent to its supporters, however, indi-
13

cates a partisan, political purpose. While GOPAC, as a political action committee, could freely engage in partisan, political activity,

ALOF, as a 501(c)(3) organization could not. Because ACTV was

described as a continuation of the activities of AOW (12/7/96

Callaway Tr. 13–15; 12/5/96 Eisenach Tr. 8; Ex. 5, FAM 0011), documents were reviewed during the Preliminary Inquiry relating to

both projects to determine what the goals were for the two projects.

GOPAC contracted with an organization called the Washington

Policy Group (‘‘WPG’’) to manage AOW. (7/12/96 Eisenach Tr. 298).

Jeffrey Eisenach was president and sole owner of WPG and the

project coordinator for AOW. (7/12/96 Eisenach Tr. 298). Mr.

Eisenach was also responsible for managing ALOF’s ACTV programs. (12/7/96 Callaway Tr. 16). WPG was essentially Mr.

Eisenach’s ‘‘personal consulting firm’’ and usually had two or three

employees. (7/12/96 Eisenach Tr. 9). WPG used GOPAC office space

and equipment as part of its compensation. (11/14/96 Eisenach Tr.

60). In addition to its work on AOW and ACTV, WPG had a consulting contract with GOPAC from January 1989 through September 1993. (7/12/96 Eisenach Tr. 9, 10, 298). Through WPG’s contract with GOPAC, Mr. Eisenach ‘‘provided research assistance and

advice to Mr. Gingrich, strategic advice to GOPAC and worked on

some specific projects, focus groups and so forth, for GOPAC.’’ (7/

12/96 Eisenach Tr. 9). Mr. Eisenach was also the Executive Director of GOPAC from June 1991 to June 1993. (7/12/96 Eisenach Tr.

8).

2. PLANNING AND PURPOSE FOR AOW/ACTV

A document entitled ‘‘Key Factors in a House GOP Majority’’ appears to be one of the earliest documents pertaining to the purpose

of AOW and ACTV. A typed version and a handwritten version of

the document were produced during the Preliminary Inquiry. The

handwritten version is in Mr. Gingrich’s handwriting. In it he

wrote:

1. The fact that 50% of all potential voters are currently

outside politics (non-voters) creates the possibility that a

new appeal might alter the current balance of political

power by bringing in a vast number of new voters.

* * * * * * *

3. It is possible to articulate a vision of ‘‘an America that

can be’’ which is appealing to most Americans, reflects the

broad values of a governing conservatism (basic American

values, entrepreneurial Free Enterprise and Technological

progress), and is very difficult for the Democrats to co-opt

because of their ideology and their interest groups.

4. It is more powerful and more effective to develop a reform movement parallel to the official Republican Party

because:

* * * * * * *

b. the non-voters who are non-political or anti-political will accept a movement more rapidly than they

will accept an established party;

* * * * * * *
14

5. As much as possible, the House Republican Party, the

Bush Administration, Senate Republicans, incumbent Republicans across the country, the NRCC, RNC, SRCC and

the conservative movement should be briefed on movement

developments; conflict within this broad group should be

minimized and coordination maximized.

6. The objective measurable goal is the maximum

growth of news coverage of our vision and ideas, the maximum recruitment of new candidates, voters and resources,

and the maximum electoral success in winning seats from

the most local office to the White House and then using

those victories to implement the values of a governing conservatism and to create the best America that can be.

(Ex. 13, Eisenach 4838–4839 (typed version) and Eisenach 4832–

4834 (handwritten version)).

When asked about AOW and ACTV, Mr. Gingrich said he had

very little recollection of the projects. He said he was distracted by

other events at the time such as his re-election efforts, legislative

issues, and becoming Republican Whip. (12/9/96 Gingrich Tr. 19,

39, 43). He said he had no recollection of the ‘‘Key Factors in a

House GOP Majority’’ document, did not know if it related to AOW

or ACTV, and did not know the purpose for which it was written.

(12/9/96 Gingrich Tr. 31). An analysis of other documents, however,

shows its relationship to the AOW/ACTV projects. Mr. Callaway

said in his interview that the goals set forth in the ‘‘Key Factors

in a House GOP Majority’’ document were the same as those for

AOW and ACTV. (12/7/96 Callaway Tr. 37–38).

As stated above, AOW was targeted to non-voters. (Ex. 7, WGC2–

01025). The ‘‘Key Factors in a House GOP Majority’’ document

notes that non-voters are the ones to appeal to in order to change

the balance of power. AOW/ACTV based the citizens’ movement on

the ‘‘Triangle of American Success’’ which was made up of basic

American values, entrepreneurial free enterprise, and technological

progress. (Ex. 5, FAM 0011; 12/7/96 Callaway Tr. 14). The ‘‘Key

Factors in a House GOP Majority’’ document indicates that it will

use those same three principles to appeal to non-voters. AOW/

ACTV was focused on building a non-partisan citizens’ movement.

(Ex. 6, Eisenach 0358–0359; Ex. 5, FAM 0011). In the ‘‘Key Factors

in a House GOP Majority’’ document, Mr. Gingrich states that ‘‘[i]t

is more powerful and more effective to develop a reform movement

parallel to the official Republican Party because . . . the non-voters

who are non-political or anti-political will accept a movement more

rapidly than they will accept an established party.’’ (Ex. 13,

Eisenach 4838 and Eisenach 4832).

In a congressional briefing Mr. Gingrich gave concerning AOW

on March 30, 1990, he described AOW/ACTV as follows:

It is our goal to define our position as a caring humanitarian reform party applying the triangle of American success and applying common sense focused on success and

opportunities to explain in general terms for the whole fall

campaign, and again some Democrats will pick up the language and this is open to everybody, this is a free country,

we think on balance it is vastly more advantageous to us
15

than it is to the left since they are the party of big city machines, they are the party of the unions, they’re much

more tied to the bureaucratic welfare state.

(Ex. 15, WGC2 06081, pp. 17–18). The ‘‘Key Factors in a House

GOP Majority’’ document notes that the message of the citizens’

movement is designed not to be useful for Democrats because it

will be ‘‘very difficult for [them] to co-opt [the ideas] because of

their ideology and their interest groups.’’ (Ex. 13, Eisenach 4838

and 4832–4833).

At the congressional briefing, Mr. Gingrich spoke of a focus

group that was commissioned to assist in the AOW/ACTV effort.

He described it as ‘‘the largest focus group project ever undertaken

by the Republican Party.’’ (Ex. 14, WGC2 06081, p. 8). He said it

concentrated on non-voters under 40 years of age (Ex. 14, WGC2

06081, p. 8) and tested negative language like ‘‘the bureaucratic

welfare state’’ and positive language like the ‘‘Triangle of American

Success,’’ ‘‘Entrepreneurial Free Enterprise,’’ ‘‘Technological

Progress and Innovation,’’ and ‘‘Basic American Values.’’ (Ex. 14,

WGC2 06081, pp. 10–11).

Near the end of the briefing Mr. Gingrich explained the reasons

for having the program labeled as non-partisan:

Lastly I was going to make the point one of the reasons

we are reaching out and we really urge people to be nonpartisan and be wide open. But we have two reasons.

First, there are a lot of former Democrats. Andy Ireland,

Ronald Reagan, Phil Gramm, Jean Kirkpatrick, Connie

Mack, you go down the list, a surprising list of people who

looked at both sides and decided we were right. That we

were more open, we were moving in the right direction.

But second, most young people under 40 are not politicized. The minute you politicize this and you make it narrow and you make it partisan—you lose them.

(Ex. 14, WGC2 06081, pp. 23–24).

The focus group Mr. Gingrich referred to was commissioned by

GOPAC in early 1990. It was performed by Market Strategies, Inc.

The July 10, 1990 report on the results of the focus group described

the project as follows:

This research project is part of an overall effort to build

a new governing majority in the United States formed

around conservative principles. Historically, building a

new majority has involved three essential tasks: activating

a group of non-participating citizens to support an existing

party (or form a new party), constructing a theory or explanation of what is right and wrong in society with which

the non-participating citizens agree, and developing the

right language (political rhetoric) to communicate that theory to the non-participating citizens. This project is the

first of several research projects to be sponsored by

GOPAC to help achieve these three tasks in this decade.

(Ex. 15, MSI 0030). The report then describes the specific language

it tested as follows:
16

6 According to Mr. Callaway this letter may have been sent out, but he did not have a specific

recollection of it. (12/7/96 Callaway Tr. 49).

The theory’s explanation of what is wrong in society was

put in terms of ‘‘the bureaucratic welfare state’’ and the

‘‘values of the left.’’ The theory’s explanation of what is

good in society was put in terms of ‘‘technological

progress,’’ ‘‘entrepreneurial free enterprise,’’ and ‘‘basic

American values’’ which were summarized as ‘‘the Triangle

of American Success.’’

(Ex. 15, MSI 0030).

In describing the target group for building the new governing

majority, the report states:

The potential for a new governing majority exists because of the large and growing numbers of non-participating citizens in our political system.

* * * * * * *

Consequently, a major premise for the research project

is that younger citizens are the right target group for a

new majority strategy and that a political theory and language needs to be effective with them if it is to be effective

at all. Supporting this premise is an additional opportunity

(to their not voting now) about younger voters—they are

already predisposed to vote Republican.

(Ex. 15, MSI 0031–0032).

3. LETTERS DESCRIBING PARTISAN, POLITICAL NATURE OF AOW/ACTV

A number of GOPAC letters also indicate the purpose behind

AOW/ACTV. Some are signed, some are not, but the ones that are

not signed were apparently in GOPAC’s files for some years, indicating that they were probably sent out. For example, in a signed

letter dated February 21, 1990, to members of GOPAC’s Executive

Finance Committee, Mr. Callaway wrote that:

The next two years are absolutely critical to all that we

hope to accomplish. Our May 19 project [AOW] will go a

long way toward helping Republicans set an agenda and

persuading Americans to realign with us.

(Ex. 16, GOPAC3 484). A copy of this letter was sent to Mr. Gingrich. Written across the top of his copy, in his handwriting, is

‘‘Newt 2/20/90.’’ (Ex. 16, WGC2–03992). According to Mr. Gingrich

this probably meant he had seen the letter (12/9/96 Gingrich Tr.

36–37); however, he did not recall the content of this letter during

an interview with Mr. Cole. (12/9/96 Gingrich Tr. 35).

An unsigned letter, apparently prepared for Mr. Callaway’s signature,6 dated March 7, 1990, states:

Our May 19th American Opportunities Workshop is the

single most exciting project I’ve ever undertaken. I consider this program critical to our efforts to become a Republican majority.

* * * * * * *
17

7 According to Mr. Callaway this letter may have been sent out, but he again did not have

a specific recollection of it. (12/7/96 Callaway Tr. 58).

In order to encourage Americans to vote—and vote Republican—so that we may enact our policies of opportunity, we must reach them with our vision of hope.

It is time for our message and program, now proven

among those in the trenches, to be shared with the Americans who are not motivated by our current government to

go to the polls or get involved.

* * * * * * *

The American Opportunities Workshop is GOPAC’s answer to teaching and empowering the American people. We

hope that the citizen movement launched by this project

will be the key to a future of Republican governance.

(Ex. 17, 425–426).

A March 16, 1990 GOPAC letter over Mr. Gingrich’s name discusses the purpose behind AOW.

Through the use of satellite hook-ups, not only can we

reach new groups of voters not traditionally associated

with our Party, but we’ll be able to give them our message

straight, without it being filtered and misinterpreted by

liberal elements in the media.

* * * * * * *

Because I believe it has such great potential for helping

President Bush, our candidates and our Party, I told Bo to

move ahead with planning the workshop.

* * * * * * *

I truly believe that our Party and our President stand

on the verge of a tremendous success this year, and that

this workshop can be a great election year boost to us.

(Ex. 18, 2782–2783). Mr. Gingrich did not recall this document.

When asked whether AOW was intended to be an election year

boost, he said that it may have been, but he also thought it was

idea oriented. (12/9/96 Gingrich Tr. 39–40).

In an unsigned letter addressed to Mr. Thorton Stearns, apparently written for Mr. Callaway’s signature,7 the AOW project and

its purpose were described as follows:

With more than 600 workshop sites across the country,

30,000 participants, and extensive media coverage, AOW

was a significant success on its own terms. However, the

real reason GOPAC took on AOW was to explore an innovative new mechanism for creating and motivating the

new Republican majority of the 1990s.

(Ex. 19, GOPAC3 467).

In a letter over Mr. Gingrich’s name dated June 21, 1990, AOW

and ACTV are explicitly tied together in an effort to achieve the

same goal of building the Republican Party and trying to have an

impact on political campaigns. The letter states:
18

8 Jim Tilton was an unpaid senior advisor to GOPAC. He was an attorney and a close friend

of Mr. Gingrich. (12/10/96 Gingrich Tr. 10, 11, 56, 57). 9 A GOPAC statement of ‘‘Revenue and Expenses’’ attached to this memorandum shows a single line item for ‘‘AOW/ACTV.’’ (Ex. 21, Eisenach 3957).

These are exciting times at GOPAC and we have been

quite busy lately. I am excited about [the] progress of the

‘‘American Citizens’ Television’’ project, which will carry

the torch of citizen activism begun by our American Opportunities Workshop on May 19th. We mobilized thousands

of people across the nation at the grass roots level who as

a result of AOW, are now dedicated GOPAC activists. We

are making great strides in continuing to recruit activists

all across America to become involved with the Republican

party. Our efforts are literally snowballing into the activist

movement we need to win in ’92.

(Ex. 20, GOPAC3 224). Mr. Gingrich said that the signature on the

letter was not his. (12/9/96 Gingrich Tr. 40). Mr. Gingrich said that

the above statement did not reflect the purpose of AOW or ACTV.

(12/9/96 Gingrich Tr. 41).

Finally, an August 27, 1990 memorandum from Mr. Callaway to

Mr. Gingrich and Jim Tilton 8 gives insight to the goals of the

AOW/ACTV projects. (Ex. 21, Eisenach 3950–3959). The memorandum discusses a meeting the three men had five days earlier.

Based on the memorandum, the main topic focused on how GOPAC

should proceed in the future. The problems addressed in the meeting concerned the fact that AOW/ACTV had diverted too much

money and attention from traditional GOPAC efforts. This caused

erosion in support from GOPAC members. The three men decided

to try one more ACTV program on September 29, 1990. If additional funding was not available beyond that point, the project

would not be continued. They decided that it needed to be ‘‘a very

strong program that is controversial enough to stir up our Charter

members and other constituents.’’ (Ex. 21, Eisenach 3951). The

show that was chosen was on educational choice, which was a specific GOPAC project.

The memorandum recounted that Mr. Gingrich had reviewed all

the options set forth and concluded the following:

Newt then stated firmly that he feels we need to go back

to basics for now through 1992. That the only special

projects for 1992 should be 1992 election oriented projects.

Newt has now concluded that you can’t really affect 1992

elections indirectly—we must do it directly through political programs.

(Ex. 21, Eisenach 3950).9 Mr. Callaway said that this paragraph

could have been referring to ACTV, but he did not have a clear

recollection. (12/5/96 Callaway Tr. 62).

4. AOW/ACTV IN MR. GINGRICH’S CONGRESSIONAL DISTRICT

While AOW/ACTV was supposed to be non-partisan, two memoranda indicate that there was some effort to ensure that workshops

were set up in Mr. Gingrich’s congressional district. In a memorandum to Mr. Callaway, dated February 8, 1990, Mr. Eisenach wrote:
19

10 According to Mr. Callaway, the listing of ACTV was a ‘‘bad choice of words.’’ (12/7/96

Callaway Tr. 70).

An area for immediate attention is ‘‘targets of opportunity’’—e.g. Georgia’s 6th District, Colorado, and the D.C.

area. We need to identify resources to ensure that we

maximize our returns in these three areas, and other specific target areas we might add later. In particular, we

need to put very high on our agenda the task of identifying

a 6th District Coordinator.

(Ex. 22, Eisenach 3811). Similarly, in a March 30, 1990 memorandum from Mr. Gingrich to Joe Gaylord and Mary Brown, the following is written:

The GOPAC print-out shows only one very tentative

(Clay Davis) site in my district. Time is getting short for

finding sites and GOPAC needs to have the hosts identified as soon as possible to get materials to them to make

the workshops a success.

Please make this a high priority.

(Ex. 23, GOPAC3 460). Mr. Gingrich did not recall this memorandum and said that there was an effort to target the 6th District—

his congressional district—‘‘only in the sense that we hosted [AOW]

from there.’’ (12/9/96 Gingrich Tr. 19).

5. GOPAC’S CONNECTION TO ALOF AND ACTV

As has been previously discussed, ACTV was a continuation of

AOW and ALOF used GOPAC’s offices and facilities. In his interview, Mr. Callaway stated a number of times that GOPAC was separate from ALOF. (12/7/96 Callaway Tr. 64, 65–66, 68–69, 73). A

number of documents, however, from 1990 indicate that ALOF and

ACTV had significant connections to GOPAC.

In a June 26, 1990 memorandum to Mr. Callaway, Mr. Eisenach

recounts a discussion the two men had that morning with Mr.

Gingrich. During that discussion, Mr. Gingrich gave them a handout that ‘‘identified three GOPAC/ALOF zones: 1. Local Elections,

2. Planning/R&D, 3. Movement.’’ (Ex. 24, Eisenach 4039). The

memorandum goes on to discuss how GOPAC and ALOF will relate

to each other.

During the Preliminary Inquiry GOPAC produced copies of its

‘‘Confidential Masterfile Reports’’ that were used to keep track of

contributors. Under the section entitled ‘‘Giving History’’ the 1990

reports list two entities: GOPAC and ALOF. (Ex. 25, GOPAC3

0510). Attached to these reports are copies of correspondence from

both GOPAC and ALOF to contributors. (Ex. 25, GOPAC3 0511–

0515).

An August 13, 1990 memorandum from Mr. Callaway to Mr.

Gingrich lists the three broad things GOPAC does. The third one

listed is ‘‘Projects such as ACTV, AOW and focus groups.’’ (Ex. 26,

Eisenach 4251).10

GOPAC’s Report to Charter Members dated November 11, 1990,

includes a section on Community Activism. (Ex. 4, GOPAC3 180–

188). In that section it discusses AOW and ACTV. While it states

that ACTV is ‘‘legally no longer a GOPAC project,’’ it goes on to dis-
20

11There is no evidence that Mr. Gingrich had any significant involvement with this level of

the financial aspects of the operations of ALOF. However, because these facts form part of the

basis for a recommendation by the Subcommittee that the relevant materials gathered during

the preliminary inquiry be made available to the Internal Revenue Service, the matter is set

forth in some detail. 12The original debt from GOPAC listed on ALOF’s tax returns was for $45,247. This is not

supported by the checks from GOPAC to ALOF which only reflect $45,000. This additional $247

continued to be listed for the remaining years and was reflected in the ultimate forgiveness of

a portion of this debt in 1993. It is not clear what the $247 represents.

cuss ACTV in terms which indicate that it continued to be treated

as a GOPAC project. For example it states that ‘‘Our mission is to

establish ACTV as a new, interactive information network.’’ (Ex. 4,

GOPAC3 181). The Charter Member Report is worded in a manner

that indicates ACTV was considered a GOPAC project. For example, it uses phrases like ‘‘Our goal’’ with ACTV, ‘‘Our next ACTV

program,’’ and ‘‘Our program was hosted by * * *.’’ (Ex. 4,

GOPAC3 181–182). At the end of the report under the heading

‘‘Getting Out the Message,’’ there is a chart showing the AOW and

ACTV programs. It then lists how many workshops were set up for

each program and what the estimated attendance was for these

workshops. (Ex. 4, GOPAC3 183).

6. GOPAC FUNDING OF ALOF AND ACTV 11

When ALOF began to operate in June 1990 it had less than $500

in its bank account. (Ex. 27, CNB 006). It obtained a loan for

$25,000 from the Central Bank of Denver in late June and received

some direct contributions. These came from a foundation associated

with Mr. Callaway, the Family Channel, and at least one other

GOPAC supporter. (Ex. 28, ALOF 0050). In addition, GOPAC

loaned ALOF $45,000 in 1990, and $29,500 in early 1991 to pay for

production expenses. The total of loans from GOPAC to ALOF was

$74,500. (Ex. 35, ALOF 0030).

ALOF’s last program was broadcast in October 1990. In 1991 and

1992 it did not engage in any activities. In 1991, Citizens Against

Government Waste contributed $37,000 to ALOF and Mr.

Callaway’s foundation contributed $10,000. (Ex. 28, ALOF 0090).

The total, $47,000, was given to GOPAC to be applied to the debt.

(Ex. 37, CNB 0426, CNB 0428, CNB 0430, CNB 0432). After the

$47,000 payment, ALOF owed GOPAC $27,500. (Ex. 28, ALOF

0064).12

In late 1991 and 1992, ALOF received contributions from a number of GOPAC supporters totalling $80,000. (Ex. 28, ALOF 0078).

$70,000 of that amount was given to GOPAC. GOPAC’s then-Executive Director, Mr. Eisenach, was involved in soliciting a number

of these donations.

On February 27, 1992, Mr. Eisenach wrote to R. Randolph Richardson to ask him to become a Charter Member of GOPAC. In

order to be a Charter Member, a person must contribute at least

$10,000. In the letter Mr. Eisenach states:

With respect to foundation funds, it is of course not appropriate for GOPAC to accept 501(c)(3) money. However,

Bo Callaway does have a foundation, the Abraham Lincoln

Opportunity Foundation (ALOF), which owes GOPAC a

substantial sum of money. You might consider a contribution to ALOF, which would enable it to pay down its
21

13 Because of her assertion of a Constitutional privilege, the Subcommittee was unable to

interview the accountant for GOPAC and ALOF. 14 In the tax return for ALOF for 1990, Part VII asks, among other things, whether ALOF

had any transactions with a political action committee involving loans, shared facilities, equipment, or paid employees. Even though GOPAC was a political action committee the return answers ‘‘no’’ to all those questions. (Ex. 28, ALOF 0056). The accountant for ALOF, who was also

the accountant for GOPAC, said that she had answered those questions in the negative based

on her belief that these questions specifically excluded any transactions with political action

committees. (10/31/96 Gilbert Tr. 18-20). She did not discuss this reading of the tax return with

anyone at ALOF, but she did fill the form out in this way and they signed it without any quesContinued

GOPAC debt, and thus be of enormous help in our efforts

to change the Congress in 1992.

(Ex. 29, Eisenach 4652). Mr. Richardson’s foundation, the Grace

Jones Richardson Trust, wrote a $25,000 check to ALOF on April

14, 1992, and ALOF wrote a $25,000 check to GOPAC on April 23,

1992. (Ex. 38, CNB 0449, CNB 0445).

On March 16, 1992, Mr. Eisenach wrote a memorandum to June

Weiss, GOPAC’s Finance Director, concerning Mr. Callaway’s Charter Member dues. The memorandum states:

Bo has offered us a choice of (1) $10,000 from him or (2) $20,000 from ALOF. I indicated to him on the phone today

I would tend to go for $20,000 over $10,000—in part,

frankly, because I think we ought to go ahead and get the

ALOF loan repaid and be done with it, as opposed to having it hanging around for another year.

(Ex. 30, Eisenach 3725). On March 23, 1992, Mr. Callaway’s foundation donated $20,000 to ALOF. (Ex. 39, CNB 0443). On the same

day, ALOF wrote a check to GOPAC for $20,000. (Ex. 39, CNB

0447). A letter was sent to Mr. Callaway on ALOF stationery

thanking him for the contribution. It was signed by numerous

members of GOPAC’s staff. (Ex. 31, GOPAC2 0012).

Two other GOPAC Charter Members made contributions to

ALOF which were immediately turned over to GOPAC. (Ex. 40,

CNB 0217, CNB 0439, CNB 0441, CNB 0459). Handwritten notes

relating to one of them indicates that a tax-deductible option for

his contribution to GOPAC was discussed before the contribution to

ALOF was made. (Ex. 32, GOPAC2 2424–2426).

As of 1993 ALOF had relocated its offices to Colorado. Its Colorado accountant was preparing the tax return for 1992 and saw the

payments to GOPAC. In November she wrote to Kay Riddle,

ALOF’s Secretary, and asked for invoices from GOPAC to ALOF to

support these payments. (Ex. 33, Newbill 0119). In December, Ms.

Riddle wrote to GOPAC’s accountant asking for those invoices. (Ex.

34, ALOF 0028). Several days later the accountant provided Ms.

Riddle with a summary memorandum and a number of invoices.

(Ex. 35, ALOF 0029–0030, ALOF 0027–0028, GOPAC3 0811). Some

were undated. Some were dated in 1991. All concerned activities

which were stated to have taken place in 1990 and there is no evidence that the invoices were written contemporaneously with the

events for which they billed.13

The invoices, along with the previously mentioned loans, totaled $160,537.70. This consisted of rent ($12,718.08), postage and office

supplies ($8,455.08), services of staff and consultants ($64,864.54),

and the loans ($74,500).14 (Ex. 35, ALOF 0029, ALOF 0027, ALOF
22

tions. (10/31/96 Gilbert Tr. 21). This same error occurred in the tax return for 1991. (Ex. 28,

ALOF 0069). 15The amount listed on the Return was $43,785. As referred to earlier, it is unclear what the

$247 difference represents.

0026, GOPAC3 0811). The time for the staff was apportioned to reflect the percentage of their work spent on ALOF business. Some

of the consultants listed, however, did not keep any records reflecting the percentage of time they spent on specific projects and did

not recall doing any work for ALOF. (12/2/96 Hanser Tr. 25; 12/5/

96 Mahe Tr. 31). Records of one consultant did record the time he

spent on ALOF business, but it was substantially less than the

time listed in the invoice. (Ex. 35, ALOF 0029; Ex. 36, WGC2–

01378–01379, Eisenach 4276–4277, Eisenach 4302–4303). According to Ms. Riddle, she did not attempt to apportion time based on

the actual hours spent by these people on ALOF business. Instead,

she said she determined the percentages before any of the people

had done any work based on her best guess of the time they would

spend. (12/9/96 Riddle Tr. 69–70). Of the total amount listed on the invoices of $160,537.70, ALOF

paid GOPAC $117,000 between 1991 and 1992. (Ex. 35, ALOF

0029). This left a balance of $43,537.70, which, according to ALOF’s

1993 tax return, was forgiven by GOPAC. (Ex. 28, ALOF 0089).15

According to Kathleen Taylor, a current employee of the Speaker’s Office and the former Political Services Director for GOPAC,

the lessons learned from AOW and ACTV were used for the Renewing American Civilization course discussed below. (6/28/96 Taylor

Tr. 45). Those lessons were ‘‘[h]ow to get workshops sites, how to

disseminate information, [and] mass-marketing the ideas.’’ (6/28/96

Taylor Tr. 45). In the same vein, a letter from Mr. Eisenach to Mr.

Mescon containing the terms and conditions under which WPG

would manage the Renewing American Civilization course states:

Among our most significant project management undertakings was the 1990 ‘‘American Opportunities Workshop’’

and its successor, American Citizens’ Television. Both of

these projects bear significant similarities to the project

you have asked us to get involved with, ‘‘Renewing American Civilization.’’ Thus, we enter this undertaking with

both enthusiasm and a full understanding of the enormity

and complexity of the undertaking.

(Ex. 41, Mescon 0651).

III. SUMMARY OF FACTS PERTAINING TO ‘‘RENEWING AMERICAN

CIVILIZATION’’

A. Genesis of the Renewing American Civilization Movement and

Course

In his interview with the Special Counsel, Mr. Gingrich said the

idea for the course was first developed while he was meeting with

Owen Roberts, a GOPAC Charter Member and advisor, for two

days in December 1992. (7/17/96 Gingrich Tr. 11–12, 23–24;

7/15/96 Gaylord Tr. 23–24; Ex. 42, GOPAC2 2492). Mr. Gingrich

wrote out notes at this meeting and they were distributed to some

of his advisors. (Ex. 42, HAN 02103–02125; 6/26/96 Hanser Tr. 28;
23

16 Among the people who received copies of the notes were Mr. Hanser, Mr. Gaylord and Mr.

Eisenach. In a subsequent memorandum to Gay Gaines and Lisa Nelson, as Ms. Gaines and

Ms. Nelson were about to take over the management of GOPAC in October 1993, Mr. Gingrich

described the roles each of the three men played in his life as follows:

1. Joe Gaylord is empowered to supervise my activities, set my schedule, advise me on

all aspects of my life and career. He is my chief counselor and one of my closest friends.

***

2. Steven Hanser is my chief ideas adviser, close personal friend of twenty years, and

chief language thinker. * * *

* * * * * * *

4. Jeff Eisenach is our senior intellectual leader and an entrepreneur with great talent

and determination. * * *

Ex. 43, GDC 11551, 11553).

17Mr. Gingrich said that he intended the movement to be international in scope. Until some

point in 1995, however, its scope was only national. (7/17/96 Gingrich Tr. 33).

7/15/96 Gaylord Tr. 24–25; 7/12/96 Eisenach Tr. 108–109).16 A review of those notes indicates that the topic of discussion at this

meeting centered mostly on a political movement. The notes contain limited references to a course and those are in the context of

a means to communicate the message of the movement.

The movement was to develop a message and then disseminate

and teach that message. (Ex. 42, HAN 02109). One of the important aspects of the movement was the creation of ‘‘disseminating

groups and [a] system of communication and education.’’ (Ex. 42,

HAN 02109). It also sought to ‘‘professionalize’’ the House Republicans by using the ‘‘message to attract voters, resources and candidates’’ and develop a ‘‘mechanism for winning seats.’’ (Ex. 42,

HAN 02110). The ultimate goal of the movement was to replace the

welfare state with an opportunity society, and all efforts had to be

exclusively directed to that goal. (Ex. 42, HAN 02119). Ultimately,

it was envisioned that ‘‘a Republican majority [would be] the heart

of the American Movement * * *’’. (Ex. 42, HAN 02117).17 Mr.

Gingrich’s role in this movement was to be the ‘‘advocate of civilization,’’ the ‘‘definer of civilization,’’ the ‘‘teacher of the rules of civilization,’’ the ‘‘arouser of those who form civilization,’’ the ‘‘organizer

of the pro-civilization activists,’’ and the ‘‘leader (possibly) of the

civilizing forces.’’ (Ex. 42, HAN 02104). In doing this, he intended

to ‘‘retain a primary focus on elected political power as the central

arena and fulcrum by which a free people debate their future and

govern themselves.’’ (Ex. 42, HAN 02104). The support systems for

this movement included GOPAC, some Republican international organizations, and possibly a foundation. (Ex. 42, HAN 02121). There

was substantial discussion of how to disseminate the message of

the movement. (Ex. 42, HAN 02109, 02110, 02111). Some of the

methods discussed for this dissemination included, ‘‘Possibly a series of courses with audio and videotape followons’’/‘‘Possibly a textbook (plus audio, video, computer) series’’/‘‘Campus (intellectual)

appearances on ‘the histories’ Gingrich the Historian applying the

lessons of history to public life.’’ (Ex. 2, HAN 02118). One of the

tasks listed for 1993 is ‘‘Design vision and its communication and

communicate it with modification after feedback.’’ (Ex. 2, HAN

02120). According to Mr. Gingrich, the course was to be a subset

of the movement and was to be a primary and essential means for

developing and disseminating the message of the movement. (7/17/

96 Gingrich Tr. 42, 58; 11/13/96 Gingrich Tr. 126–127).

Another description of the Renewing American Civilization movement is found in notes of a speech Mr. Gingrich gave on January
24

18This appears to be the earliest example of Mr. Gingrich speaking about the Renewing American Civilization movement. A draft of this document in Mr. Gingrich’s handwriting is attached

to the typed version of the notes. 19 Although not mentioned in this speech, those five pillars and three areas are each separate

lectures in what became the course.

20Two days later Mr. Gingrich delivered a Special Order on the House floor concerning Renewing American Civilization. In this speech he described a movement to renew American civilization, but did not mention the course. He did discuss the five pillars of American civilization

and the three areas where solutions needed to be developed. (Ex. 45, LIP 00036–00045).

23, 1993, to the National Review Institute. (Ex. 44, PFF 14473–

14477, PFF 38279–38288).18 In those notes, Mr. Gingrich wrote

that ‘‘our generation’s rendezvous with history is to launch a movement to renew American civilization.’’ (Ex. 44, PFF 14474). He

noted that a majority of Americans favor renewing American civilization and that ‘‘[w]e are ready to launch a 21st century conservatism that will renew American civilization, transform America

from a welfare state into an opportunity society and create a conservative governing majority.’’ (Ex. 44, PFF 14475). Mr. Gingrich

then goes on to describe the five pillars of American civilization

and the three areas where the movement needs to offer solutions.19

He then wrote that if they develop solutions for those three areas

they ‘‘will decisively trump the left. At that point either Clinton

will adopt our solutions or the country will fire the president who

subsidizes decay and blocks progress.’’ (Ex. 44, PFF 14476). The

notes end with the following:

We must renew American civilization by studying these

principles, networking success stories, applying these success stories to develop programs that will lead to dramatic

progress, and then communicating these principles and

these opportunities so the American people have a clear

choice between progress, renewal, prosperity, safety and

freedom within America [sic] civilization versus decay, decline, economic weakness, violent crime and bureaucratic

dominance led by a multicultural elite.

Given that choice, our movement for renewing American

civilization will not just win the White House in 1996, we

will elect people at all levels dedicated to constructive proposals.

(Ex. 44, PFF 14477). (Emphasis in the original).20

In a draft document entitled ‘‘Renewing American Civilization

Vision Statement,’’ written by Mr. Gingrich and dated March 19,

1993, he again described the movement in partisan terms and emphasized that it needed to communicate the vision of renewing

American civilization on very large scale. (Ex. 46, WGC 00163–

00171, WGC 00172–00191). He wrote that renewing American civilization will require ‘‘a new party system so we can defeat the

Democratic machine and transform American society into a more

productive, responsible, safe country by replacing the welfare state

with an opportunity society.’’ (Ex. 46, WGC 00163).

B. Role of the Course in the Movement

Mr. Gingrich was asked about the role of the course in the movement. He said that the course was ‘‘the only way actually to develop and send * * * out’’ the message of the movement. (7/17/96
25

21 It is not clear whether the meeting was exclusively a GOPAC meeting, but at least part

of the agenda explicitly concerned GOPAC projects. As will be discussed later, GOPAC’s political

plan for 1993 centered on Renewing American Civilization. As also discussed below, GOPAC’s

April 1993 Charter Meeting was called ‘‘Renewing American Civilization’’ and employed breakout sessions for Charter Members to critique and improve individual components of the course

on Renewing American Civilization. (7/17/96 Gingrich Tr. 69–70; 7/12/96 Eisenach Tr. 144–146;

7/15/96 Gaylord Tr. 46).

Gingrich Tr. 42). In a later interview, he modified this statement

to say that the course was ‘‘clearly the primary and dominant

method; it was not the only way one could have done it. But I think

it was essential to do it, to have the course.’’ (11/13/96 Gingrich Tr.

126–127).

The earliest known documentary reference to the course in the

context of the movement is in an agenda for a meeting held on February 15, 1993, at GOPAC’s offices. The meeting had two agenda

items: ‘‘I. General Planning/Renewing American Civilization’’ and

‘‘II. Political/GOPAC Issues.’’ (Ex. 47, JR–0000645–0000647).

Under the first category, one topic listed is ‘‘American Civilization

Class/Uplink.’’ (Ex. 47, JR–0000645). Under the second category

two of the items listed are ‘‘GOPAC Political Plan & Schedule’’ and

‘‘Charter Meeting Agenda.’’ (Ex. 47, JR–0000645). 21 Attached to

the agenda for this meeting is a ‘‘Mission Statement’’ written by

Mr. Gingrich which applied to the overall Renewing American Civilization movement, including the course. (7/12/96 Eisenach Tr.

248–249; 7/17/96 Gingrich Tr. 145–146). It states:

We will develop a movement to renew American civilization using the 5 pillars of 21st Century Freedom so people

understand freedom and progress is possible and their

practical, daily lives can be far better.* As people become

convinced American civilization must and can be renewed

and the 5 pillars will improve their lives we will encourage

them and help them to network together and independently, autonomously initiate improvements wherever they

want. However, we will focus on economic growth, health,

and saving the inner city as the first three key areas to

improve. Our emphasis will be on reshaping law and government to facilitate improvement in all of [A]merican society. We will emphasize elections, candidates and politics

as vehicles for change and the news media as a primary

vehicle for communications. To the degree Democrats

agree with our goals we will work with them but our emphasis is on the Republican Party as the primary vehicle

for renewing American civilization.

*Renewing American Civilization must be communicated as an intellectual-cultural message with governmental-political consequences. (footnote in original)

(Ex. 47, JR–0000646).

In February 1993, Mr. Gingrich first approached Mr. Mescon

about teaching the course at KSC. (Ex. 48, Mescon 0278; 6/13/96

Mescon Tr. 26–27). Mr. Gingrich had talked to Dr. Mescon in October or November 1992 about the general subject of teaching, but

there was no mention of the Renewing American Civilization

course at that time. (6/13/96 Mescon Tr. 12–14). The early discussions with Mr. Mescon included the fact that Mr. Gingrich intended

to have the Renewing American Civilization course disseminated
26

22The letter goes on to state that: [L]et me emphasize very strongly that the ‘‘Renewing American Civilization’’ project is not being carried out under the auspices of GOPAC, but rather by

Kennesaw State College and the Kennesaw State College Foundation. We will not be relying

on GOPAC staff to support the class, and I am not asking you for financial support.

(Ex. 50, Kohler 138) (emphasis in the original).

23 At the top of this memorandum is a handwritten notation (not Mr. Gingrich’s) stating:

‘‘Tuesday 4 p.m. GOPAC Mtg.’’ (Ex. 51, GDC 08891).

through a satellite uplink system. (Ex. 49, Mescon 0664; 6/13/96

Mescon Tr. 29–30).

Shortly before this discussion with Mr. Mescon, in late January

1993, Mr. Gingrich met with a group of GOPAC Charter Members.

In a letter written some months later to GOPAC Charter Members,

Mr. Gingrich described the meeting as follows:

During our meeting in January, a number of Charter

Members were kind enough to take part in a planning session on ‘‘Renewing American Civilization.’’ That session

not only affected the substance of what the message was

to be, but also how best the new message of positive solutions could be disseminated to this nation’s decision makers—elected officials, civic and business leaders, the media

and individual voters. In addition to my present avenues

of communication I decided to add an avenue close to my

heart, that being teaching. I have agreed with Kennesaw

State College, * * * to teach ‘‘Renewing American Civilization’’ as a for-credit class four times during the next four

years.

Importantly, we made the decision to have the class

available as a ‘‘teleseminar’’ to students all across the

country, reaching college campuses, businesses, civic organizations, and individuals through a live ‘‘uplink,’’ video

tapes and audio tapes. Our hope is to have at least 50,000

individuals taking the class this fall and to have trained

200,000 knowledgeable citizen activists by 1996 who will

support the principles and goals we have set.

(Ex. 50, Kohler 137–138). 22 During an interview with the Special

Counsel, Mr. Gingrich said he doubted that he had written this letter and said that the remark in the letter that the Charter Members’ comments played a large role in developing the course ‘‘exaggerates the role of GOPAC.’’ The letter was written to ‘‘flatter’’ the

Charter Members. (11/13/96 Gingrich Tr. 129–130).

In a March 29, 1993 memorandum, Mr. Gingrich specifically connects the course with the political goals of the movement. The

memorandum is entitled ‘‘Renewing American Civilization as a defining concept’’ and is directed to ‘‘Various Gingrich Staffs.’’ 23 The

original draft of the memorandum is in Mr. Gingrich’s handwriting.

(Ex. 51, GDC 08891–08892, GDC 10236–10238). In the memorandum, Mr. Gingrich wrote:

I believe the vision of renewing American civilization

will allow us to orient and focus our activities for a long

time to come.

At every level from the national focus of the Whip office

to the 6th district of Georgia focus of the Congressional office to the national political education efforts of GOPAC
27

24 ‘‘FONG’’ stands for Mr. Gingrich’s campaign organization, ‘‘Friends of Newt Gingrich.’’ 25The ‘‘party’’ referred to in the quote is the Republican Party. (11/13/96 Gingrich Tr. 80). 26Mr. Eisenach apparently sent a copy of this to a GOPAC supporter in preparation for a

meeting in May of 1993. (7/12/96 Eisenach Tr. 146–149). In the accompanying letter, Mr.

Eisenach said: ‘‘The enclosed materials provide some background for our discussions, which I

expect will begin with a review of the Vision, Strategies and Goals of our efforts to Renew AmerContinued

and the re-election efforts of FONG 24 we should be able to

use the ideas, language and concepts of renewing American civilization.

(Ex. 51, GDC 08891).

In the memorandum, he describes a process for the dissemination of the message of Renewing American Civilization to virtually

every person he talks to. This dissemination includes a copy of the

Special Order speech and a one-page outline of the course. He then

goes on to describe the role of the course in this process:

The course is only one in a series of strategies designed

to implement a strategy of renewing American civilization.

(Ex. 51, GDC 08891). Another strategy involving the course is:

Getting Republican activists committed to renewing

American civilization, to setting up workshops built

around the course, and to opening the party up to every

citizen who wants to renew American civilization.

(Ex. 51, GDC 08892). 25 Jana Rogers, the Site Host Coordinator for

the course in 1993, was shown a copy of this memorandum and

said she had seen it in the course of her work at GOPAC. (7/3/96

Rogers Tr. 64). She said that this represented what she was doing

in her job with the course. (7/3/96 Rogers Tr. 67–69). Steve Hanser,

a paid GOPAC consultant and someone who worked on the course,

also said that the contents of the memorandum were consistent

with the strategy related to the movement. (6/28/96 Hanser Tr. 42–

45).

The most direct description of the role of the course in relation

to the movement to renew American civilization is set out in a document which Mr. Gingrich indicates he wrote. (7/17/96 Gingrich Tr.

162–163). The document has a fax stamp date of May 13, 1993 and

indicates it is from the Republican Whip’s Office. (Ex. 52, GDC

10639–10649). The document has three parts to it. The first is entitled ‘‘Renewing America Vision’’ (Ex. 52, GDC 10639–10643); the

second is entitled ‘‘Renewing America Strategies’’ (Ex. 52, GDC

10644–10646); and the third is entitled ‘‘Renewing American Civilization Our Goal.’’ (Ex. 52, GDC 10647–10649). Mr. Gingrich said

that the third part was actually a separate document. (7/17/96

Gingrich Tr. 162–164). While all three parts are labeled ‘‘draft,’’ the

document was distributed to a number of Mr. Gingrich’s staff members and associates, including Mr. Hanser, Ms. Prochnow, Ms. Rogers, Mr. Gaylord, Mr. Eisenach, and Allan Lipsett (a press secretary). Each of the recipients of the document have described it as

an accurate description of the Renewing American Civilization

movement. (6/28/96 Hanser Tr. 48, 53; 7/10/96 Prochnow Tr. 70–71;

7/3/96 Rogers Tr. 71–75; 7/15/96 Gaylord Tr. 66–67; 7/12/96

Eisenach Tr. 148–149, 272–275; Lipsett Tr. 30–31). 26 In the first

section, Mr. Gingrich wrote:
28

ican Civilization. The class Newt is teaching at Kennesaw State College this Fall is central to

that effort, and GOPAC and the newly created Progress & Freedom Foundation both play important roles as well. (Ex. 13, GOPAC2 2337).’’ 27This refrain goes as follows: ‘‘You cannot maintain a civilization with twelve-year-olds having babies, fifteen-year-olds shooting each other, seventeen-year-olds dying of AIDS, and eighteen-year-olds getting diplomas they can’t read.’’

The challenge to us is to be positive, to be specific, to be

intellectually serious, and to be able to communicate in

clear language a clear vision of the American people and

why it is possible to create that America in our generation.

Once the American people understand what they can

have they will insist that their politicians abolish the welfare state which is crippling them, their children, and their

country and that they replace it with an opportunity society based on historically proven principles that we see

working all around us.

(Ex. 52, GDC 10643).

In the second portion of the document, Mr. Gingrich describes

how the vision of renewing America will be accomplished. He lists

thirteen separate efforts that fall into categories of communication

of the ideas in clear language, educating people in the principles

of replacing the welfare state with an opportunity society, and recruiting public officials and activists to implement the doctrines of

renewing American civilization. (Ex. 52, GDC 10644–10646).

In the third section, Mr. Gingrich explicitly connects the course

to the movement. First he starts out with three propositions that

form the core of the course: (1) a refrain he refers to as the ‘‘four

can’ts;’’ 27 (2) the welfare state has failed; and (3) the welfare state

must be replaced because it cannot be repaired. (Ex. 52, GDC

10647; see also Ex. 54, PFF 18361, 18365–18367). He then described the goal of the movement:

Our overall goal is to develop a blueprint for renewing

America by replacing the welfare state, recruit, discover,

arouse and network together 200,000 activists including

candidates for elected office at all levels, and arouse

enough volunteers and contributors to win a sweeping victory in 1996 and then actually implement our victory in

the first three months of 1997.

Our specific goals are to:

1. By April 1996 have a thorough, practical blueprint for replacing the welfare state that can be understood and supported by voters and activists.

We will teach a course on Renewing American civilization on ten Saturday mornings this fall and make it

available by satellite, by audio and video tape and by

computer to interested activists across the country. A

month will then be spent redesigning the course based

on feedback and better ideas. Then the course will be

retaught in Winter Quarter 1994. It will then be rethought and redesigned for nine months of critical reevaluation based on active working groups actually applying ideas across the country the course will be

taught for one final time in Winter Quarter 1996.
29

2. Have created a movement and momentum which

require the national press corps to actually study the

material in order to report the phenomenon thus infecting them with new ideas, new language and new

perspectives.

3. Have a cadre of at least 200,000 people committed

to the general ideas so they are creating an echo effect

on talk radio and in letters to the editor and most of

our candidates and campaigns reflect the concepts of

renewing America.

Replacing the welfare state will require about

200,000 activists (willing to learn now [sic] to replace

the welfare state, to run for office and to actually replace the welfare state once in office) and about six

million supporters (willing to write checks, put up

yard signs, or do a half day’s volunteer work).

(Ex. 52, GDC 10647–10649). The ‘‘sweeping victory’’ referred to

above is by Republicans. (11/13/96 Gingrich Tr. 86). The reference

to ‘‘our candidates’’ above is to Republican candidates. (11/13/96

Gingrich Tr. 90). According to Mr. Gingrich, Mr. Gaylord, and Mr.

Eisenach, the three goals set forth above were to be accomplished

by the course. (7/17/96 Gingrich Tr. 174–179; 7/15/96 Gaylord Tr.

66–67; 7/12/96 Eisenach Tr. 225; Ex. 55, GOPAC2 2419; Ex. 56,

GOPAC2 2172–2173; Ex. 57, Mescon 0626).

In various descriptions of the course, Mr. Gingrich stated that

his intention was to teach it over a four-year period. After each

teaching of the course he intended to have it reviewed and improved. The ultimate goal was to have a final product developed by

April of 1996. (7/17/96 Gingrich Tr. 109; Ex. 56, GOPAC2 2170). An

explanation of this goal is found in a three-page document, in Mr.

Gingrich’s handwriting, entitled ‘‘End State April 1996.’’ (Ex. 58,

PFF 20107–20109). Mr. Gingrich said he wrote this document early

in the process of developing the movement and described it as a

statement of where he hoped to be by April 1996 in regard to the

movement and the course. (7/17/96 Gingrich Tr. 108–115). On the

first page he wrote that the 200,000 plus activists will have a common language and general vision of renewing America, and a commitment to replacing the welfare state. In addition, ‘‘[v]irtually all

Republican incumbents and candidates [will] have the common language and goals.’’ (Ex. 58, PFF 20107). On the second page he

wrote that the ‘‘Republican platform will clearly be shaped by the

vision, language, goals and analysis of renewing America.’’ (Ex. 58,

PFF 20108). In addition, virtually all Republican Presidential candidates will broadly agree on that vision, language, goals and analysis. (Ex. 58, PFF 20108). The Clinton administration and the

Democratic Party will be measured by the vision, principles and

goals of renewing America and there will be virtual agreement that

the welfare state has failed. (Ex. 58, PFF 20108). On the last page

Mr. Gingrich wrote a timeline for the course running from September of 1993 through March of 1996. At the point on the timeline

where November 1994 appears, he wrote the word ‘‘Election.’’ (Ex.

58, PFF 20109). When Mr. Hanser was asked about this document

he said that the vision, language, and concepts of the Renewing

American Civilization movement discussed in the document were
30

28 As mentioned above, the earliest mention of the Renewing American Civilization course was

in February 1993. (Ex. 47, JR–0000646).

being developed in the course. (6/28/96 Hanser Tr. 53). He went on

to say that ‘‘End State’’ was ‘‘an application of those ideas to a specific political end, which is one of the purposes, remember, for the

course.’’ (6/28/96 Hanser Tr. 54). There was an appreciation that

this would be primarily a Republican endeavor. (6/28/96 Hanser Tr.

30).

C. GOPAC and Renewing American Civilization

As discussed above, GOPAC was a political action committee

dedicated to, among other things, achieving Republican control of

the United States House of Representatives. (11/13/96 Gingrich Tr.

169; 7/3/96 Rogers Tr. 38–40). One of the methods it used was the

creation of a political message and the dissemination of that message. (7/12/96 Eisenach Tr. 18–19; 6/28/96 Hanser Tr. 13–14; 7/3/

96 Rogers Tr. 36). The tool principally used by GOPAC to disseminate its message was audiotapes and videotapes. These were sent

to Republican activists, elected officials, potential candidates, and

the public. The ultimate purpose of this effort was to help Republicans win elections. (6/27/96 Nelson Tr. 21–22; 7/15/96 Gaylord Tr.

37, 39; 7/3/96 Rogers Tr. 35–36).

1. GOPAC’S ADOPTION OF THE RENEWING AMERICAN CIVILIZATION

THEME

At least as of late January 1993, Mr. Gingrich and Mr. Eisenach

had decided that GOPAC’s political message for 1993 and 1994

would be ‘‘Renewing American Civilization.’’ 28 (Ex. 59, PFF 37584–

37590; 11/13/96 Gingrich Tr. 157; 7/17/96 Gingrich Tr. 61–62, 74;

7/15/96 Gaylord Tr. 35–36, 42–43; 7/3/96 Rogers Tr. 35, 54–56; 6/

28/96 Taylor Tr. 26; 6/27/96 Nelson Tr. 34, 46). As described in a

February 1993 memorandum over Mr. Gingrich’s name to GOPAC

Charter Members:

GOPAC’s core mission—to provide the ideas and the

message for Republicans to win at the grass roots—is now

more important than ever, and we have important plans

for 1993 and for the 1993–1994 cycle. The final enclosure

is a memorandum from Jeff Eisenach outlining our 1993

program which I encourage you to review carefully and,

again, let me know what you think.

(Ex. 60, PFF 37569). The attached memorandum, dated February

1, 1993, is from Mr. Eisenach to Mr. Gingrich and references their

recent discussions concerning GOPAC’s political program for 1993.

(Ex. 59, PFF 37584–37590). It then lists five different programs.

The fourth one states:

(4) Message Development/’’Renewing American Civilization’’—focus group project designed to test and improve the

‘‘Renewing American Civilization’’ message in preparation

for its use in 1993 legislative campaigns and 1994 Congressional races.
31

29 It is not clear whether any work was done in New Jersey because that state had a Republican legislature and did not need GOPAC’s help. (7/15/96 Gaylord Tr. 42). 30GOPAC later produced two tapes from the session. One was called ‘‘Renewing American

Civilization’’ and was mailed to 8,742 people. (Ex. 63, JG 000001693). The other was called

‘‘Leading the Majority’’ and became a major training tool for GOPAC, used at least into 1996.

(6/27/96 Nelson Tr. 18). Both are based on the Renewing American Civilization message and

contain the core elements of the course. The ‘‘Renewing American Civilization’’ tape contains

more of the RAC philosophy than the ‘‘Leading the Majority’’ tape, however, both contain the

basics of the course that Mr. Gingrich describes as the ‘‘central proposition’’ or ‘‘heart of the

course.’’ (Ex. 56, GOPAC2 2146–2209; Ex. 64, PP000330–000337; Ex. 54, PFF 18361, 18365–

18367).

(Ex. 59, PFF 37584) (emphasis in original). Of the other four programs listed, three relate directly to the use of the Renewing American Civilization message. The fourth—the ‘‘ ‘Tory (Franchise)

Model’ R & D’’—was not done. (7/12/96 Eisenach Tr. 188). This

same political program was also listed in two separate GOPAC documents dated April 26, 1993. One is entitled ‘‘1993 GOPAC POLITICAL PROGRAM’’ (Ex. 61, PP001187–00193) and the other is the

‘‘GOPAC Report to Shareholders.’’ (Ex. 62, Eisenach 2536–2545).

The first page of the Report to Shareholders states:

The challenge facing Republicans, however, is an awesome one: We must build a governing majority, founded on

basic principles, that is prepared to do what we failed to

do during the last 12 years: Replace the Welfare State

with an Opportunity Society and demonstrate that our

ideas are the key to progress, freedom and the Renewal of

American Civilization.

(Ex. 62, Eisenach 2536).

In describing the political programs, these documents provide

status reports that indicate that the Renewing American Civilization message is at the center of each project. Under ‘‘Off-Year State

Legislative Races (New Jersey, Virginia)’’ the project is described

as ‘‘Newt speaking at and teaching training seminar for candidates

at [a June 5, 1993] Virginia Republican Convention.’’ (Ex. 61,

PP001187; Ex. 62, Eisenach 2540). 29 As discussed below, that

speech and training session centered on the Renewing American

Civilization message. Under ‘‘Ongoing Political Activities’’ the first

aspect of the project is described as sending tapes and establishing

a training module on Renewing American Civilization and health

care. (Ex. 61, PP001187; Ex. 62, Eisenach 2540). Under ‘‘Curriculum Update and Expansion’’ the project is described as the production of new training tapes based on Mr. Gingrich’s session at the

Virginia Republican Convention. (Ex. 61, PP01189; Ex. 62,

Eisenach 2541). 30

2. GOPAC’S INABILITY TO FUND ITS POLITICAL PROJECTS IN 1992 AND

1993

At the end of 1992, GOPAC was at least $250,000 short of its

target income (Ex. 65, PFF 38054) and financial problems lasted

throughout 1993. (7/15/96 Gaylord Tr. 71–72). Because of these financial shortfalls, GOPAC had to curtail its political projects, particularly the tape program described above. (Ex. 65, PFF 38054–

38060; Ex. 66, WGC 07428; 7/15/96 Gaylord Tr. 71–72, 76). For example, according to Mr. Gaylord, GOPAC usually sent out eight

tapes a year; however, in 1993, it only sent out two. (7/15/96 Gay-
32

lord Tr. 76). One of these was the ‘‘Renewing American Civilization’’ tape made from Mr. Gingrich’s June 1993 training session at

the Virginia Republican Convention (Ex. 63, JG 000001693). Accompanying the mailing of this tape was a letter from Joe Gaylord

in his role as Chairman of GOPAC. That letter states:

Ideas matter, and replacing the welfare state with an

Opportunity society is so important that Newt is developing a college course that he’ll be teaching this fall on this

subject, Renewing American Civilization.

I wanted you to hear his initial thoughts because it

seems to me that we can’t answer the question ‘‘What does

the Republican Party stand for?’’ without considering the

issues Newt has raised in this speech.

(Ex. 67, WGC 06215).

In light of GOPAC’s poor financial condition, the dissemination

of the Renewing American Civilization message through the course

was beneficial to its political projects. In this regard, the following

exchange occurred with Mr. Gingrich:

Mr. Cole: [I]s one of the things GOPAC wanted to have

done during 1993 and 1994 was the dissemination of its

message; is that correct?

Mr. Gingrich: Yes.

Mr. Cole: GOPAC also did not have much money in

those years; is that correct?

Mr. Gingrich: That is correct. Particularly—it gets better

in ’94, but ’93 was very tight.

Mr. Cole: That curtailed how much it could spend on disseminating its message?

Mr. Gingrich: Right.

Mr. Cole: The message that it was trying to disseminate

was the Renewing American Civilization message; is that

right?

Mr. Gingrich: Was the theme, yes.

(11/13/96 Gingrich Tr. 157–158). With respect to whether the

dissemination of the course benefited GOPAC, the following exchange occurred:

Mr. Cole: Was GOPAC better off in a situation where

the message that it had chosen as its political message for

those years was being disseminated by the course? Was it

better off?

Mr. Gingrich: The answer is yes.

(11/13/96 Gingrich Tr. 167).

3. GOPAC’S INVOLVEMENT IN THE DEVELOPMENT, FUNDING, AND

MANAGEMENT OF THE RENEWING AMERICAN CIVILIZATION COURSE

a. GOPAC personnel

Starting at least as early as February 1993, Mr. Eisenach, then

GOPAC’s Executive Director, was involved in developing the Renewing American Civilization course. Although Mr. Eisenach has

stated that Mr. Gaylord was responsible for the development of the

course until mid-May 1993 (7/12/96 Eisenach Tr. 71–75; Ex. 68,
33

31The February 15, 1993, agenda for the meeting where the RAC course and other GOPAC

issues were discussed, lists Mr. Eisenach as an attendee, but does not list Mr. Gaylord as being

present. (Ex. 47, JR–0000645). 32During her interviewing process, Ms. Prochnow was provided with materials to help her understand the goals of GOPAC. (Ex. 72, GOPAC2 0529). Although she has no specific recollection

as to what these materials were, she believes they were materials related to the Renewing

American Civilization movement. (7/10/96 Prochnow Tr. 18–19; Ex. 73, PP000459–000463;

PP00778). 33Mr. Eisenach has stated that he did not ask Ms. Prochnow to do this fundraising work, but

rather Mr. Gaylord did. (7/12/96 Eisenach Tr. 71, 75; Ex. 65, PFF 1168). However, both Mr. Gaylord and Ms. Prochnow clearly state that it was Mr. Eisenach, not Mr. Gaylord, who directed

Ms. Prochnow to perform the fundraising work. (7/15/96 Gaylord Tr. 16, 17; 7/10/96 Prochnow

Tr. 14, 73–74; Ex. 71, Letter dated July 25, 1996, from Prochnow’s attorney).

Eisenach Testimony Before House Ethics Committee at Tr. 142;

Ex. 69, PFF 1167), Mr. Gaylord stated that he never had such a

responsibility. (7/15/96 Gaylord Tr. 15–18). Additionally, Mr. Gingrich and others involved in the development of the course identified

Mr. Eisenach as the person primarily responsible for the development of the course from early on. (7/17/96 Gingrich Tr. 117, 121;

6/13/96 Mescon Tr. 30–31; 6/28/96 Hanser Tr. 74–75; 7/3/96 Rogers

Tr. 17–18, 22). 31 Several documents also establish Mr. Eisenach’s

role in the development of the course starting at an early stage.

One document written by Mr. Eisenach is dated February 25, 1993,

and shows him, as well as others, tasked with course development

and marketing. (Ex. 70, PFF 16628). A memorandum from Mr.

Gingrich to Mr. Mescon, dated March 1, 1993, describes how Mr.

Eisenach is involved in contacting a number of institutions in regard to funding for the course. (Ex. 71, KSC 3491).

Aside from Mr. Eisenach, other people affiliated with GOPAC

were involved in the development of the course. Mr. Gingrich was

General Chairman of GOPAC and had a substantial role in the

course. Jana Rogers served as Mr. Eisenach’s executive assistant at

GOPAC during the early part of 1993 and in that role worked on

the development of the course. (7/3/96 Rogers Tr. 16–17). In June

1993, she temporarily left GOPAC at Mr. Eisenach’s request to become the course’s Site Host Coordinator. As a condition of her becoming the site host coordinator, she received assurances from both

Mr. Eisenach and Mr. Gaylord that she could return to GOPAC

when she had finished her assignment with the course. (7/3/96 Rogers Tr. 12–16). After approximately five months as the course’s Site

Host Coordinator, she returned to GOPAC for a brief time. (7/3/96

Rogers 24–25). Steve Hanser, a member of the GOPAC Board and

a paid GOPAC consultant, helped develop the course. (6/28/96

Hanser Tr. 10, 19–21). Mr. Gaylord was a paid consultant for

GOPAC and had a role in developing the course. (7/15/96 Gaylord

Tr. 15).

Pamla Prochnow was hired as the Finance Director for GOPAC

in April 1993. 32 Ms. Prochnow spent a portion of her early time at

GOPAC raising funds for the course. (7/10/96 Prochnow Tr. 14–16;

6/13/96 Mescon Tr. 63–67, 82; Ex. 74, Documents produced by

Prochnow). 33 A number of the people and entities she contacted

were GOPAC supporters. In fact, according to Mr. Eisenach, approximately half of the first year’s funding for the course came

from GOPAC supporters. (Ex. 69, PFF 1168–1169). Some of those

people also helped fund the course in 1994. (See attachments to Ex.

69, PFF 1252–1277) (the documents contain Mr. Eisenach’s marks
34

34 As discussed earlier, WPG was a corporation formed by Mr. Eisenach which had a contract

with KSCF to run all aspects of the course. 35The only other person who was involved in the early development of the course was Nancy

Desmond. She did not work for GOPAC, but had been a volunteer at Mr. Gingrich’s campaign

office for approximately a year before starting to work on the course. (6/13/96 Desmond Tr. 15–

16). She continued to work as a volunteer for Mr. Gingrich’s campaign until July of 1993, when

she was told to resign from the campaign because of the perceived negative image her two roles

would project. (6/13/96 Desmond Tr. 37–38; Ex. 77, PFF 38289).

of ‘‘G’’ next to the people, companies, and foundations that were donors or related to donors to GOPAC.))

When Mr. Eisenach resigned from GOPAC and assumed the title

of the course’s project director, two GOPAC employees joined him

in his efforts. Kelly Goodsell had been Mr. Eisenach’s Administrative Assistant at GOPAC since March of 1993 (7/9/96 Goodsell Tr.

8, 11), and Michael DuGally had been an employee at GOPAC

since January 1992. (7/19/96 DuGally Tr. 9–10). Both went to work

on the course as employees of Mr. Eisenach’s Washington Policy

Group (‘‘WPG’’).34 In the contract between WPG and KSCF, it was

understood that WPG would devote one-half of the time of its employees to working on the course. WPG had only one other client

at this time—GOPAC. In its contract with GOPAC, WPG was to

receive the same monthly fee as was being paid by KSCF in return

for one-half of the time of WPG’s employees. (Ex. 76, PFF 37450–

37451). The contract also stated that to the extent that WPG did

not devote full time to KSCF and GOPAC projects, an adjustment

in the fee paid to WPG would be made. (Ex. 76, PFF 37450). Neither Ms. Goodsell nor Mr. DuGally worked on any GOPAC project

after they started working on the course in June of 1993. (7/9/96

Goodsell Tr. 8, 10–11; 7/19/96 DuGally Tr. 14). Mr. Eisenach said

that he spent at the most one-third of his time during this period

on GOPAC projects. (7/12/96 Eisenach Tr. 36–37). No adjustment

to WPG’s fee was made by GOPAC. (7/12/96 Eisenach Tr. 44).35

The February 15, 1993, agenda discussed above also gives some

indication of GOPAC’s role in the development of the Renewing

American Civilization course. (Ex. 47, JR–0000645–0000647). Of

the eight attendees at that meeting, five worked for or were closely

associated with GOPAC (Mr. DuGally, Mr. Eisenach and Ms. Rogers were employees, Mr. Hanser was a member of the Board and

a paid GOPAC consultant, and Mr. Gingrich was the General

Chairman). Furthermore, the agenda for that meeting indicates

that GOPAC political issues were to be discussed as well as course

planning issues. Two of the GOPAC political issues apparently related to: (1) the political program described in the February 1,

1993, memorandum which lists four of GOPAC’s five political

projects as relating to Renewing American Civilization (Ex. 60,

PFF 37569–37576), and (2) GOPAC’s Charter Meeting agenda entitled ‘‘Renewing American Civilization.’’ As discussed below, this

Charter Meeting included breakout sessions to help develop a number of the lectures for the course, as well as GOPAC’s message for

the 1993–1994 election cycle. (Ex. 78, PP00448–PP000452). As Mr.

Gingrich stated in his interview, his intention was to have GOPAC

use Renewing American Civilization as its message during this

time frame. (7/17/96 Gingrich Tr. 74; 7/3/96 Rogers Tr. 54–56).

In 1993 Mr. Eisenach periodically produced a list of GOPAC

projects. The list is entitled ‘‘Major Projects Underway’’ and was
35

used for staff meetings. (7/12/96 Eisenach Tr. 213; 7/15/96 Gaylord

Tr. 79–80; 6/28/96 Taylor Tr. 43–44). Items related to the Renewing

American Civilization course were listed in several places on

GOPAC’s project sheets. For example, from April 1993 through at

least June 1993, ‘‘Renewing American Civilization Support’’ is listed under the ‘‘Planning/Other’’ section of GOPAC’s projects sheets.

(Ex. 79, JG 000001139, JG 000001152, JG 000001173, JG

000001270). Another entry which appears a number of times under

‘‘Planning/Other’’ is ‘‘RAC Pert Chart, etc.’’ (Ex. 79, JG 000001152,

JG 000001173, JG 000001270). It refers to a time-line Mr.

Eisenach wrote while he was the Executive Director of GOPAC relating to the development of the various components of the course,

including marketing and site coordination, funding, readings, and

the course textbook. (Ex. 80, PFF 7529–7533; 7/12/96 Eisenach Tr.

212–213). Finally, under the heading ‘‘Political’’ on the May 7,

1993, project sheet, is listed the phrase ‘‘CR/RAC Letter.’’ (Ex. 79,

JG 000001152). This refers to a mailing about the course sent over

Mr. Gingrich’s name by GOPAC to approximately 1,000 College Republicans. (Ex. 81, Mescon 0918, 0915, 0914 and Meeks 0038–0040;

7/15/96 Gaylord Tr. 81–82).

b. Involvement of GOPAC charter members in course design

As discussed earlier, Mr. Gingrich had a meeting with GOPAC

Charter Members in January 1993 to discuss the ideas of Renewing American Civilization. (11/13/96 Gingrich Tr. 132). According to

a letter written about that meeting, the idea to teach arose from

that meeting. In April 1993, GOPAC held its semi-annual Charter

Meeting. Its theme was ‘‘Renewing American Civilization.’’ (Ex. 78,

PP000448–PP000452). Mr. Gingrich gave the keynote address, entitled ‘‘Renewing American Civilization,’’ and there were five breakout sessions entitled ‘‘Advancing the Five Pillars of Twenty-first

Century Democracy.’’ (Ex. 78, PP000449). Each of the breakout sessions was named for a lecture in the course, and these sessions

were used to help develop the content of the course (11/13/96 Gingrich Tr. 164–165; 7/17/96 Gingrich Tr. 69–70; 7/12/96 Eisenach Tr.

144–146; 7/15/96 Gaylord Tr. 46) as well as GOPAC’s political message for the 1993 legislative campaigns and the 1994 congressional

races. (11/13/96 Gingrich Tr. 164–165; Ex. 62, Eisenach 2540). As

stated in a memorandum from Mr. Eisenach to GOPAC Charter

Members, these breakout sessions were intended to ‘‘dramatically

improve both our understanding of the subject and our ability to

communicate it.’’ (Ex. 82, Roberts 0045–0048).

c. Letters sent by GOPAC

In June of 1993, GOPAC sent a letter over Mr. Gingrich’s signature stating that ‘‘it is vital for Republicans to now DEVELOP and

put forward OUR agenda for America.’’ (Ex. 83, PP000534) (emphasis in original). In discussing an enclosed survey the letter states:

It is the opening step in what I want to be an unprecedented mobilization effort for Republicans to begin the

process of replacing America’s failed welfare state.
36

36The copy of the letter produced is a draft. While Mr. Gingrich was not able to specifically

identify the letter, he did state that the letter fit the message and represented the major theme

of GOPAC at that time. (7/17/96 Gingrich Tr. 60–61).

And the key political component of that effort will be an

all-out drive to end the Democrat’s 40 year control of the

U.S. House or Representatives in 1994!

(Ex. 83, PP000535).36 The letter then states that it is important to

develop the themes and ideas that will be needed to accomplish the

victory in 1994. (Ex. 83, PP000536). In language that is very similar to the core of the course, but with an overtly partisan aspect

added to it, the letter states:

Personally, I believe we can and should turn the 1994

midterm elections into not just a referendum on President

Clinton, but on whether we maintain or replace the welfare state and the Democratic Party which supports it.

I believe the welfare state which the Democrats have

created has failed.

In fact, I challenge anyone to say that it has succeeded,

when today in America twelve year olds are having children, fifteen year olds are killing each other, seventeen

year olds are dying of AIDS and eighteen year olds are

being given high school diplomas they cannot even read.

* * * * * * *

And what I want to see our Party work to replace it with

is a plan to renew America based on what I call ‘‘pillars’’

of freedom and progress:

(1) Personal strength;

(2) A commitment to quality in the workplace;

(3) Spirit of American Inventiveness;

(4) Entrepreneurial free enterprise applied to both

the private and public sectors;

(5) Applying the lessons of American history as to

what works for Americans to proposed government solutions to our problems.

After being active in politics for thirty years, and being

in Congress for fourteen of them, I firmly believe these five

principles can develop a revolutionary change in government. Properly applied, they can dramatically improve

safety, health, education, job creation, the environment,

the family and our national defense.

(Ex. 83, PP000536).

In other letters sent out by GOPAC, the role of the Renewing

American Civilization course in relation to the Republican political

goals of GOPAC were described in explicit terms. A letter to Neil

Gagnon, dated May 5, 1993, over Mr. Gingrich’s name, states:

As we discussed, it is time to lay down a blue print—

which is why in part I am teaching the course on Renewing American Civilization. Hopefully, it will provide the

structure to build an offense so that Republicans can break

through dramatically in 1996. We have a good chance to

make significant gains in 1994, but only if we can reach
37

37 Jana Rogers had not seen this letter before her interview, but after reading it she said that

through her work on the course, she believed the contents of the letter set out one of the goals

of the Renewing American Civilization course. (7/3/96 Rogers Tr. 75–76). 38 Both Dr. Mescon and Dr. Siegel of KSC were shown some of these letters. They both said

that had they known of this intention in regard to the course, they would not have viewed it

as an appropriate project for KSC. (6/13/96 Mescon Tr. 84–87; 6/13/96 Siegel Tr. 60–62).

the point where we are united behind a positive message,

as well as a critique of the Clinton program.37

(Ex. 84, GOPAC2 0003).

In a letter dated June 21, 1993, that Pamla Prochnow, GOPAC’s

new finance director, sent to Charter Members as a follow-up to an

earlier letter from Mr. Gingrich, she states:

As the new finance director, I want to introduce myself

and to assure you of my commitment and enthusiasm to

the recruitment and training of grassroots Republican candidates. In addition, with the course Newt will be teaching

in the fall—Renewing American Civilization—I see a very

real opportunity to educate the American voting population to Republican ideals, increasing our opportunity to

win local, state and Congressional seats.38

(Ex. 85, PP000194).

On January 3, 1994, Ms. Prochnow sent another letter to the

Charter Members. It states:

As we begin the new year, we know our goals and have

in place the winning strategies. The primary mission is to

elect Republicans at the local, state and congressional

level. There, also, is the strong emphasis on broadcasting

the message of renewing American civilization to achieve

peace and prosperity in this country.

(Ex. 86, PP000866).

In another letter sent over Mr. Gingrich’s name, the course is

again discussed. The letter, dated May 12, 1994, is addressed to

Marc Bergschneider and states:

I am encouraged by your understanding that the welfare

state cannot merely be repaired, but must be replaced and

have made a goal of activating at least 200,000 citizen activists nationwide through my course, Renewing American

Civilization. We hope to educate people with the fact that

we are entering the information society. In order to make

sense of this society, we must rebuild an opportunistic

country. In essence, if we can reach Americans through my

course, independent expenditures, GOPAC and other strategies, we just might unseat the Democratic majority in the

House in 1994 and make government accountable again.

(Ex. 87, GDC 01137).

Current and former GOPAC employees said that before a letter

would go out over Mr. Gingrich’s signature, it would be approved

by him. (7/3/96 Rogers Tr. 88; 6/27/96 Nelson Tr. 56–60). According

to Mr. Eisenach, Mr. Gingrich ‘‘typically’’ reviewed letters that

went out over his signature, but did not sign all letters that were

part of a mass mailing. (7/12/96 Eisenach Tr. 35). With respect to
38

letters sent to individuals over Mr. Gingrich’s name, Mr. Eisenach

said the following:

Mr. Eisenach: [Mr. Gingrich] would either review those

personally or be generally aware of the content. In other

words, on rare, if any, occasions, did I or anybody else invent the idea of sending a letter to somebody, write the letter, send it under Newt’s signature and never check with

him to see whether he wanted the letter to go.

There were occasions—now, sometimes that would be—

Newt and I would discuss the generic need for a letter. I

would write the letter and send it and fax a copy to him

and make sure he knew that it had been sent.

Mr. Cole: Would you generally review the contents of the

letter with him prior to it going out?

Mr. Eisenach: Not necessarily word for word. It would

depend. But as a general matter, yes.

(7/12/96 Eisenach Tr. 36). Mr. Gingrich’s Administrative Assistant,

Rachel Robinson, stated that in 1993 and 1994 whenever she received a letter or other document for Mr. Gingrich that was to be

filed, she would sign Mr. Gingrich’s name on the document and

place her initials on it. This ‘‘usually’’ meant that Mr. Gingrich had

seen the letter. (9/6/96 Robinson Tr. 4). The letter sent to Mr.

Bergschneider on May 12, 1994, was produced from the files of Mr.

Gingrich’s Washington, D.C. office and has Ms. Robinson’s initials

on it. (9/6/96 Robinson Tr. 4).

The letters sent out over Mr. Gingrich’s signature were shown to

Mr. Gingrich during an interview. He said that none of them contained his signature, he did not recall seeing them prior to the

interview, and said he would not have written them in the language used. (7/17/96 Gingrich Tr. 77–78, 140–141). Mr. Gaylord

said that ‘‘it seemed to [him] there was a whole series of kind of

usual correspondence that was done by the staff’’ that Mr. Gingrich

would not see. (7/15/96 Gaylord Tr. 77). The content of the letters

listed above, however, are quite similar to statements made directly by Mr. Gingrich about the movement and the role of the

course in the movement. (See, e.g., Ex. 47, JR–0000646 (‘‘emphasis

is on the Republican Party as the primary vehicle for renewing

American civilization’’); Ex. 52 GDC 10639–10649 (‘‘sweeping victory’’ will be accomplished through the course); Ex. 88, GDC

10729–10733 (‘‘Democrats are the party of the welfare state.’’ ‘‘Only

by voting Republican can the welfare state be replaced and an opportunity society be created.’’))

D. ‘‘Replacing the Welfare State With an Opportunity Society’’ as a

Political Tool

According to Mr. Gingrich, the main theme of both the Renewing

American Civilization movement and the course was the replacement of the welfare state with an opportunity society. (7/17/96

Gingrich Tr. 52, 61, 170; 11/13/96 Gingrich Tr. 85). Mr. Gingrich

also said, ‘‘I believe that to replace the welfare state you almost

certainly had to have a [R]epublican majority.’’ (7/17/96 Gingrich

Tr. 51). ‘‘I think it’s hard to replace the welfare state with the

[D]emocrats in charge.’’ (7/17/96 Gingrich Tr. 62). The course was
39

39During his interview, the following exchange occurred regarding the movement:

Mr. Cole: Yet there was an emphasis in the movement on the Republican Party?

Mr. Gingrich: There certainly was on my part, yes.

Mr. Cole: You were at the head of the movement, were you not?

Mr. Gingrich: Well, I was the guy trying to create it.

Mr. Cole: The course was used as the tool to communicate the message of the movement, was

it not?

Mr. Gingrich: Yes, it was a tool, yes.

(11/13/96 Gingrich Tr. 76).

40 According to Ms. Rogers, the course’s Site Host Coordinator, there was coordination between

the message, the movement, and activists. ‘‘They were extensions of Newt and each had to

make—each group had to make sure—what I mean specifically is GOPAC and the class had

to make sure that they were using the same message that Newt was trying to disseminate, that

it was identical.

(7/3/96 Rogers Tr. 54).

designed to communicate the vision and language of the Renewing

American Civilization movement and ‘‘was seen as a tool that could

be used to replace the welfare state.’’ (7/17/96 Gingrich Tr. 159–

160; see also 11/13/96 Gingrich Tr. 47, 76).39

In addition to being the title of a movement, the course, and

GOPAC’s political message for 1993 and 1994, ‘‘Renewing American Civilization’’ was also the main message of virtually every political and campaign speech made by Mr. Gingrich in 1993 and

1994. (7/17/96 Gingrich Tr. 69).40 According to Mr. Gingrich, there

was an effort in 1994 to use the ‘‘welfare state’’ label as a campaign

tool against the Democrats and to use the ‘‘opportunity society’’

label as an identification for the Republicans. (7/17/96 Gingrich Tr.

113). Mr. Gingrich made similar comments in a subsequent interview:

Mr. Cole: During [1993–1994] was there an effort to connect the Democrats with the welfare state?

Mr. Gingrich: Absolutely; routinely and repetitively.

Mr. Cole: And a campaign use of that?

Mr. Gingrich: Absolutely.

Mr. Cole: A partisan use, if you will?

Mr. Gingrich: Absolutely.

Mr. Cole: And was there an effort to connect the Republicans with the opportunity society?

Mr. Gingrich: Absolutely.

Mr. Cole: A partisan use?

Mr. Gingrich: Yes, sir.

Mr. Cole: And that was the main theme of the course,

was it not, replacement of the welfare state with the opportunity society?

Mr. Gingrich: No. The main theme of the course is renewing American civilization and the main subset is that

you have—that you have to replace the welfare state with

an opportunity society for that to happen.

(11/13/96 Gingrich Tr. 79–80).

As referred to above, Mr. Gingrich held a training seminar for

candidates on behalf of GOPAC at the Virginia Republican Convention in June 1993. (7/15/96 Gaylord Tr. 29–30). He gave a speech

entitled ‘‘Renewing American Civilization’’ which described the nature of the movement and the course. (Ex. 56, GOPAC2 2146–

2209). Near the beginning of his speech, Mr. Gingrich said:

What I first want to suggest to you [is] my personal belief that we are engaged in a great moral and practical ef-
40

41These four propositions were used as the ‘‘central propositions’’ or ‘‘heart’’ of the course to

introduce each session in 1993 and 1994. (Ex. 54, PFF 18361, 18365–18367).

fort, that we are committed to renewing American civilization, and I believe that’s our battle cry. That we want to

be the party and the movement that renews American civilization and that renewing American civilization is both

an idealistic cause and a practical cause at the same time.

(Ex. 56, GOPAC2 2146).

He then told the audience that he has four propositions with

which 80% to 95% of Americans will agree. These are: (1) there is

an American civilization; (2) the four can’ts; (3) the welfare state

has failed; and (4) to renew American civilization it is necessary to

replace the welfare state. (Ex. 56, GOPAC2 2149–2153). 41 Mr.

Gingrich then went on to relate the principles of renewing American civilization to the Republican party:

We can’t do much about the Democrats. They went too

far to the left. They are still too far to the left. That’s their

problem. But we have a huge burden of responsibility to

change our behavior so that every one who wants to replace the welfare state and every one who wants to renew

American civilization has a home, and it’s called being Republican. We have to really learn how to bring them all in.

And I think the first step of all that is to insist that at

the core of identification the only division that matters is

that question. You want to replace the welfare state and

renew American civilization. The answer is just fine, come

and join us. And not allow the news media, not allow the

Democrats, not allow interest groups to force us into fights

below that level in terms of defining who we are. That in

any general election or any effort to govern that we are

every one who is willing to try to replace the welfare state,

and we are every one who is willing to renew American

civilization.

Now, that means there is a lot of ground in there to

argue about details. Exactly how do you replace the welfare state. Exactly which idea is the best idea. But if we

accept every one coming in, we strongly change the dynamics of exactly how this country is governed and we

begin to create a majority Republican party that will

frankly just inexorably crow[d] out the Democrats and

turn them into minority status.

(Ex. 56, GOPAC2 2155–2156).

Mr. Gingrich told the audience that he would discuss three areas

in his remarks: (1) the principles of renewing American civilization;

(2) the principles and skills necessary to be a ‘‘renewing candidate’’

and then ultimately a ‘‘renewing incumbent;’’ and (3) the concept

and principles for creating a community among those who are committed to replacing the welfare state and renewing American civilization. (Ex. 56, GOPAC2 2168). In speaking of the first area, Mr.

Gingrich said that it is a very complicated subject. Because of this

he was only going to give a ‘‘smattering’’ of an outline at the training seminar. (Ex. 56, GOPAC2 2170). He said, however, that in the
41

42These are the same three specific goals that were listed in the document entitled ‘‘Renewing

American Civilization Our Goal’’ that referred to achieving a ‘‘sweeping victory in 1996’’ as the

overall goal. (Ex. 52, GDC 10647–10648).

fall he planned to teach a twenty-hour course on the subject, and

then refine it and teach it again over a four-year period. (Ex. 56,

GOPAC2 2170). He then described the three goals he had for the

course:

First, we want to have by April of ’96 a genuine intellectual blueprint to replace the welfare state that you could

look at as a citizen and say, yeah, that has a pretty good

chance of working. That’s dramatically better than what

we’ve been doing.

Second, we want to find 200,000 activist citizens, and I

hope all of you will be part of this, committed at every

level of American life to replacing the welfare state. Because America is a huge decentralized country. You’ve got

to have school boards, city councils, hospital boards, state

legislatures, county commissioners, mayors, and you’ve got

to have congressmen and senators and the President and

governors, who literally [sic] you take all the elected posts

in America and then you take all the people necessary to

run for those posts and to help the campaigns, etc., I think

it takes around 200,000 team players to truly change

America.

(Ex. 56, GOPAC2 2170–2171).

Third, we create a process—and this is something you

can all help with in your own districts—we create a process interesting enough that the national news media has

to actually look at the material in order to cover the

course.42

(Ex. 56, GOPAC2 2173).

The transcript of his speech goes on for the next 30 pages to describe the five pillars of American civilization that form the basis

of the course, and how to use them to get supporters for the candidates’ campaigns. In discussing this Mr. Gingrich said:

Now, let me start just as [a] quick overview. First, as I

said earlier, American civilization is a civilization. Very

important. It is impossible for anyone on the left to debate

you on that topic.

* * * * * * *

But the reason I say that is if you go out and you campaign on behalf of American civilization and you want to

renew American civilization, it is linguistically impossible

to oppose you. And how is your opponent going to get up

and say I’m against American civilization?

(Ex. 56, GOPAC2 2175–2176). Near the end of the speech he said:

I believe, if you take the five pillars I’ve described, if you

find the three areas that will really fit you, and are really

in a position to help you, that you are then going to have

a language to explain renewing American civilization, a
42

43 As discussed above, this speech was used by GOPAC to produce two training tapes. One

was called ‘‘Renewing American Civilization’’ and the other was called ‘‘Leading the Majority.’’

(7/15/96 Gaylord Tr. 31). 44Mr. Gingrich at least wrote the first draft of this document and stated that it was compatible with what he was doing at that time. It was probably a briefing paper for the House Republican members. (Ex. 90, GDC 00132–00152; 7/17/96 Gingrich Tr. 203–204). 45 In this section he defines the ‘‘partners for progress’’ as ‘‘citizens activists.’’

language to explain how to replace the welfare state, and

three topics that are going to arouse volunteers and arouse

contributions and help people say, Yes, I want this done.

(Ex. 56, GOPAC2 2207).43

In a document that Mr. Gingrich apparently wrote during this

time (Ex. 89, Eisenach 2868–2869), the course is related to the Renewing American Civilization movement in terms of winning a Republican majority. The ‘‘House Republican Focus for 1994’’ is directed at having Republicans communicate a positive message so

that a majority of Americans will conclude that their only hope for

real change is to vote Republican. In describing that message, the

document states:

The Republican party can offer a better life for virtually

every one if it applies the principles of American civilization to create a more flexible, decentralized market oriented system that uses the Third Wave of change and accepts the disciplines of the world market.

These ideas are outlined in a 20 hour intellectual framework ‘‘Renewing American Civilization’’ available on National Empowerment Television every Wednesday from 1

pm to 3 pm and available on audio tape and video tape

from 1–800–TO–RENEW.

(Ex. 89, Eisenach 2869).

In a document dated March 21, 1994, and entitled ‘‘RENEWING

AMERICA: The Challenge for Our Generation,’’ 44 Mr. Gingrich described a relationship between the course and the movement. (Ex.

90, GDC 00132–00152). Near the beginning of the document, one

of the ‘‘key propositions’’ listed is that the welfare state has failed

and must be replaced with an opportunity society. (Ex. 90, GDC

00136). The opportunity society must be based on, among other

things, the principles of American civilization. (Ex. 90, GDC

00136). The document states that the key ingredient for success is

a movement to renew American civilization by replacing the welfare state with an opportunity society. (Ex. 90, GDC 00137). That

movement will require at least 200,000 ‘‘partners for progress’’

committed to the goal of replacing the welfare state with an opportunity society and willing to study the principles of American civilization, work on campaigns, run for office, and engage in other activities to further the movement. (Ex. 90, GDC 00138).45 Under the

heading ‘‘Learning the Principles of American Civilization’’ the document states, ‘‘The course, ‘Renewing American Civilization’, is designed as a 20 hour introduction to the principles necessary to replace the welfare state with an opportunity society.’’ (Ex. 90, GDC

00139). It then lists the titles of each class and the book of readings associated with the course. The next section is titled ‘‘Connecting the ‘Partners’ to the ‘Principles’.’’ (Ex. 90, GDC 00140). It de-
43

46The course was broadcast twice each week on National Empowerment Television. In light

of it being a ten-week course, and being offered five times during 1994 on NET, it ran for 50

weeks during this election year. In addition to being on NET, it was also on a local cable channel in Mr. Gingrich’s district in Georgia. (Ex. 91, DES 01048; 7/18/96 Gingrich Tr. 257–259).

scribes where the course is being taught, including that it is being

offered five times during 1994 on National Empowerment Television, and states that, ‘‘Our goal is to get every potential partner

for progress to take the course and study the principles.’’ (Ex. 90,

GDC 00140).46 The document then lists a number of areas where

Republicans can commit themselves to ‘‘real change,’’ including the

Contract with America and a concerted effort to end the Democratic majority in the House. (Ex. 90, GDC 00144–00150).

A May 10, 1994 document which Mr. Gingrich drafted (7/18/96

Gingrich Tr. 234–235; 7/15/96 Gaylord Tr. 70) entitled ‘‘The 14

Steps[:] Renewing American Civilization by replacing the welfare

state with an opportunity society,’’ he notes the relationship between the course and the partisan aspects of the movement. (Ex.

88, GDC 10729–10733). After stating that the welfare state has

failed and needs to be replaced (Ex. 88, GDC 10729), the document

states that, ‘‘Replacing the welfare state will require a disciplined

approach to both public policy and politics.’’ (Ex. 88, GDC 10730).

‘‘We must methodically focus on communicating and implementing

our vision of replacing the welfare state.’’ (Ex. 88, GDC 10730). In

describing the replacement that will be needed, Mr. Gingrich says

that it:

must be an opportunity society based on the principles of

American civilization * * *.

These principles each receive two hours of introduction

in ‘Renewing American Civilization’, a course taught at

Reinhardt College. The course is available on National

Empowerment Television from 1–3 P.M. every Wednesday

and by videotape or audiotape by calling 1–800–TO–

RENEW.

(Ex. 88, GDC 10730).

This document goes on to describe the 200,000 ‘‘partners for

progress’’ as being necessary for the replacement of the welfare

state and how the Contract with America will be a first step toward replacing the welfare state with an opportunity society. (Ex.

88, GDC 10731). The document then states:

The Democrats are the party of the welfare state. Too

many years in office have led to arrogance of power and

to continuing violations of the basic values of self-government.

Only by voting Republican can the welfare state be replaced and an opportunity society be created.

(Ex. 88, GDC 10731).

On November 1, 1994, Mr. Gingrich attended a meeting with Ms.

Minnix, his co-teacher at Reinhardt, to discuss the teaching of the

course in 1995. (Ex. 92, Reinhardt 0063–0065). Also at that meeting were Mr. Hanser, Ms. Desmond, Mr. Eisenach, and John

McDowell. One of the topics discussed at the meeting was Mr.

Gingrich’s desire to teach the course on a second day in Washing-
44

47Ms. Minnix stated that the word ‘‘Republican’’ may not have been specifically used by Mr.

Gingrich, but that it was the context of his remark. (6/12/96 Minnix Tr. 54–56). 48The other participants at this meeting were asked about this conversation. To the extent

they recalled the discussion, they confirmed that it was as related in Ms. Minnix’s memorandum. No one had a recollection that was contrary to Ms. Minnix’s memorandum. (6/12/96 Minnix

Tr. 54–56; 6/28/96 Hanser Tr. 71–72; 6/13/96 Desmond Tr. 76–78; 7/12/96 Eisenach Tr. 270–271;

7/17/96 Gingrich Tr. 211–215). 49Mr. Gingrich provided Mr. Hoekstra with some materials to explain the movement. (See Ex.

99, Hoekstra 0259). Apparently, this material included the May 13, 1993, three part document

entitled ‘‘Renewing America Vision,’’ ‘‘Renewing America Strategies,’’ and ‘‘Renewing American

Civilization Our Goal.’’ (Ex. 52, GDC 10639–10649). In a memorandum from one of Mr.

Hoekstra’s staffers analyzing the material, he lists the thirteen items that were to be done to

further the movement. (Ex. 100, Hoekstra 0140b). They are the same thirteen items that are

listed in the ‘‘Renewing America Strategies’’ portion of the May 13, 1993 document.

ton, D.C. According to notes of the meeting prepared by Ms.

Minnix, Mr. Gingrich wanted to teach the course in D.C. in an effort:

to attract freshman congresspeople, the press—who will be

trying to figure out the Republican agenda—and congressional staff looking for the basis of Republican doctrine.

‘Take the course’ will be suggested to those who wonder

what a Republican government is going to stand for.

(Ex. 92, Reinhardt 0064).47 Later in the meeting Mr. Gingrich said

that his chances of becoming Speaker were greater than 50 percent

and he was making plans for a transition from Democratic to Republican rule. Ms. Minnix wrote that Mr. Gingrich ‘‘sees the course

as vital to this—so vital that no one could convince him to teach

it only one time per week and conserve his energy.’’ (Ex. 92,

Reinhardt 0065).48

A number of other documents reflect a similar partisan, political

use of the message and theme of Renewing American Civilization.

(Ex. 93, LIP 00602–00610, (‘‘Renewing American Civilization: Our

Duty in 1994,’’ a speech given to the Republican National Committee January 21, 1994 Winter Breakfast); Ex. 94, GDC 11010–

11012, (‘‘Whip Office Plan for 1994’’ with the ‘‘vision’’ of ‘‘Renew

American civilization by replacing the welfare state which requires

the election of a Republican majority and passage of our agenda’’);

Ex. 95, GDC 10667–10670, (‘‘Planning Assumptions for 1994’’); Ex.

96, Eisenach 2758–2777, (untitled); Ex. 97, PFF 2479–2489, (seminar on Renewing American Civilization given to the American Legislative Exchange Council); Ex. 98, PFF 37179–37188, (‘‘House

GOP Freshman Orientation: Leadership for America’s 21st Century.’’))

E. Renewing American Civilization House Working Group

As stated in Mr. Gingrich’s easel notes from December 1992, one

goal of the Renewing American Civilization movement was to ‘‘professionalize’’ the House Republicans. (Ex. 42, HAN 02110). His intention was to use the message of Renewing American Civilization

to ‘‘attract voters, resources and candidates’’ and to develop a

‘‘mechanism for winning seats.’’ (Ex. 42, HAN 02110). In this vein,

a group of Republican House Members and others formed a working group to promote the message of Renewing American Civilization. Starting in approximately June 1993, Mr. Gingrich sponsored

Representative Pete Hoekstra as the leader of this group and

worked with him. (7/18/96 Gingrich Tr. 279).49 According to a num-
45

50Mr. Gingrich reviewed notes similar to these and though he did not specifically recall them,

he said they were compatible with the activities of that time. (7/18/96 Gingrich Tr. 283–284).

ber of documents associated with this group, a goal was to use the

theme of renewing American civilization to elect a Republican majority in the House. (Ex. 99, Hoekstra 0259; Ex. 101, Hoekstra

0264; Ex. 102, Gregorsky 0025). According to notes from a July 23,

1993 meeting, Mr. Gingrich addressed the group and made several

points:

1. Renewing American Civilization (RAC) is the basic

theme;

2. RAC begins with replacing the welfare state, not improving it;

3. RAC will occur by promoting the use of the five pillars

of American civilization;

4. Use of the three key policy areas of saving the inner

city, health, and economic growth and jobs.

(Ex. 101, Hoekstra 0264). The meeting then turned to a discussion

of possible ways to improve these points. (Ex. 101, Hoekstra 0264).

On July 30, 1993, another meeting of this group was held. According to notes of that meeting, the group restated its objectives

as follows:

a. restate our objective: Renewing American Civilization

by replacing the paternalistic welfare state

—GOP majority in the House ASAP

—nationwide GOP majority ASAP

* * * * * * *

—objective: create ‘‘echo chamber’’ for RAC

* * * * * * *

i. develop RAC with an eye toward marketability

* * * * * * *

ii. promote message so that this defines many 1994

electoral contests at the congressional level and below,

and defines the 1996 national election.

(Ex. 102, Gregorsky 0025).50

The goal of the group was further defined in a memorandum

written by one of Mr. Hoekstra’s staffers in September of 1993. (Ex.

103, Hoekstra 0266–0267). In that memorandum, the staff member

said the group’s goal had changed ‘‘from one of promoting the Renewing American Civilization course to one of proposing a ‘political

platform’ around which House Republican incumbents and candidates can rally.’’ (Ex. 103, Hoekstra 0266). The group’s ‘‘underlying perspective’’ was described as follows:

To expand our party, it is important that Republicans

develop, agree on and learn to explain a positive philosophy of government.

At the core of that philosophy is the observation that the

paternalistic welfare state has failed, and must be replaced

by alternative mechanisms within and outside of government if social objectives are to be achieved.
46

51This included his congressional office, his WHIP office, RAC, and GOPAC.

Fundamental to developing a new philosophy is the idea

that traditions in American civilization have proven themselves to be powerful mechanisms for organizing human

behavior. There are working principles in the lessons of

American history that can be observed, and should be preserved and strengthened.

These working principles distinguish the Republican

party and its beliefs from the Democratic party, which remains committed to the welfare state even though these

policies are essentially alien to the American experience.

(Ex. 103, Hoekstra 0266–0267).

This group began to develop a program to incorporate Renewing

American Civilization into the House Republican party. The program’s goals included a House Republican majority, Mr. Gingrich

as Speaker, and Republican Committee Chairs. (Ex. 104, Hoekstra

0147–0151). To accomplish this goal, there were efforts to have

candidates, staffers and members use Renewing American Civilization as their theme. (Ex. 104, Hoekstra 0148). One proposal in this

area was a training program for staffers in the principles of Renewing American Civilization for use in their work in the House. (Ex.

104, Hoekstra 0148). A memorandum from Mr. Gingrich to various

members of his staffs 51 asked them to review a plan for this training program and give him their comments. (Ex. 105, WGC 03732–

03745).

During his interview, Mr. Hoekstra stated that Renewing American Civilization and the concept of replacing the welfare state was

intended as a means of defining who Republicans were; however,

the group never finalized this as a project. (7/29/96 Hoekstra Tr.

47–48). In talking about this group, Mr. Gingrich said that he

wanted the Republican party to move toward Renewing American

Civilization as a theme and that he would have asked the group

to study the course, understand the ideas, and use those ideas in

their work. (7/18/96 Gingrich Tr. 284–286). It is not known what

became of this group. Mr. Hoekstra said that the project ended

without any closure, but he does not recall how that happened. (7/

29/96 Hoekstra Tr. 46).

F. Marketing of the Course

As discussed above, Mr. Gingrich wrote in his March 29, 1993

memorandum that he wanted ‘‘Republican activists committed

* * * to setting up workshops built around the course, and to

opening the party up to every citizen who wants to renew American civilization.’’ (Ex. 51, GDC 08892). There is evidence of efforts

being made to recruit Republican and conservative organizations

into becoming sponsors for the course. These sponsors were known

as ‘‘site hosts.’’ One of the responsibilities of a site host was to recruit participants. (Ex. 106, PFF 8033). Jana Rogers was the Site

Host Coordinator for the course when it was at Kennesaw State

College. She stated that part of her work in regard to the course

involved getting Republican activists to set up workshops around

the course to bring people into the Republican party. (7/3/96 Rogers
47

52 According to Mr. Gingrich, the NAS (National Association of Scholars) is a conservative organization. (7/18/96 Gingrich Tr. 345–346). 53Mr. DuGally said that he made an effort to contact the Young Democrats, but they did not

show any interest. (7/19/96 DuGally Tr. 31–32). 54Mr. Gingrich was shown this letter and he said that while he was not familiar with it, nothing in it was particularly new. (7/17/96 Gingrich Tr. 87). Jeff Eisenach, GOPAC’s Executive Director and then the coordinator of the course, either wrote the letter or edited it from a draft

written by another GOPAC employee. (7/12/96 Eisenach Tr. 200–201).

Tr. 67–68). She said there was an emphasis on getting Republicans

to be site hosts. (7/3/96 Rogers Tr. 69).

In an undated document entitled ‘‘VISION: To Obtain Site Hosts

for Winter 1994 Quarter,’’ three ‘‘projects’’ are listed: (1) ‘‘To obtain

site hosts from conservative organizations;’’ (2) ‘‘To secure site

hosts from companies;’’ (3) ‘‘To get cable companies to broadcast

course.’’ (Ex. 107, PFF 7526). The ‘‘strategies’’ listed to accomplish

the ‘‘project’’ of obtaining site hosts from conservative organizations

are listed as:

Mailing to State and local leaders through lists from National Republican Committee, Christian Coalition, American Association of Christian Schools, U.S. Chamber of

Commerce, National Right to Life, Heritage Foundation,

Empower America, National Empowerment Television,

Free Congress, etc.

(Ex. 107, PFF 7526). One of the tactics listed to accomplish the goal

of obtaining more site hosts is to:

Contact National College Republican office to obtain

names and addresses of all presidents country-wide. Develop letter to ask college republicans to try to obtain the

class for credit on their campus or to become a site host

with a sponsor group. Also, ask them to contact RAC office

for a site host guide and additional information.

(Ex. 107, PFF 7527).

In a memorandum written by Nancy Desmond concerning the

course, among the areas where she suggested site host recruiting

should be directed were to ‘‘NAS members,’’ 52 ‘‘schools recognized

as conservative’’ and ‘‘national headquarters of conservative

groups.’’ (Ex. 108, PFF 37328–37330). In a number of the project

reports written by employees of the course in 1993, there are notations about contacts with various Republicans in an effort to have

them host a site for the course. There are no similar notations of

efforts to contact Democrats. (Ex. 109, Multiple Documents). 53

In several instances mailings were made to Republican or conservative activists or organizations in an effort to recruit them as

site hosts. In May of 1993 a letter was sent over Mr. Gingrich’s signature to approximately 1,000 College Republicans regarding the

course. 54 That letter states that:

[C]onservatives today face a challenge larger than stopping President Clinton. We must ask ourselves what the

future would be like if we were allowed to define it, and

learn to explain that future to the American people in a

way that captures first their imagination and then their

votes.

In that context, I am going to devote much of the next

four years, starting this Fall, to teaching a course entitled
48

‘‘Renewing American Civilization.’’ I am writing to you

today to ask you to enroll for the class, and to organize a

seminar so that your friends can enroll as well.

* * * * * * *

Let me be clear: This is not about politics as such. But

I believe the ground we will cover is essential for anyone

who hopes to be involved in politics over the next several

decades to understand. American civilization is, after all,

the cultural glue that holds us all together. Unless we can

understand it, renew it and extend it into the next century, we will never succeed in replacing the Welfare State

with an Opportunity Society.

* * * * * * *

(Ex. 81, Mescon 0915; Meeks 0039). The letter ends by stating:

I have devoted my life to teaching and acting out a set

of values and principles. As a fellow Republican, I know

you share those values. This class will help us all remember what we’re about and why it is so essential that we

prevail. Please join me this Fall for ‘‘Renewing American

Civilization.’’

(Ex. 81, Mescon 0914; Meeks 0040). GOPAC paid for this mailing

(7/12/96 Eisenach Tr. 200; 7/15/96 Gaylord Tr. 82) and it was listed

as a ‘‘political’’ project on GOPAC’s description of its ‘‘Major

Projects Underway’’ for May 7, 1993. (Ex. 79, JG 000001152). At

the top of a copy of the letter to the College Republicans is a handwritten notation to Mr. Gingrich from Mr. Eisenach: ‘‘Newt, Drops

to 1000+ C.R. Chapters on Wednesday. JE cc: Tim Mescon.’’ (Ex.

81, Mescon 0915, Meeks 0039).

During an interview with Mr. Cole, Mr. Eisenach was asked

about this letter.

Mr. Eisenach: Use of the course by political institutions

in a political context was something that occurred and was

part of Newt’s intent and was part of the intent of other

partisan organizations, but the intent of the course and,

most importantly, the operation of the course and its use

of tax-exempt funds was always and explicitly done in a

nonpartisan way.

Political organizations—in this case, GOPAC—found it

to their advantage to utilize the course for a political purpose, and they did so.

Mr. Cole: Were you involved in GOPAC?

Mr. Eisenach: At this time I was involved in GOPAC,

yes.

Mr. Cole: And in making the decision that GOPAC

would utilize the course?

Mr. Eisenach: Yes.

(7/12/96 Eisenach Tr. 203).

Mr. DuGally worked with Economics America, Inc. to have them

send a letter to the members of the groups listed in The Right

Guide as part of an effort to recruit them as site hosts. The first

paragraph of the letter states:
49

55Others who worked on the course also said it was marketed to Republican and conservative

groups. (7/3/96 Rogers Tr. 62–63; 6/13/96 Stechschulte Tr. 21–22, 57–58; 6/13/96 Desmond Tr.

66).

Newt Gingrich asked that I tell the organizations listed

in The Right Guide about his new nationally broadcast college course, ‘‘Renewing American Civilization.’’ It promises

to be an important event for all conservatives, as well as

many young people who are not yet conservatives. You and

your organization can be part of this project.

(Ex. 110, PFF 19821). The letter goes on to say, ‘‘And remember,

since you are a team teacher you can use the course to explain and

discuss your views.’’ (Ex. 110, PFF 19821).

In the fall of 1993, Mr. DuGally arranged for a letter to be sent

by Lamar Alexander on behalf of the Republican Satellite Exchange Network promoting the course and asking its members to

serve as site hosts. (Ex. 111, PFF 19795–19798). In addition, a letter was prepared for mailing to all chairmen of the Christian Coalition asking them to serve as site hosts. (Ex. 112, PFF 19815). In

June of 1993, Mr. DuGally worked with the Republican National

Committee to have a letter sent by Chairman Haley Barbour to

RNC Members informing them of the course. (Ex. 113, RNC 0094).

This letter did not solicit people to be site hosts.

Jana Rogers, the Site Host Coordinator for the course, attended

the College Republican National Convention. Her weekly report on

the subject said the following:

The response to Renewing American Civilization at the

College Republican National Convention was overwelming

[sic]. In addition to recruiting 22 sites and possibly another

30+ during follow-up, I was interviewed by MTV about the

class and learned more about RESN [Republican Exchange

Satellite Network] from Stephanie Fitzgerald who does

their site coordination. I also handed out 400 Site Host

Guides to College Republicans and about 600 registration

flyers. NCRNC says it will work aggressively with their

state chairmen to help us set up sites know [sic] that the

convention is over.

(Ex. 114, PFF 7613). She made no effort to contact any Democratic

groups. (7/3/96 Rogers Tr. 78).

In notes provided by Mr. Mescon from a meeting he attended on

the course, he lists a number of groups that would be targeted for

mailings on the course. They include mostly elected or party officials and the notation ends with the words ‘‘25,000/total Republican

mailing.’’ (Ex. 115, Mescon 0263). According to Mr. Mescon, the

course was being marketed to Republicans as a target audience

and he knew of no comparable mailing to Democrats. (6/13/96

Mescon Tr. 112–113). 55

In an August 11, 1993, memorandum from Mr. DuGally, a WPG

employee who worked on the course, he lists the entities where

mailings for the course had been sent or were intended to be sent

up to that point. They are as follows:

1. GOPAC farm team—9,000

2. Cong/FONG/Whip offices—4,000
50

56This is the only meeting where there is not a suggestion to have a Renewing American Civilization or PFF employee attend personally. Instead, Mr. McDowell apparently only intended

to find an attendee who would be willing to pass out Renewing American Civilization materials. 57Patti Hallstrom, an activist in the Arizona Republican Party, was instrumental in recruiting

host sites in Arizona, such as the Arizona Republican Party and various cable television stations. (Ex. 120, PFF 7362). She prepared part of a training manual on how to recruit cable companies as host sites. (Ex. 120, DES 00999–01007). She also provided the Renewing American

Civilization project with information about which radio and talk shows in Arizona were the most

conservative as possible shows where Mr. Gingrich could appear. She said the more conservative

shows would allow for a ‘‘more amenable discussion.’’ (Ex. 120, DES 00262–00264; 6/20/96

Hallstrom Tr. 41–43).

3. Sent to site hosts—5,500

4. College Republicans—2,000

5. American Pol Sci Assoc.—11,000

6. Christian Coalition leadership—3,000

7. The Right Guide list—3,000

(Ex. 116, PFF 19794).

In June of 1994, John McDowell wrote to Jeff Eisenach with his

suggestions about where to market the course during that summer.

The groups he listed were the Eagle Forum Collegians; the National Review Institute’s Conservative Summit; Accuracy in Academia; Young Republicans Leadership Conference (Mr. McDowell

was on their Executive Board); Young America’s Foundation, National Conservative Student Conference; College Republican National Conference; the American Political Science Association Annual Meeting; 56 and the Christian Coalition, Road to Victory. (Ex.

117, PFF 3486–3489). At a number of these meetings, Mr. Gingrich

was scheduled to be a speaker. (Ex. 117, PFF 3486–3489).

A site host listing dated August 18, 1994, identifies the approximately 100 site hosts as of that date. (Ex. 118, PFF 7493–7496).

These include businesses, community groups, cable stations, and

others. In addition, some colleges offered the course either for credit, partial credit or no credit. (Ex. 119, Reinhardt 0160–0164).

Based on their names, it was not possible to determine whether all

of the site hosts fell within the goals set forth in the above-described documents. Some of them, however, were identifiable. For

example, of the 28 ‘‘community groups’’ listed on the August 18,

1994 ‘‘Site Host Listing,’’ 11 are organizations whose names indicate they are Republican or conservative organizations—Arizona

Republican Party; Athens Christian Coalition; Conservative PAC;

Henry County Republicans; Houston Young Republicans; Huron

County Republican Party; Las Rancheras Republican Women; Louisiana Republican Legislative Delegation; Northern Illinois Conservative Council; Republican Party Headquarters (in Frankfort

Kentucky); Suffolk Republican Party. The list does not indicate

whether the remaining groups—e.g., the Alabama Family Alliance;

the Family Foundation (Kentucky); Leadership North Fulton (Georgia); the North Georgia Forum; Northeast Georgia Forum; the

River of Life Family Church (Georgia)—are nonpartisan, Democratic, Republican, liberal or conservative. The list does not contain

any organizations explicitly denominated as Democratic organizations. Similarly, it is not clear whether there was a particular political or ideological predominance in the businesses, cable stations

and individuals listed.57

Mr. Gingrich said that the efforts to recruit colleges to hold the

course had been ‘‘very broad.’’ ‘‘I talked, for example, with the dean
51

58This memorandum was faxed to Mr. Gingrich. The fax cover sheet has Mr. Gingrich’s name

and the date ‘‘10/15/93’’ on it in his handwriting. As Mr. Gingrich has said, this probably indicates that he had seen this memorandum. (12/98/96 Gingrich Tr. 36–37).

of the government school at Harvard. Berkley [sic] actually was offering the course.’’ (7/18/96 Gingrich Tr. 346). The course at Berkeley, however, did not go through the regular faculty review process

for new courses, because it was initiated by a student. (7/12/96

Eisenach Tr. 316–317). Such courses were not conducted by a professor, but could be offered on campus for credit if a faculty member sponsored the course and the Dean approved it. The student

site host coordinator at Berkeley was named Greg Sikorski. (Ex.

121, JR–0000117). In the June 20, 1994 memorandum from John

McDowell to Mr. Eisenach, the following is written under the heading ‘‘College Republican National Conference:’’ ‘‘RAC Atlanta representative to attend and staff a vendor booth. These 1,000 college

students represent a good source of future ‘Greg Sikorskis’ * * *

in the sense that they can promote RAC on their campus!’’ (Ex.

117, PFF 3488). The faculty sponsor for the student-initiated Renewing American Civilization course was William Muir, a former

speechwriter for George Bush. (Ex. 121, JR–0000117). Aside from

Mr. Sikorski and Mr. Muir, Mr. Eisenach did not know if the RAC

course at Berkeley had any additional university review. (7/12/96

Eisenach Tr. 319).

The site host for the Renewing American Civilization course at

Harvard was Marty Connors. (Ex. 122, LIP 00232). According to

Mr. Gingrich, Marty Connors is a conservative activist. (7/18/96

Gingrich Tr. 266). In a memorandum dated October 13, 1993, from

Marty Connors to Lamar Alexander, Newt Gingrich, Ed Rogers,

Jeff Eisenach, Paul Weyrich, Mike Baroody, and Bill Harris, he

wrote about a ‘‘series of ideas (that included the Renewing American Civilization course) that could have significant consequences

in building a new ‘Interactive’ communication system and message

for the Republican Party and the conservative movement.’’ (Ex.

123, WGC 06781). He goes on to write that he was working on a

project to take the concept of the Republican Exchange Satellite

Television, National Empowerment Television and ‘‘Newt Gingrich’s ‘Renewing American Civilization’ lectures and make them

‘‘more interactive and user friendly.’’ (Ex. 123, WGC 06781). The

purpose for this is to have a ‘‘far greater ability for ‘participatory’

party building in the immediate future.’’ (Ex. 123, WGC 06781–

06782). He goes on to write, ‘‘Friends, I truly believe the next major

political advantage will go to the group that figures out how to use

‘interactive’ communications in building a new Republican coalition.’’ (Ex. 123, WGC 06782).58

G. Kennesaw State College’s Role in the Course

Renewing American Civilization was taught at Kennesaw State

College (‘‘KSC’’) in 1993. The sponsoring organization for the course

was the Kennesaw State College Foundation (‘‘KSCF’’), a 501(c)(3)

organization dedicated to promoting projects at KSC. The approximate expenditures for the course at KSC was $300,000. This represented 29–33% of KSCF’s program expenditures for 1993. The
52

59The contract between WPG and KSCF was never signed by KSCF. It was directed to Dr.

Mescon, but he was not an authorized agent of KSCF. According to Jeffery Eisenach, President

of WPG, even though the contract was not signed, it memorialized the terms of the relationship

between WPG and KSCF. (Ex. 41, Mescon 0651–0652; 7/12/96 Eisenach Tr. 42; 11/14/96

Eisenach Tr. 11). 60Prior to assuming control of the course PFF was tasked with putting together the book of

readings that were to be used for the course. This entailed Mr. Eisenach and Mr. Hanser editing

the writings of others. Mr. Hanser was paid $5,000 or $10,000 for this work, but Mr. Eisenach

was not separately compensated for his role in this. (7/12/96 Eisenach Tr. 68). Mr. Eisenach was

president of PFF, WPG, former Executive Director of GOPAC, and advisor to Mr. Gingrich. Mr.

Hanser was a close friend, confidant, and at times a congressional employee of Mr. Gingrich.

He was also a board member and consultant to GOPAC and a board member and consultant

to the Progress and Freedom Foundation. (6/28/96 Hanser Tr. 6–10, 14). He had a substantial

role in developing the course. (6/28/96 Hanser Tr. 19–20).

funds raised for the course and donated to KSCF were tax-deductible.

KSCF had no role in raising funds for the course. (6/13/96 Fleming Tr. 33–36). Mr. Mescon, the course’s co-teacher and Dean of

KSC’s Business School, wrote some letters with the help of Ms.

Prochnow, GOPAC’s Finance Director (6/13/96 Mescon Tr. 65–68,

71–74; 7/10/96 Prochnow Tr. 58–62, 66; 7/12/96 Eisenach Tr. 69),

but most of the fundraising was coordinated by Mr. Eisenach, Ms.

Prochnow, and Mr. Gingrich. (7/12/96 Eisenach Tr. 68–71, 84, 97,

99; 7/17/96 Gingrich Tr. 123, 136, 137).

The course as offered at KSC was a forty-hour classroom lecture.

Twenty hours were taught by Mr. Gingrich and twenty hours were

taught by Mr. Mescon. While officials of KSC and KSCF considered

the course to include the full forty hours of lecture (6/13/96 Mescon

Tr. 38; 6/13/96 Fleming Tr. 23), only the twenty hours taught by

Mr. Gingrich were taped and disseminated. (6/13/96 Siegel Tr. 25–

26; 6/13/96 Mescon Tr. 35; 6/13/96 Fleming Tr. 23). The funds

raised for the course were primarily used for the dissemination of

Mr. Gingrich’s portion of the course to the various site host locations. (6/13/96 Fleming Tr. 22, 24; 6/13/96 Mescon Tr. 55–56). No

one at KSC or KSCF had any role in deciding which portions of the

course would be taped and disseminated or even knew the reasons

for doing it. (6/13/96 Mescon Tr. 36, 44–45, 58–59; 6/13/96 Fleming

Tr. 23; 6/13/96 Siegel Tr. 78–79).

KSCF did not manage the course. It contracted with Mr.

Eisenach’s Washington Policy Group, Inc. (‘‘WPG’’) to manage and

raise funds for the course’s development, production and distribution. In return, WPG was paid $8,750 per month.

The contract between WPG and KSCF ran from June 1, 1993,

through September 30, 1993.59 All funds raised were turned over

to KSCF and dedicated exclusively for the use of the Renewing

American Civilization course. KSCF’s only role was to act as the

banker for the funds for the course and disburse them upon a request from Mr. Mescon. (6/13/96 Fleming Tr. 24–25; 6/13/96

Mescon Tr. 103; Ex. 124, KSF 001269, Mescon 0454, KSF 003804,

PFF 16934, KSF 001246). Mr. Mescon did not engage in a detailed

review of the bills. He merely reviewed the bills that were provided

by Mr. Eisenach or his staff and determined whether the general

nature of the bills fell within the parameters of the project of dissemination of the course. (6/13/96 Mescon Tr. 61–63).

When the contract between WPG and KSCF ended, the Progress

and Freedom Foundation (‘‘PFF’’) assumed the role WPG had with

the course at the same rate of compensation. 60 PFF was also a
53

61The December 8, 1994 letter from Mr. Gingrich to the Committee states that, ‘‘Respected

scholars such as James Q. Wilson, Everett Carl Ladd, and Larry Sabato continue to contribute

to and review course content.’’ (Ex. 138, p. 3). The same reference to Mr. Wilson’s and Mr.

Sabato’s review of the course is contained in a September 3, 1993 memorandum sent out over

Jana Rogers’ name to site hosts. (Ex. 125, PFF 22963). However, in a letter from James Q. Wilson to Mr. Eisenach dated September 28, 1993, Mr. Wilson wrote:

Perhaps I don’t understand the purpose of the course, but if it is to be a course rather

[than] a series of sermons, this chapter won’t do. It is bland, vague, hortatory, and lacking in substance. (emphasis in original)

* * * * * * *

I could go on, but I dare not for fear I have misunderstood what this enterprise is

all about. I am a professor, and so I bring the perspectives (and limitations) of a professor to bear on this matter. If this is not to be a course but instead a sermon, then you

should get a preacher to comment on it.

(Ex. 126, PFF 5994–5995). Also, in a book co-written by Larry Sabato, the following statements

are made:

In late 1992 and early 1993, Gingrich began conceiving a new way to advance those

political goals—a nationally broadcast college course, ambitiously titled ‘‘Renewing

American Civilization,’’ in which he would inculcate students with his Republican values. (p. 94).

* * * * * * *

Nominally an educational enterprise, internal course planning documents revealed

the true nature of the course as a partisan organizing tool. (p. 95).

Sabato, L. and Simpson, G., ‘‘Dirty Little Secrets: The Persistence of Corruption in American

Politics,’’ Times Books (1996). 62 Near the end of his interview, Mr. Mescon expressed embarrassment in regard to his participation in the course. He became involved in the course in order to raise the profile of the

school, but now believes that his efforts have had severe repercussions. (6/13/96 Mescon Tr. 136–

137).

501(c)(3) tax exempt organization, but its status as such was not

used while the course was at KSC. Mr. Eisenach was the founder

and president of PFF.

KSCF and KSC had little or no role in supervising the course or

its dissemination. Since the course was a ‘‘Special Topics’’ course,

it did not need to go through formal approval by a curriculum committee at KSC—it only required Mr. Mescon’s approval. (6/13/96

Siegel Tr. 15–16, 30, 32, 76–77). While Mr. Mescon was given advance copies of Mr. Gingrich’s lectures, he had little input into

their content. (6/28/96 Hanser Tr. 22; 6/13/96 Desmond Tr. 63). Mr.

Mescon described his role more in terms of having his own 20

hours to put forth any counterpoint or objection to any of the material in Mr. Gingrich’s lectures. (6/13/96 Mescon Tr. 40–41).61

Shortly after PFF took over the management of the course, the

Georgia Board of Regents passed a resolution prohibiting any elected official from teaching at a Georgia state educational institution.

This was the culmination of a controversy that had arisen around

the course at KSC. The controversy pertained to objections voiced

by KSC faculty to the course on the grounds that it was essentially

political. (Ex. 127, KSC 3550–3551, 3541, 3460, 3462). Because of

the Board of Regent’s decision and the controversy, it was decided

that the course would be moved to a private college. (7/12/96

Eisenach Tr. 47–50).62

H. Reinhardt College’s Role in the Course

Reinhardt College was chosen as the new host for the course in

part because of its television production facilities. (6/12/96 Falany

Tr. 14). The 1994 and 1995 courses took place at Reinhardt. While

there, PFF assumed full responsibility for the course. It no longer

received payments to run the course. Rather, it paid Reinhardt to
54

63 As of November 1996, PFF’s tax return (Form 990) for its third fiscal year (which ended

March 31, 1996) had not been filed. 64 Reinhardt saw the ‘‘project’’ as essentially dealing with the dissemination of the course outside of Reinhardt’s campus. (6/12/96 Falany Tr. 48–50, 54–66, 84–85). 65 All of the funds for the course while at Reinhardt were raised by PFF under its tax exempt

status. 66 Reinhardt College did rent its television production facilities to PFF for its use in the dissemination in the course, and was paid separately for this in the amount of $40,000. All production beyond that was handled by PFF. (6/12/96 Falany Tr. 27–28).

use the college’s video production facilities. All funds for the course

were raised by and expended by PFF under its tax-exempt status.

The approximate expenditures for the course were $450,000 in

1994 and in $450,000 in 1995. At PFF this represented 63% of its

program expenditures for its first fiscal year (which ended March

31, 1994) and 35% of its program expenditures for its second fiscal

year (which ended March 31, 1995). 63

Reinhardt had a curriculum committee review the content of the

course before deciding to have it presented on its campus. (6/12/96

Falany Tr. 15–16). The controversy over the course at KSC, however, affected the level of involvement Reinhardt was willing to assume in regard to the course. (6/12/96 Falany Tr. 44–48, 51–53, 59–

66; 6/12/96 Minnix Tr. 26–27). In this regard, Reinhardt’s administration saw a distinction between the ‘‘course’’ and a broader political ‘‘project.’’ As stated in a memorandum from Mr. Falany,

Reinhardt’s President, to Mr. Eisenach dated November 11, 1993:

First, there seems to be a ‘‘project’’, which is Renewing

American Civilization, of which the ‘‘course’’ is a part. This

distinction is blurred at times in the Project Overview.

When you refer to the ‘‘project’’ it seems to imply a broader

political objective (a non-welfare state). This is not to say

that this political objective should be perceived as being

negative, but it should, in fact, be seen as broader than

and distinct from the simpler objective of the ‘‘course.’’

(Ex. 128, Reinhardt 0225).64 Because of this concern, Reinhardt administrators agreed to be involved only in the actual teaching of

the course on its campus and would not participate in any other

aspects of the project. (6/12/96 Falany Tr. 51–53, 59–66; 6/12/96

Minnix Tr. 26–27).65 In this regard, Mr. Falany made it clear to the

faculty and staff at the college that:

It is important to understand that, for the Winter Quarter 1994, the College will offer the course and teach it—

that is the extent of our commitment. At the present time,

the Progress and Freedom Foundation will handle all of

the fund raising associated with the course; the distribution of tapes, text and materials; the broadcasting; and the

handling of all information including the coordination of

off-campus sites.

(Ex. 129, Reinhardt 0265). 66

As was the case at KSC, Reinhardt administrators considered

the course to be the forty hours of lecture by both Mr. Gingrich and

Ms. Minnix. (6/12/96 Falany Tr. 74–76). Again, only Mr. Gingrich’s

portion of the course was disseminated outside of Reinhardt. (6/12/

96 Falany Tr. 53–54; 6/12/96 Minnix Tr. 48–49). Ms. Minnix had

little contact with Mr. Gingrich, and no input into the content of
55

the course in 1994. In 1995 she had only limited input into the content of the course. (6/12/96 Minnix Tr. 20–22). Similarly, Mr. Gingrich and his associates provided no input as to Ms. Minnix’s portion

of the course. (6/12/96 Minnix Tr. 31–32).

While Mr. Falany did not know the purpose for disseminating

the course, and made no inquiries in that regard (6/12/96 Falany

Tr. 48–50; 54–66; 84–85), Ms. Minnix did have some knowledge in

this area. Based on her contacts with the people associated with

the course, she believed Mr. Gingrich had a global vision of getting

American civilization back ‘‘on track’’ and that he wanted to shape

the public perception through the course. (6/12/96 Minnix Tr. 59–

60). She felt there was an ‘‘evangelical side’’ to the course, which

she described as an effort to have people get involved in politics,

run for office, and try to influence legislation. (6/12/96 Minnix Tr.

70–71). Ms. Minnix felt uncomfortable with this ‘‘evangelical side.’’

(6/12/96 Minnix Tr. 70). Furthermore, as reflected in her memorandum of the November 1, 1994 meeting with Mr. Gingrich and others, she was aware that the course was to be used to let people

know what Mr. Gingrich’s political agenda would be as Speaker. (6/

12/96 Minnix Tr. 53–59; Ex. 92, Reinhardt 0064). As with KSC, one

of the reasons Reinhardt administrators wanted to have the course

taught on its campus was to raise profile of the school. (6/12/96

Falany Tr. 112–113).

I. End of Renewing American Civilization Course

Although Mr. Gingrich had intended to teach the course for four

years, through the 1996 Winter quarter, he stopped teaching it

after the 1995 Winter quarter. According to most of the witnesses

interviewed on this subject, the reason for this was that he had run

out of time in light of the fact that he had become Speaker. (7/12/

96 Eisenach Tr. 280; 6/28/96 Hanser Tr. 52–53). On the other hand,

Mr. Gingrich says that he had learned all he could from teaching

the course and had nothing new to say on the topics. (7/18/96 Gingrich Tr. 364). Mr. Gingrich refused to support the efforts of PFF in

regard to the course at that point, largely because he was disappointed with Mr. Eisenach’s financial management of the course.

(7/18/96 Gingrich Tr. 365–366). Mr. Eisenach had indicated to Mr.

Gingrich that the course was $250,000 in debt and that PFF had

used its own resources to cover this shortfall. (Ex. 130, GDC

11325). Mr. Gingrich was skeptical of this claim, offered to have

the records reviewed, and stated that he would help raise any

amount that the review disclosed was needed. According to Mr.

Gingrich, this offer was not pursued by Mr. Eisenach. (7/18/96

Gingrich Tr. 367–368).

IV. ETHICS COMMITTEE APPROVAL OF COURSE

On May 12, 1993, Mr. Gingrich wrote the Committee asking for

‘‘guidance on the development of an intellectual approach to new

legislation that will be different from our normal activities.’’ (Ex.

131, p. 1). He said that he wanted ‘‘to make sure that [his] activities remain within a framework that meets the legitimate ethics

concerns of the House.’’ (Ex. 131, p. 1). He went on to describe a
56

course he was planning to teach in the fall of 1993 at Kennesaw

State College.

The course would be based on his January 25, 1993 Special

Order entitled ‘‘Renewing American Civilization.’’ (Ex. 131, p. 2). It

would be ‘‘completely non-partisan’’ and, he hoped, would include

ideas from many people, including politicians from both parties and

academics. (Ex. 131, p. 2). He stated that he believed the development of ideas in the course was a ‘‘crucial part’’ of his job as a legislator. (Ex. 131, p. 3). He ended his letter with a request to the

Committee to meet to discuss the project if the Committee had any

concerns. (Ex. 131, p. 3).

In June 1993, counsel for the Committee, David McCarthy, met

with Mr. Gingrich, two people from his staff (Annette Thompson

Meeks and Linda Nave) and Mr. Eisenach to discuss the course.

(7/18/96 McCarthy Tr. 7; 7/10/96 Meeks Tr. 13). Mr. McCarthy’s

initial concern was whether Mr. Gingrich could qualify for a teaching waiver under the House ethics rules. (7/18/96 McCarthy Tr. 16).

When he learned Mr. Gingrich was teaching without compensation,

the issue of a teaching waiver became, in his opinion, irrelevant.

(7/18/96 McCarthy Tr. 16). Mr. McCarthy then asked questions regarding whether any official resources would be used to support

the course and whether Mr. Gingrich planned to use any unofficial

resources to subsidize his official business. Mr. McCarthy did not

see any problems pertaining to these issues. Mr. Gingrich indicated

that he might repeat the lectures from the course as Special Orders

on the floor of the House. Mr. McCarthy suggested that Mr. Gingrich consult with the House Parliamentarian on that subject. (Ex.

132, p. 1).

One issue raised with Mr. McCarthy was whether the House

Ethics Rules permitted Mr. Gingrich to raise funds for a tax-exempt organization. Mr. McCarthy’s conclusion was that since KSCF

was a qualified tax-exempt organization, Mr. Gingrich could raise

funds for KSCF as long as he complied with the relevant House

rules on the subject. (7/18/96 McCarthy Tr. 17). Mr. Eisenach

raised the issue concerning the propriety of his being involved in

fundraising for the course in light of the fact that he also worked

for GOPAC. According to Mr. McCarthy, his response to the issue

was as follows:

[T]o my knowledge of tax law, the issue of whether the

contributions in support of the course would keep their

tax-deductible status would turn not on who did the fundraising but on how the funds were spent, and that the educational nature of the course spoke for itself. I told him

that I was aware of no law or IRS regulation that would

prevent Eisenach from raising charitable contributions,

even at the same time that he was raising political contributions. In any event, I advised him, I expected the

Committee to stick by its advisory opinion in the Ethics

Manual and not get into second-guessing the IRS on its determinations of tax-exempt status.

(Ex. 132, p. 2).

Mr. McCarthy said in an interview that his statement regarding

the Committee’s ‘‘stick[ing]’’ by its advisory opinion pertained only
57

67The information Mr. Gingrich provided to the Committee was that the Kennesaw State College Foundation, a 501(c)(3) organization affiliated with Kennesaw State College, was providing

him with a ‘‘Content Coordinator to coordinate the videotape inserts and other materials that

Continued

to whether Mr. Gingrich could raise funds for the course. (7/18/96

McCarthy Tr. 19). The discussion did not relate to any other

501(c)(3) issues. (7/18/96 McCarthy Tr. 19). While Mr. McCarthy

was aware that the course lectures would be taped and broadcast

(7/18/96 McCarthy Tr. 16), neither Mr. Gingrich nor his staff asked

for Mr. McCarthy’s advice regarding what activities in that regard

were permissible under 501(c)(3) and Mr. McCarthy did not discuss

such issues. (7/18/96 McCarthy Tr. 19; 7/18/96 Gingrich Tr. 375–

376; 7/10/96 Meeks Tr. 15). Mr. McCarthy did not recall any discussion regarding a Renewing American Civilization movement. (7/18/

96 McCarthy Tr. 16). Mr. McCarthy did not recall any discussion

of GOPAC’s use of the Renewing American Civilization message.

(7/18/96 McCarthy Tr. 12–13). The discussion pertaining to Mr.

Eisenach and GOPAC was brief. (Ex. 132, p. 2).

During the meeting with Mr. McCarthy, there were no questions

posed about 501(c)(3) or what could be done in regard to the course,

aside from the fund-raising issue under 501(c)(3). (7/18/96 Gingrich

Tr. 375–376). Mr. Gingrich did not believe that it was necessary to

explain to Mr. McCarthy his intended use for the course.

Mr. Cole: We are focusing, however, on your intended

use of the course. And your intended use of the course here

was in a partisan political fashion; is that correct?

Mr. Gingrich: My intended use was, but I am not sure

I had any obligation to explain that to the [C]ommittee. As

long as the course itself was nonpartisan and the course

itself was legal and the course itself met both accreditation

and tax status, I don’t believe I had an obligation to tell

the Ethics Committee what my political strategies were. I

think that’s a retrospective comment. And maybe I am

wrong.

I don’t think—the questions were: Was it legal? Did I

use official funds? Had we gotten approval? Was GOPAC’s

involvement legitimate and legal? Was it an accredited

course? Was I getting paid for it?

I mean, none of those questions require that I explain a

grand strategy, which would have seemed crazy in ’94. If

I had wandered around and said to people, hi, we are

going to win control, reshape things, end the welfare entitlement, form a grand alliance with Bill Clinton, who is

also going to join us in renewing America, how would I

have written that?

(11/13/96 Gingrich Tr. 89–90).

On July 21, 1993, Mr. Gingrich wrote the Committee to provide

additional information about the course he planned to teach at

KSC. The letter did not discuss how the course was to be funded

or that there was a plan to distribute the course nationally via satellite, videotape, audiotape and cable, or that GOPAC’s main theme

was to be ‘‘Renewing American Civilization.’’ The letter also did not

discuss GOPAC’s role in the course. (Ex. 133).67
58

will be used in the presentations.’’ (Ex. 133, pp. 1–2). He also wrote that none of his staff would

perform tasks associated with the course and that the course material would not be based on

previous work of his staff. (Ex. 133, p. 1). Finally, he wrote that much of the material from the

course would be presented in Special Orders, although the presentations would have some differences. (Ex. 133, p. 2). 68 Better Business Bureau of Washington, D.C. v. United States, 326 U.S. 279 (1945).

On August 3, 1993, the Committee, in a letter signed by Mr.

McDermott and Mr. Grandy, responded to Mr. Gingrich’s letters of

May 12, 1993 and July 21, 1993, regarding his request to the teach

the course and his request to present the course materials in Special Orders. (Ex. 134, p. 1). The Committee’s letter also notes that

Mr. Gingrich had asked if he could help KSC raise funds for the

course. The Committee’s guidance was as follows:

1. Since Mr. Gingrich was teaching the course without

compensation, he did not need the Committee’s approval to

do so;

2. It was within Mr. Gingrich’s ‘‘official prerogative’’ to

present the course materials in Special Orders;

3. Mr. Gingrich was permitted to raise funds for the

course on behalf of charitable organizations, ‘‘provided that

no official resources are used, no official endorsement is

implied, and no direct personal benefit results.’’

(Ex. 134, p. 1). The Committee, however, advised Mr. Gingrich to

consult with the FEC regarding whether election laws and regulations might pertain to his fundraising efforts. The Committee’s letter to Mr. Gingrich did not discuss any matters relating to the implications of 501(c)(3) on the teaching or dissemination of the

course or GOPAC’s relationship to the course. (Ex. 134, p. 1).

V. LEGAL ADVICE SOUGHT AND RECEIVED

As described in greater detail in the Appendix, section 501(c)(3)

requires, among other things, that an organization be organized

and operated exclusively for one or more exempt purposes. Treas.

Reg. 1.501(c)(3)–1(d)(1)(ii) provides that an organization does not

meet this requirement: Unless it serves a public rather than a private purpose. It is necessary for an organization to establish that

it is not organized or operated for the benefit of private interests

such as designated individuals, the creator or his family, or persons

controlled, directly or indirectly, by such private interests.

The purpose of the ‘‘private benefit’’ prohibition is to ensure that

the public subsidies flowing from section 501(c)(3) status, including

income tax exemption and the ability to receive tax-deductible

charitable contributions, are reserved for organizations that are

formed to serve public, not private interests. Treas. Reg.

1.501(c)(3)–1(c)(1) defines the application of the private benefit prohibition in the context of the operational test: An organization will

be regarded as ‘‘operated exclusively’’ for one or more exempt purposes only if it engages primarily in activities which accomplish

one or more of such exempt purposes specified in section 501(c)(3).

An organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt purpose.

Although cases on the private benefit doctrine date back to

1945, 68 a more recent, significant case on the subject is the 1989

Tax Court opinion in American Campaign Academy v. Commis-
59

69 His adviser, Mr. Gaylord, was a director of the Academy. (12/9/96 Gingrich Tr. 57; American

Campaign Academy v. Commissioner, 92 T.C. 1053, 1056 (1989)). As referred to above, Mr. Gaylord was one of the ‘‘five key people’’ Mr. Gingrich relied on most. (Ex. 3, GDC 11551, GDC

11553).

sioner, 92 T.C. 1053 (1989). That case discusses the doctrine in

terms of conferring an impermissible private benefit on Republican

candidates and entities.

Prior to his involvement in both AOW/ACTV and the Renewing

American Civilization course, Mr. Gingrich was aware of the tax

controversy pertaining to the American Campaign Academy (‘‘ACA’’

or ‘‘Academy’’). In his interview with Mr. Cole he said, ‘‘I was

aware of [ACA] because * * * the staff director of the [ACA] had

been totally involved. I was aware of his briefings and what was

involved. * * * I was aware of them at the time and I was aware

of them during the court case.’’ (7/18/96 Gingrich Tr. 375–376). ‘‘I

lived through that case. I mean, I was very well aware of what the

[American Campaign Academy] did and what the ruling was.’’ (11/

13/96 Gingrich Tr. 61). 69

Responding to the question of whether he had any involvement

with the Academy, Mr. Gingrich said: ‘‘I think I actually taught

that [sic], but that’s the only direct involvement I had.’’ (12/9/96

Gingrich Tr. 58). In an undated document on GOPAC stationery

entitled ‘‘Offices of Congressman Newt Gingrich,’’ three offices are

listed: GOPAC, FONG, and the American Campaign Academy. (Ex.

143, Kohler 285). Mr. Gingrich did not believe that he had an office

at the Academy, but thought it possible that his press secretary,

Rich Galen, had an office there. (12/9/96 Gingrich Tr. 58–59).

In speaking about the Renewing American Civilization course,

Mr. Gingrich told the New York Times that he acted very aggressively in regard to 501(c)(3) law:

‘‘Whoa,’’ [Mr. Gingrich] said, when asked after class one

recent Saturday if the course nears the edge of what the

law allows. ‘‘Goes right up to the edge. What’s the beef?

Doesn’t go over the edge, doesn’t break any law, isn’t

wrong. It’s aggressive, it’s entrepreneurial, it’s risk taking.’’

New York Times, section A, page 12, column 1 (Feb. 20, 1995). (Ex.

144). In addition, Mr. Gingrich has had involvement with a number

of tax-exempt organizations. As Mr. Gingrich’s tax lawyer stated,

politics and 501(c)(3) organizations are an ‘‘explosive mix.’’ (12/12/

96 Holden Tr. 132–134, 146).

Despite all of this, he did not seek specific legal advice concerning the application of section 501(c)(3) with respect to AOW/ACTV

or the Renewing American Civilization course. Furthermore, he did

not know if any one did so on his behalf. With respect to the

course, the following exchange occurred:

Mr. Cole: Were you involved in seeking any legal advice

concerning the operation of the course under 501(c)(3)?

Mr. Gingrich: No. We sought legal advice about ethics.

Mr. Cole: Did you seek any legal advice concerning the

501(c)(3) issues involving the course?

Mr. Gingrich: No. I did not.

Mr. Cole: Do you know if anybody did on your behalf?
60

70 A document dated November 13, 1990, entitled Campaign For A Successful America, was

reviewed by the Subcommittee. (Ex. 145, Eisenach 3086–3142). In a section drafted by Gordon

Strauss, an attorney in Ohio, for a consulting group called the Eddie Mahe Company, the following is written:

[S]ome educational organizations, tax exempt under Section 501(c)(3) of the Internal

Revenue Code, have engaged in activities which affect the outcome of elections, though

that is theoretically not supposed to occur.

(Ex. 145, Eisenach 3132). The document also contains the following:

A very controversial program is being undertaken by a (c)(3), indicating that it may

have involvement in the electorial process, notwithstanding the express prohibition on

it. At this time, a (c)(3) is not recommended because it would have to be truly independent of the (c)(4) and its PAC.

(Ex. 145, Eisenach 3134).

There was substantial inquiry about this document during the Preliminary Inquiry. No evidence was uncovered to indicate that Mr. Gingrich had any exposure to this document. (12/5/

96 Mahe Tr. 34–35; 12/9/96 Gingrich Tr. 52–54; 12/5/96 Eisenach Tr. 59–61). Mr. Strauss was

interviewed and stated that the document had nothing to do with AOW/ACTV, the 501(c)(3) organization referred to in the document was merely one he had heard of in an IRS Revenue Ruling, and that he never gave Mr. Gingrich any advice on the law pertaining section 501(c)(3) in

regard to AOW/ACTV, the Renewing American Civilization course, or any other projects. The

only legal advice he gave Mr. Gingrich pertained to need for care in the use of official resources

for travel expenses.

Mr. Gingrich: No.

(7/17/96 Gingrich Tr. 140). With respect to AOW/ACTV, Mr. Gingrich said that he did not get any legal advice regarding the

projects. (12/9/96 Gingrich Tr. 54). He said that he assumed Mr.

Callaway sought such legal advice. (12/9/96 Gingrich Tr. 54).

Mr. Gingrich said two attorneys involved with GOPAC at the

time, Jim Tilton and Dan Swillinger, monitored all GOPAC activities and would have told him if the projects violated the law. (12/

9/96 Gingrich Tr. 54–56). Mr. Callaway said neither Mr. Swillinger

nor Mr. Tilton was ever told that one of the purposes of ACTV was

to recruit people to the Republican party. (12/7/96 Callaway Tr. 41,

47). 70

Mr. Gingrich explained to the Subcommittee in November 1996

that, in his opinion, there were no ‘‘parallels’’ between the American Campaign Academy and the Renewing American Civilization

course. (11/13/96 Gingrich Tr. 61). After this explanation, Mr.

Schiff and Mr. Gingrich had the following exchange:

Mr. Schiff: Did you go to a tax expert and say, here is

what I have in mind; do you agree that there are no parallels and that there’s no problem with the American Campaign Academy case in terms of what I am doing here? I

am just asking if you did that?

Mr. Gingrich: The answer is, no. I just want to assert

the reason I wouldn’t have done it is as a college teacher

who had taught on a college campus I didn’t think the two

cases—I also didn’t ask them if it related to spouse abuse.

I mean, I didn’t think the two cases had any relationship.

(11/13/96 Gingrich Tr. 61–62). During his testimony before the Subcommittee in December, Mr. Schiff raised similar questions with

Mr. Gingrich.

Mr. Schiff: What strikes me is without trying to resolve

that at this minute, the possibility is out there, the possibility that a violation of 501(c)(3) is very much in evidence

to me. And it seems to me that is true all the way along.

You did have the American Campaign Academy case of
61

1989, which you have indicated you were aware of. It’s

true the facts were different, but nevertheless something

sprung up that told somebody there was a 501(c)(3) problem here if you get too close to political entities.

What I am getting at is this, and again to answer any

way you wish, wasn’t it, if not intentional, wasn’t it reckless to proceed with your involvement as a Member of the

House of Representatives into at least a couple of—involvements with the 501(c)(3) organizations, whether it was

Progress & Freedom or Kennesaw State or Abraham Lincoln Opportunity Foundation, without getting advice from

a tax attorney to whom you told everything? You said, this

is the whole plan, this is the whole movement of Renewing

American Civilization. * * *

Shouldn’t that have been presented to somebody who is

a tax attorney, and said, now, am I going to have any

problems here? Is this okay under the 501(c)(3) laws?

(12/10/96 Gingrich Tr. 32–33). In response to Mr. Schiff’s question,

Mr. Gingrich explained why he thought there was no need to seek

legal advice because the facts of American Campaign Academy and

Renewing American Civilization were inapposite. (12/10/96 Gingrich Tr. 34–36).

Mr. Gingrich: The facts are the key. I was teaching at

an accredited university; [ACA] was an institution being

set up as basically a politically training center. My course

was open to everybody; [ACA] was a Republican course.

My course says nothing about campaigns; [ACA] was a

course specifically about campaigns.

There are four standards * * * none of which apply to

Renewing American Civilization. * * * Just at an objective

level you are going to put these [ACA and RAC] up on a

board and say that is not a relevant question.

(12/10/96 Gingrich Tr. 35). After Mr. Gingrich’s explanation, Mr.

Schiff said the following:

Mr. Schiff: I understand how you distinguish the facts

between the American Campaign Academy case and your

course. There are those that would argue that the legal

holding applies equally to both. In other words, that which

brings you to the legal conclusion of not complying with

the 501(c)(3) laws, for various reasons that I’d rather not

get into now—discuss with Mr. Holden, perhaps—that

those are in common even if certain peripheral facts are

different.

What I’m getting at is, excuse me for using your own

words, but you’re not a lawyer. Knowing that there was an

attempt to set up a 501(c)(3) training and education academy which floundered in the courts because of something,

wouldn’t that motivate particularly a Member of the House

to want to say, before you start into another one, maybe

I ought to sit down with somebody who is a tax expert and

tell them the whole plan here, not just course content, but

where the course fits into all the strategies here and say,
62

now, do you think I’ve got a problem? And I don’t think

you did that. If you did, tell me you did. * * *

(12/10/96 Gingrich Tr. 36–37). Mr. Gingrich’s response was threefold:

Mr. Gingrich: [First,] [i]f you read the speech I gave in

January of 1993, which was the core document from which

everything else comes, I talk very specifically about a

movement in the speech. I talk very simply about 2 million, not 200,000, volunteers, citizen activists, in the

speech. I describe it as a cultural movement that has a political component in the speech.

That’s the core document I gave to everyone when I

would say, here’s what I want to try to teach about. Here

is what I want to try to do. That document clearly says

there is a movement, and this course is designed to outline

the principles from which the movement comes. And so, if

everybody who was engaged in looking at the course,

whether it was Kennesaw Foundation’s lawyers or it was

Progress & Freedom’s lawyers or it was Reinhardt’s lawyers, and the president of the college in both cases, everybody had a chance to read the core document which has

movement very specifically in it.

Second, the reason I didn’t seek unique legal counsel is

as a Ph.D. teaching in a State college in an accredited setting, it never occurred—I mean, if I had thought—this is

another proof of my ignorance or proof of my innocence, I’ll

let you decide—it never occurred to me that this is an

issue. * * *

[Third,] I think everybody who has actually seen my

course will tell you * * * I was very careful. Ironically,

Max Cleland, who won the Senate seat, is the only current

politician used in the course other than John Lewis.

And so the course was clearly not Republican. It was

clearly not designed to send a partisan message. No one I

know of who has actually seen the course thinks that it

was a partisan vehicle. It has no relationship to the American Campaign Academy.

(12/10/96 Gingrich Tr. 37–39).

Officials at KSC and Reinhardt did not seek legal advice pertaining to the application of 501(c)(3) to the course. The only such advice ever sought was by KSCF in connection with the agreement

to transfer the course to PFF in November 1993 and in asking its

outside lawyers to render a legal opinion concerning the course in

1995. Citing the attorney/client privilege, KSCF officials have refused to disclose to the Subcommittee the advice KSCF received in

both instances. (6/13/96 Mescon Tr. 60; 6/13/96 Siegel Tr. 36–37;

6/12/96 Falany Tr. 50–51; 6/13/96 Fleming Tr. 46–48).

In his July 1996 interview, Mr. Eisenach said that he did not

seek legal advice pertaining to the application of 501(c)(3) to the

course. (7/12/96 Eisenach Tr. 236). In his November 1996 interview, Mr. Eisenach said that he had worked with many attorneys

who had experience in 501(c)(3) law. (11/14/96 Eisenach Tr. 84–88).

But he was not able to point to any specific consultation with a tax
63

attorney where the entire relationship between the course, the

movement, and political goals were fully set forth and found to be

within the bounds of 501(c)(3). (11/14/96 Eisenach Tr. 88–91).

VI. SUMMARY OF THE REPORT OF THE SUBCOMMITTEE’S EXPERT

A. Introduction

Because of differences of opinion among the Members of the Subcommittee regarding the tax issues raised in the Preliminary Inquiry, the Subcommittee determined that it would be helpful to obtain the views of a recognized expert in tax-exempt organizations

law, particularly with respect to the ‘‘private benefit’’ prohibition.

The expert, Celia Roady, reviewed Mr. Gingrich’s activities on behalf of ALOF and the activities of others on behalf of ALOF with

Mr. Gingrich’s knowledge and approval. She also reviewed Mr.

Gingrich’s activities on behalf of KSCF, PFF, and Reinhardt College in regard to the Renewing American Civilization course and

the activities of others on behalf of those organizations with Mr.

Gingrich’s knowledge and approval. The purpose of this review was

to determine whether those activities violated the status of any of

these organizations under section 501(c)(3) of the Internal Revenue

Code.

B. Qualifications of the Subcommittee’s Expert

Ms. Roady is a partner in the Washington, D.C. office of the law

firm Morgan, Lewis & Bockius LLP where she specializes full-time

in the representation of tax-exempt organizations. Her practice involves the provision of advice on all aspects of section 501(c)(3). Ms.

Roady has written many articles on tax-exempt organization issues

for publication in legal periodicals such as the ‘‘Journal of Taxation

of Exempt Organizations’’ and the ‘‘Exempt Organization Tax Review.’’ She is a frequent speaker on exempt organizations topics,

regularly lecturing at national tax conferences such as the ALI/

ABA conference on charitable organizations and the Georgetown

University Law Center conference on tax-exempt organizations, as

well as at local tax conferences and seminars on tax-exempt organization issues. In 1996, she was named the Program Chair of the

Georgetown University Law Center’s annual conference on tax-exempt organizations. (11/15/96 Roady Tr. 2–7).

Ms. Roady is the immediate past Chair of the Exempt Organizations Committee of the Section of Taxation of the American Bar Association, having served as Chair from 1993 to 1995. She is currently serving a three-year term as a member of the Council of the

ABA Section of Taxation, and is the Council Director for the Section’s Exempt Organizations Committee. She also serves on the

Legal Section Council of the American Society of Association Executives, and is a Fellow of the American College of Tax Counsel.

(11/15/96 Roady Tr. 2–7).

Ms. Roady served a three-year term as the Co-Chair of the Exempt Organizations Committee of the District of Columbia Bar’s

Tax Section from 1989 to 1991. She also served on the Steering

Committee of the D.C. Bar’s Tax Section from 1989 to 1995, and
64

71The one known public comment on the matter by Ms. Roady is found in the following paragraph from a New York Times article: ‘‘Clearly, it’s an aggressive position,’’ said Celia Roady,

a Washington lawyer and chairwoman of the American Bar Association’s committee on tax-exempt organizations, who stressed that she was not talking for the association. ‘‘Whether it’s too

aggressive and crosses the line, I don’t know. Clearly, it’s more aggressive than many exempt

organizations would go forward with.’’

New York Times, section A, page 12 (Feb. 20, 1995). (Ex. 144). In the same article, Mr. Gingrich is quoted as saying that he acted aggressively in regard to 501(c)(3) law: ‘‘Whoa,’’ [Mr. Gingrich] said, when asked after class one recent Saturday if the course nears the edge of what the

law allows. ‘‘Goes right up to the edge. What’s the beef? Doesn’t go over the edge, doesn’t break

any law, isn’t wrong. It’s aggressive, it’s entrepreneurial, it’s risk taking.’’

New York Times, section A, page 12, column 1 (Feb. 20, 1995).

72 A detailed discussion of the law pertaining to organizations exempt from federal income tax

under section 501(c)(3) of the Internal Revenue Code is attached as an Appendix to this Report.

as Co-Chair of the Steering Committee from 1991 to 1993. (11/15/

96 Roady Tr. 2–7).

Each of the attorneys interviewed for the position of expert for

the Subcommittee highly recommended Ms. Roady. She was described as being impartial and one of the leading people in the field

of exempt organizations law. (11/15/96 Roady Tr. 2).71

Ms. Roady is a 1973 magna cum laude graduate of Duke University. She received her law degree from Duke Law School, with distinction, in 1976. She received a masters degree in taxation from

the Georgetown University Law Center in 1979.

C. Summary of the Expert’s Conclusions

Ms. Roady considered the following issues in her review:

1. whether the content of the television programs broadcast

by ALOF or the Renewing American Civilization course were

‘‘educational’’ within the meaning of section 501(c)(3);

2. whether one of the purposes of the activities with respect

to the television programs or the course was to provide more

than an incidental benefit to GOPAC, Mr. Gingrich, or other

Republican entities and candidates in violation of the private

benefit prohibition in section 501(c)(3);

3. whether the activities with respect to the television programs or the course provided support to GOPAC or a candidate

for public office in violation of the campaign intervention prohibition in section 501(c)(3);

4. whether the activities with respect to the television programs or the course violated the private inurement prohibition

in section 501(c)(3); and

5. whether the activities with respect to the television programs or the course violated the lobbying limitations applicable to section 501(c)(3) organizations.

(11/15/96 Roady Tr. 7).72

With respect to the last two issues, Ms. Roady did not conclude

that the activities with respect to the television programs or the

course resulted in impermissible private inurement or violated the

lobbying limitations applicable to section 501(c)(3) organizations.

Similarly, with respect to the first issue, Ms. Roady concluded that

the television programs and the course met the requirements of the

methodology test described in Rev. Proc. 86–43 and were ‘‘educational’’ within the meaning of section 501(c)(3) even though they

advocated particular viewpoints and positions. Accordingly, Ms.

Roady concluded that the activities with respect to the television
65

73 After Ms. Roady met with the Subcommittee to discuss the tax-exempt organizations law

and her conclusions regarding Renewing American Civilization, she met with the Special Counsel to discuss the ACTV project. Although she did not formally present her conclusions to the

Subcommittee, the legal principles she explained during her meetings with the Subcommittee

with respect to Renewing American Civilization were equally applicable to the facts surrounding

the ACTV project and support her conclusions set forth in this section of the Report.

programs and the course served an educational purpose and would

be appropriate activities for section 501(c)(3) organizations, as long

as there was no violation of the private benefit prohibition or the

campaign intervention prohibition. She found substantial evidence,

however, of violations of both such prohibitions and therefore concluded that Mr. Gingrich’s activities on behalf of the organizations

and the activities of others on behalf of the organizations with Mr.

Gingrich’s knowledge and approval violated the organizations’ status under section 501(c)(3). (11/15/96 Roady Tr. 7). The basis for

her conclusions may be summarized briefly as follows:

1. THE AMERICAN CITIZENS TELEVISION PROGRAM OF ALOF 73

a. Private benefit prohibition

Under section 501(c)(3) and the other legal authorities discussed

above, the analysis of whether there is a violation of the private

benefit prohibition does not depend on whether the activities at

issue—the television programs—served an exempt purpose. Even

though the television programs met the definition of ‘‘educational,’’

there is a violation of section 501(c)(3) if another purpose of the activities was to provide more than an insubstantial or incidental

benefit to GOPAC or any other private party. As the Supreme

Court stated in Better Business Bureau v. United States, 326 U.S.

276, 283 (1945), ‘‘the presence of a single noneducational purpose,

if substantial in nature, will destroy the exemption regardless of

the number or importance of truly educational purposes.’’ In making such a determination, the Tax Court has held that the proper

focus is ‘‘the purpose towards which an organization’s activities are

directed and not the nature of the activities themselves.’’ American

Campaign Academy, 92 T.C. at 1078–79. The determination as to

whether there is a violation of the private benefit prohibition cannot, therefore, be made solely by reference to the content of the television programs or whether the activities in relation to the programs served an educational purpose. Rather, the determination

requires a factual analysis to determine whether the organization’s

activities also had another, nonexempt purpose to provide more

than an incidental benefit to a private party such as GOPAC or Republican entities and candidates. In this case, there is substantial

evidence that these parties were intended to and did receive more

than an incidental benefit from the activities conducted by ALOF.

In summary, according to Ms. Roady, the evidence shows that

the ACTV project was a continuation of GOPAC’s AOW project, and

had the same partisan, political goals as AOW. These goals included, among other things, reaching ‘‘new groups of voters not traditionally associated with [the Republican] party;’’ ‘‘mobiliz[ing]

thousands of people across the nation at the grass roots level [to

become] dedicated GOPAC activists;’’ and ‘‘making great strides in

continuing to recruit activists all across America to become involved with the Republican party.’’ The persons who conducted the
66

ACTV project on behalf of ALOF were GOPAC officers, employees,

or consultants. In essence, the transfer of the AOW project from

GOPAC to ALOF was more in name than substance, since the

same activities were conducted by the same persons in the same

manner with the same goals. Through the use of ALOF, however,

these persons were able to raise tax-deductible charitable contributions to support the ACTV project, funding that would not have

been available to GOPAC on a tax-deductible basis.

Taken together, according to Ms. Roady, the facts as described

above show that in addition to its educational purpose, another

purpose of the ACTV project was to benefit GOPAC and, through

it, Republican entities and candidates, by continuing to conduct the

AOW project under a new name and through a section 501(c)(3) organization that could raise funding for the project through tax-deductible charitable contributions. This benefit was not merely incidental. To the contrary, the evidence supports a finding that one

of the main purposes for transferring the project to ALOF was to

make possible the continuation of activities that substantially benefited GOPAC and Republican entities and candidates.

For these reasons, Ms. Roady concluded that one of the purposes

of Mr. Gingrich’s activities on behalf of ALOF and the activities of

others on behalf of ALOF with Mr. Gingrich’s knowledge and approval was to provide more than an incidental benefit to GOPAC

and Republican entities and candidates in violation of the private

benefit prohibition.

b. Campaign intervention prohibition

As with respect to the private benefit prohibition, the legal authorities discussed above make it clear, according to Ms. Roady,

that the analysis of whether there is a violation of the campaign

intervention prohibition does not turn on whether the television

programs had a legitimate educational purpose. In the IRS CPE

Manual, the IRS explained that ‘‘activities that meet the [educational] methodology test * * * may nevertheless constitute participation or intervention in a political campaign.’’ IRS CPE Manual at 415. See also New York Bar, 858 F.2d 876 (2d Cir. 1988);

Rev. Proc. 86–43. Nor does the analysis turn on the fact that the

television programs did not expressly urge viewers to ‘‘support

GOPAC,’’ ‘‘vote Republican,’’ or ‘‘vote for Mr. Gingrich.’’ The IRS

does not follow the express advocacy standard applied by the FEC,

and it is not necessary to advocate the election or defeat of a clearly identified candidate to violate the campaign intervention prohibition. IRS CPE Manual at 413. The determination as to whether

there is a violation of the campaign intervention prohibition requires an overall ‘‘facts and circumstances’’ analysis that cannot be

made solely by reference to the content of the television programs.

The central issue is whether the television programs provided

support to GOPAC. When Congress enacted section 527 in 1974,

the legislative history explained that the provision was not intended to affect the prohibition against electioneering activity contained in section 501(c)(3). The IRS regulations under section 527

provide that section 501(c)(3) organizations are not permitted to establish or support a PAC. Treas. Reg. § 1.527–6(g). Under the applicable legal standards, there is a violation of the campaign interven-
67

tion prohibition with respect to ALOF if the evidence shows that

the ACTV project provided support to GOPAC, even though the television programs were educational and were not used as a means

to expressly advocate the election or defeat of a particular candidate.

According to Ms. Roady, there is substantial evidence of such

support in this case. As discussed above, the evidence shows that

the ACTV project conducted by ALOF was a continuation of AOW,

a partisan, political project undertaken by GOPAC. Mr. Gingrich

himself described ACTV as a continuation of the AOW project. The

activities conducted by ALOF with respect to the ACTV project

were the same as the activities that had been conducted by GOPAC

with respect to the AOW project. The persons who conducted the

ACTV project on behalf of ALOF were GOPAC officers, employees,

or consultants. Shifting the project to ALOF allowed the parties to

raise some tax-deductible charitable contributions to conduct what

amounted to the continuation of a GOPAC project for partisan, political purposes. For these reasons, Ms. Roady concluded that Mr.

Gingrich’s activities on behalf of ALOF and the activities of others

on behalf of ALOF with Mr. Gingrich’s knowledge and approval

provided support to GOPAC in violation of the campaign intervention prohibition.

2. THE RENEWING AMERICAN CIVILIZATION COURSE

a. Private benefit prohibition

The determination of whether there is a violation of the private

benefit prohibition does not depend on whether the teaching and

dissemination of the course served an educational purpose, and

cannot be made simply by analyzing the content of Mr. Gingrich’s

lectures. The course met the definition of ‘‘educational’’ under section 501(c)(3) and served an educational purpose. (11/15/96 Roady

Tr. 7). Nevertheless, there is a violation of section 501(c)(3) if another purpose of the course was to provide more than an incidental

private benefit. (11/15/96 Roady Tr. 17). Making this determination

requires an analysis of the facts to find out whether Mr. Gingrich’s

activities on behalf of KSCF, PFF, and Reinhardt and the activities

of others with his knowledge and approval had another nonexempt

purpose to provide more than an incidental benefit to private parties such as Mr. Gingrich, GOPAC, and other Republican entities

and candidates. In this case, there is substantial evidence that

these parties were intended to and did receive more than an incidental benefit from the activities conducted with respect to the

course. (11/15/96 Roady Tr. 78, 123, 124, 130, 131, 142–145, 173,

195).

In summary, according to Ms. Roady, the evidence shows that

the course was developed by Mr. Gingrich in the context of a broader movement. (11/15/96 Roady Tr. 127–130, 134–135, 196). This

movement was intended to have political consequences that would

benefit Mr. Gingrich in his re-election efforts, GOPAC in its national political efforts, and Republican party entities and candidates in seeking to attain a Republican majority. The goals of the

movement were expressed in various ways, and included arousing

200,000 activists interested in renewing American civilization by
68

74Some funding came from the sale of videotapes and audiotapes of the course. (7/12/96

Eisenach Tr. 283).

replacing the welfare state with an opportunity society and having

the Republican party adopt the message of Renewing American

Civilization so as to attract those activists to the party. It was intended that a Republican majority would be part of the movement,

and that the Republican party would be identified with the ‘‘opportunity society’’ and the Democratic party with the ‘‘welfare state.’’

(11/15/96 Roady Tr. 128, 130, 142, 145–148, 217–218; 11/19/96

Roady Tr. 35, 41).

The movement, the message of the movement, and the course

were all called ‘‘Renewing American Civilization.’’ Mr. Gingrich’s

lectures in the course were based on the same principles as the

message of the movement, and the course was an important vehicle

for disseminating the message of the movement. Mr. Gingrich stated that the course was ‘‘clearly the primary and dominant method

[of disseminating the message of the movement.]’’ Mr. Gingrich

used the Renewing American Civilization message in almost every

political and campaign speech he made in 1993 and 1994. He was

instrumental in determining that virtually the entire political program for GOPAC for 1993 and 1994 would be centered on developing, disseminating, and using the message of Renewing American

Civilization. (11/15/96 Roady Tr. 125–127, 144–145, 148–149, 153,

177, 218).

Although GOPAC’s financial resources were not sufficient to enable it to carry out all of the political programs at its usual level

during this period, it had many roles in regard to the course. These

roles included development of the course content which was coordinated in advance with GOPAC charter members, fundraising for

the course on behalf of the section 501(c)(3) organizations, and promotion of the course. GOPAC envisioned a partisan, political role

for the course. (11/15/96 Roady Tr. 197–202, 208–209).

From 1993 to 1995, KSCF and PFF spent most of the money they

had raised for the course on the dissemination of the 20 hours

taught by Mr. Gingrich. These funds were raised primarily through

tax-deductible charitable contributions to KSCF and to PFF,74

funding that would not have been available had the project been

conducted by GOPAC or another political or noncharitable organization.

According to Ms. Roady, the facts as set forth above show that,

although the Renewing American Civilization course served an

educational purpose, it had another purpose as well. (11/19/96

Roady Tr. 37, 40). The other purpose was to provide a means for

developing and disseminating the message of Renewing American

Civilization by replacing the welfare state with an opportunity society. That was the main message of GOPAC and the main message

of virtually every political and campaign speech made by Mr. Gingrich in 1993 and 1994. Through the efforts of Mr. Gingrich and others acting with his knowledge and approval, tax-deductible charitable contributions were raised to support the dissemination of a

course in furtherance of Mr. Gingrich’s political strategies. (11/19/

96 Roady Tr. 37, 38). Mr. Gingrich encouraged GOPAC, House Republicans and other Republican entities and candidates to use the
69

course in their political strategies as well. (11/15/96 Roady Tr. 145,

152, 173).

The partisan, political benefit to these parties was intended from

the outset, and this benefit cannot be considered merely incidental.

To the contrary, the evidence supports a finding that one of Mr.

Gingrich’s main purposes for teaching the course was to develop

and disseminate the ideas, language, and concepts of Renewing

American Civilization as an integral part of a broad movement intended to have political consequences that would benefit him in his

re-election efforts, GOPAC in its political efforts, and other Republican entities and candidates in seeking to attain a Republican majority. For these reasons, Ms. Roady concluded that one of the purposes of Mr. Gingrich’s activities on behalf of KSCF, PFF and

Reinhardt in regard to the course entitled ‘‘Renewing American

Civilization’’ and the activities of others on behalf of those organizations with Mr. Gingrich’s knowledge and approval was to provide

more than an incidental benefit to Mr. Gingrich, GOPAC, and

other Republican entities and candidates in violation of the private

benefit prohibition. (11/15/96 Roady Tr. 122, 125, 127, 143–145,

148, 152, 153, 187–189, 213–217).

b. Campaign intervention prohibition

As discussed above, neither the fact that the content of the Renewing American Civilization course is educational within the

meaning of section 501(c)(3) nor the fact that the course lectures

do not contain expressions of support or opposition for a particular

candidate precludes a finding that there is a violation of the campaign intervention prohibition. Section 501(c)(3) organizations are

prohibited from establishing or supporting PACs, and from providing support to candidates in their campaign activities. The relevant

issue is whether the course provided support to GOPAC or to Mr.

Gingrich in his capacity as a candidate.

According to Ms. Roady, there is substantial evidence of such

support in this case. As discussed above, the evidence shows that

the course was developed by Mr. Gingrich as a part of a broader

political movement to renew American civilization by replacing the

welfare state with an opportunity society. The course was an important vehicle for disseminating the message of that movement.

The message of replacing the welfare state with the opportunity society was also used in a partisan, political fashion. The ‘‘welfare

state’’ was associated with Democrats and the ‘‘opportunity society’’

was associated with Republicans. The message of the course was

also the main message of GOPAC during 1993 and 1994 and the

main message of virtually every political and campaign speech

made by Mr. Gingrich in 1993 and 1994. Through the use of section

501(c)(3) organizations, Mr. Gingrich and others acting with his

knowledge and approval raised tax-deductible charitable contributions which were used to support a course designed, developed and

disseminated in a manner that provided support to GOPAC in its

political programs and to Mr. Gingrich in his re-election campaign.

For these reasons, Ms. Roady concluded that Mr. Gingrich’s activities on behalf of KSCF, PFF and Reinhardt and the activities of

others on behalf of those organizations with Mr. Gingrich’s knowledge and approval provided support to GOPAC and to Mr. Gingrich
70

75Mr. Holden and his partner conferred with Mr. Eisenach for about three hours. (12/12/96

Holden Tr. 38). The conversation with KSCF counsel, via telephone, lasted about 30 minutes.

(12/12/96 Holden Tr. 39). The conversation with PFF’s counsel lasted about two hours. (12/12/

96 Holden Tr. 38–39). Mr. Holden did not talk to Mr. Gingrich prior to writing the opinion. (12/

12/96 Holden Tr. 43). He also did not talk to anyone else involved in the course, such as Mr.

Hanser, Ms. Rogers, Ms. Nelson, Mr. Mescon, or Ms. Minnix. (12/12/96 Holden Tr. 43–44).

in violation of the campaign intervention prohibition. (11/15/96

Roady Tr. 171–175, 194).

D. Advice Ms. Roady Would Have Given

Had Mr. Gingrich or others associated with ACTV or Renewing

American Civilization consulted with Ms. Roady prior to conducting

these activities under the sponsorship of 501(c)(3) organizations,

she would have advised that they not do so for the reasons set

forth above. During her testimony before the Subcommittee, she

was asked what her advice would have been to Mr. Gingrich and

others associated with ACTV and Renewing American Civilization.

She said that she would have recommended the use of a 501(c)(4)

organization to pay for the dissemination of the course, as long as

the dissemination was not the primary activity of the 501(c)(4) organization. If this had been done, contributions for ACTV and the

course would not have been tax-deductible. (11/15/96 Roady Tr.

207–208).

VII. SUMMARY OF CONCLUSIONS OF MR. GINGRICH’S TAX COUNSEL

A. Introduction

During the Preliminary Inquiry, Mr. Gingrich’s lawyer forwarded

to the Subcommittee a legal opinion letter and follow-on letter regarding the tax questions at issue. The letters were prepared by attorney James P. Holden. At Mr. Gingrich’s request, Mr. Holden and

his partner who helped him prepare the letters, Susan Serling, met

with the Subcommittee on December 12, 1996, to discuss his conclusions. The purpose of the letters was to express Mr. Holden’s

conclusions regarding whether any violation of section 501(c)(3) occurred with respect to the Renewing American Civilization course.

His understanding of the facts of the matter was based on a review of the course book prepared for the course, videotapes of the

course, documents produced by KSC pursuant the Georgia Opens

Records Act, PFF’s application to the IRS for exemption, newspaper

articles, discussions with Mr. Baran, Mr. Eisenach, and counsel to

PFF and KSCF.75

B. Qualifications of Mr. Gingrich’s Tax Counsel

Mr. Holden is a partner at the Washington, D.C. law firm of

Steptoe and Johnson. He was an adjunct professor at Georgetown

University Law Center from 1970 to 1983. He is co-author of ‘‘Ethical Problems in Federal Tax Practice’’ and ‘‘Standards of Tax Practice.’’ He is the author of numerous tax publications and a speaker

at numerous tax institutes. He was chair of the American Bar Association Section of Taxation from 1989 to 1990; chair of the Advisory Group to the Commissioner of Internal Revenue from 1992 to

1993; and chair of the IRS Commissioner’s Review Panel on Integ-
71

76 Although Mr. Holden declined to identify the client in this case, he said that the case ‘‘is

perhaps the largest case the Internal Revenue Service has before it on this whole issue.’’ (12/

12/96 Holden Tr. 20–21).

rity Controls from 1989 to 1990. He was a trustee and president

of the American Tax Policy Institute from 1993 to 1995 and a regent of the American College of Tax Counsel. He is or was a member of the following organizations: American Law Institute (consultant, Federal Income Tax Project); Advisory Group to Senate Finance Committee Staff regarding Subchapter C revisions (1984–

1985); Board of Advisors, New York University/Internal Revenue

Service Continuing Professional Education Program (1987–1990);

and BNA Tax Management Advisory Board. He received a J.D. degree from Georgetown University Law Center in 1960 and a B.S.

degree from the University of Colorado in 1953.

His experience in 501(c)(3) law stems principally from one client

and one case that has been before the IRS for the past six years.

(12/12/96 Holden Tr. 21).76 He said during his testimony, ‘‘I don’t

pretend today to be a specialist in exempt organizations. * * * I

pretend to be an expert in the political aspects of such organizations.’’ (12/12/96 Holden Tr. 21). The one case Mr. Holden worked

on has not been resolved and he has spent, on average, about 30

percent of his time for the last six years on this case. (12/12/96

Holden Tr. 24). He has never been a member of any organization

or committee concerned principally with tax-exempt organizations

law. (12/12/96 Holden Tr. 25). He does not have any publications

in the exempt organizations field. (12/12/96 Holden Tr. 25). He has

never given any speeches on exempt organizations law nor has he

been an expert witness with respect to exempt organizations law.

(12/12/96 Holden Tr. 26).

When Mr. Baran asked Mr. Holden to prepare his opinion letter,

Mr. Baran did not ask what qualifications Mr. Holden had in the

exempt organizations area. (12/12/96 Holden Tr. 32). Mr. Holden

did not give Mr. Baran any information regarding his background

in exempt organizations law other than the names of two references. (12/12/96 Holden Tr. 33).

Mr. Holden’s partner who helped prepared the opinion, Susan

Serling, does not have experience in the exempt organizations field

other than with respect to the one case referred to above that is

still before the IRS. (12/12/96 Holden Tr. 27). She is not a member

of the ABA Exempt Organizations Committee and does not have

any publications in the exempt organizations field. She has never

given any speeches pertaining to exempt organizations law and has

never testified as an expert witness with respect to exempt organizations law. (12/12/96 Holden Tr. 27).

C. Summary of Conclusions of Mr. Gingrich’s Tax Counsel

As set forth in Mr. Holden’s opinion letter, his follow-on letter,

and in his testimony, it was Mr. Holden’s opinion, based on his review of the facts available to him, that ‘‘there would be no violation

of section 501(c)(3) if an organization described in that section were

to conduct ‘Renewing American Civilization’ as its primary activity.’’ (9/6/96 Holden Ltr. 4). In arriving at this opinion, Mr. Holden

evaluated the facts in light of the requirements:
72

1. that a section 501(c)(3) organization be operated exclusively for an exempt purpose;

2. that the organization serve a public rather than a private interest;

3. that the earnings of an organization not inure to the

benefit of any person;

4. that no substantial part of the activities of the organization consist of attempting to influence legislation; and

5. that the organization not participate or intervene in

any political campaign in support of or in opposition to any

candidate for public office.

(9/6/96 Holden Ltr. 4). A discussion of Mr. Holden’s views on the

two principal tax questions at issue before the Subcommittee—the

private benefit prohibition and campaign intervention prohibition—

is set forth below.

1. PRIVATE BENEFIT PROHIBITION

With respect to whether Renewing American Civilization violated

the private benefit prohibition described above, Mr. Holden’s opinion and follow-on letter focused exclusively on the American Campaign Academy case. His letters did not refer to other precedent or

IRS statements pertaining to the private benefit prohibition. In

evaluating whether Renewing American Civilization created any

discernible secondary benefit, in the terms used by the Court in

American Campaign Academy, Mr. Holden considered whether the

course provided an ‘‘identifiable benefit’’ to GOPAC or the Republican party. He concluded that it did not.

Following our review of the course materials, the course

syllabi, and video tapes of the course lectures, we have not

been able to identify any situation in which students of the

course were advised to vote Republican, join the Republican party, join GOPAC, or support Republicans in general. Rather, the course explored broad aspects of American civilization through Mr. Gingrich’s admittedly partisan viewpoint.

(9/17/96 Holden Ltr. 5). Mr. Holden also wrote:

From our review of the course materials * * * and their

presentation, it appears to us that the educational message was not narrowly targeted to benefit particular organizations or persons beyond the students themselves.

(9/6/96 Holden Ltr. 58). During his testimony before the Subcommittee, Mr. Holden said that because the course was educational within the meaning of the ‘‘methodology test’’ referred to

above, he could not ‘‘conceive’’ of how the broad dissemination of its

message could violate 501(c)(3). (12/12/96 Holden Tr. 71).

Now, when we get into the course—and I am saying I

am going to look at the activities, and if I have a clean

educational message, then my organization is entitled to

disseminate that message as broadly as we have the resources to do [for any purpose as long as it is] serving the
73

public with that in the sense that this message has utility

to the public.

(12/12/96 Holden Tr. 113–114).

In coming to his conclusion that the course did not violate the

private benefit prohibition, Mr. Holden made several findings of

fact and several assumptions. For example, he wrote that he considered the facts that established a close connection between individuals who were active in GOPAC and the development and promotion of the course. As he characterized it, GOPAC’s former Executive Director and GOPAC employees became employees or contractors to the organizations that conducted the course. Individuals, foundations, and corporations that provided financial support

for the course were also contributors to GOPAC or Mr. Gingrich’s

political campaigns. GOPAC employees solicited contributions for

the course. (9/6/96 Holden Ltr. 4). Furthermore, documents he reviewed:

provide[d] evidence that the course was developed in a political atmosphere and as part of a larger political strategy.

The documents indicate that Mr. Gingrich and GOPAC

evolved a political theme that they denominated ‘‘Renewing American Civilization’’ and that, in their political campaign capacities, they intended to press this theme to the

advantage of Republican candidates.

(9/17/96 Holden Ltr. 2).

Mr. Holden assumed a political motivation behind the development of the course. As described in his opinion letter:

[T]he individuals who controlled GOPAC and who participated in promoting the course viewed the course as desirable in a political context, and many of their expressions

and comments evidence a political motive and interest.

* * * Mr. Gingrich is a skilled politician whose ideology

finds expression in a political message, and he is interested in maximum exposure of that message and in generating interest in those who might be expected to become

advocates of the message. In sum, we have not assumed

that the development and promotion of the course were

free from political motivation.

(9/6/96 Holden Ltr. 4–5). Furthermore, Mr. Holden said that when

preparing his opinion, he made the ‘‘critical assumption that the interests of the political persona surrounding GOPAC were advanced

by creating this course.’’ (12/12/96 Holden Tr. 72). In this regard,

Mr. Holden also said during his testimony:

We have taken as an assumption that the intent [of the

course] was to benefit the political message. If someone

told me that teaching the course actually resulted in the

benefit, I guess I wouldn’t be surprised because that was

our understanding of the objective. * * * I accept[ed] for

purposes of our opinion that there was an intent to advance the political message by utilizing a (c)(3).

(12/12/96 Holden Tr. 83).
74

In Mr. Holden’s opinion, however, the political motivation or

strategy behind the creation of the course is irrelevant when determining whether a violation of the private benefit prohibition occurred.

It is not the presence of politicians or political ideas that

controls. The pertinent law does not turn on the political

affiliations or political motivations of the principal participants.

(9/6/96 Holden Ltr. 6). According to Mr. Holden, the issue of whether a violation of 501(c)(3) occurred ‘‘may not be resolved by a determination that the individuals who designed and promoted the

course acted with political motivation.’’ (9/17/96 Holden Ltr. 4). In

his opinion, when determining whether an organization violated

the private benefit prohibition, it is necessary to determine whether an organization’s activities in fact served a private interest. (12/

12/96 Holden Tr. 80). What motivates the activities is irrelevant.

I’m saying it’s irrelevant to look to what caused an individual or group of individuals to form a (c)(3) or to utilize

a 501(c)(3) organization. The question instead is on the activities—the focus instead is on the activities of the organization and whether they violated the operational test. I

think that’s a critical distinction.

(12/12/96 Holden Tr. 61). He said that he was ‘‘aware of no authority that would hold that because one is motivated to establish a

501(c)(3) organization by business, political, or other motivation,

that means that the organization cannot operate in a manner that

satisfies 501(c)(3), because we are talking about an operational

test.’’ (12/12/96 Holden Tr. 17–18). Mr. Holden cited American

Campaign Academy as an authority for his conclusion that an organization’s activity must itself benefit a targeted group and that motivation of an organization’s agents in conducting that activity is irrelevant. Mr. Holden said:

[In American Campaign Academy] [t]he focus was, instead, on the operational test and whether the activities of

the organization evidenced a purpose to serve a private interest. But you have to find that in the activities of the organization and not in some general notion of motivation or

background purpose.

(12/12/96 Holden Tr. 61).

In light of these and similar comments made by Mr. Holden, the

Special Counsel asked Mr. Holden to comment on statements found

in the American Campaign Academy case at page 1064. The statements are in a section of the case under the heading ‘‘Operational

Test’’ and are as follows:

The operational test examines the actual purpose for the

organization’s activities and not the nature of the activities

or the organization’s statement of purpose. (citations omitted). (emphasis supplied).

In testing compliance with the operational test, we look

beyond the four corners of the organization’s charter to

discover ‘‘the actual objects motivating the organization
75

and the subsequent conduct of the organization.’’ (citations

omitted). (emphasis supplied).

What an organization’s purposes are and what purposes

its activities support are questions of fact. (citations omitted).

(12/12/96 Holden Tr. 75–76). After the Special Counsel brought

these sections of the case to Mr. Holden’s attention, the following

exchange occurred:

Mr. Holden: May I refer you to the last sentence before

the next heading, ‘‘Operating Primarily for Exempt Purposes.’’ The last sentence before that says: ‘‘The sole issue

for declaration [sic] is whether respondent properly determined that petitioner failed to satisfy the first condition of

the operational test by not primarily engaging in activities,

which is not for exempt purposes.’’

It’s an activities test. And this is where the courts say

this is the sole issue. The stuff before, they’re just kind of

reciting the law. When he gets to this, he said this is what

we have to determine.

Mr. Cole: But in reciting the law, don’t they say, in testing compliance with the operational test, we look beyond

the four corners of the organization’s charter to discover

the actual objects motivating the organization? Prior to

that, they say the operational test examines the actual

purpose for the organization’s activities, not the nature of

the activities or the organization’s statement of purpose.

I grant you that is the statement of the law, but you are

saying that has no significance?

Mr. Holden: That’s not the case Judge Nims decided.***

(12/12/96 Holden Tr. 77).

2. CAMPAIGN INTERVENTION PROHIBITION

In his opinion letter, Mr. Holden wrote that it was ‘‘important to

note that section 501(c)(3) does not, as is often suggested, bar ‘political activity’ [by 501(c)(3) organization].’’ (9/6/96 Holden Ltr. 68).

The prohibition is more limited and prohibits an organization from

participating in or intervening in any political campaign on behalf

of or in opposition to any candidate for public office. In order for

an organization to violate this prohibition, there must exist a campaign, a candidate, a candidate seeking public office, and an organization that participates or intervenes on behalf of or in opposition

to that candidate. (9/6/96 Holden Ltr. 68–69). Mr. Holden concluded

that the course did not violate this prohibition.

The [course] materials contain no endorsement of or opposition to the candidacy of any person, whether expressed

by name or through the use of a label that might be taken

as a stand-in for a candidate. While the materials are critical of what is referred to as the ‘‘welfare state’’ and laudatory of what is described as an ‘‘opportunity society,’’ none

of this is properly characterized as personalized to candidates, directly or indirectly.
76

77See also 12/12/96 Holden Tr. 103:

Mr. Schiff: But if you are providing 501(c)(3) raised money to pay for that candidate to give

the same message, which is his political message, I think, for all substantial purposes, aren’t

you then, in effect, intervening or even endorsing the candidate by using that type of money

to allow him to get his message further than it would get in the absence of that money?

Mr. Holden: I go back to the fact that we have a clean curriculum that we were talking about

in a hypothetical and in the judgment that we reached about this case, and I don’t believe that

merely because a political figure takes a particular set of values and articulates them as a political theme, that that so captures that set of values that a 501(c)(3) organization cannot legitimately educate people about that same set of values.

Mr. Schiff: With the same messenger?

Mr. Holden: It doesn’t seem to me that that compels a conclusion that there’s a violation of

501(c)(3).

(9/6/96 Holden Ltr. 72). During his testimony before the Subcommittee, Mr. Holden said that the course contained issue advocacy in the sense that it called for the replacement of the welfare

state with the opportunity society. (12/12/96 Holden Tr. 103–104).

He also said that this issue—the replacement of the welfare state

with an opportunity society—was closely identified with Mr. Gingrich and his political campaigns. (12/12/96 Holden Tr. 104). He,

however, did not see this as a basis for concluding that the course

violated the prohibition on intervention in a political campaign because ‘‘Mr. Gingrich [had not] captured [this issue] to the point

where it is not a legitimate public interest issue for discussion in

a purely educational setting, even where he is the instructor.’’ (12/

12/96 Holden Tr. 104).77

D. Advice Mr. Holden Would Have Given

During his appearance before the Subcommittee, Mr. Holden was

asked about what type of organization he would have advised Mr.

Gingrich and others to use in order to conduct and disseminate Renewing American Civilization had he been asked in advance. He

said that he would not have advised the use of a 501(c)(3) organization because the mix of politics and tax-deductible funds is too ‘‘explosive.’’

I would have advised them not to do the activity through

a (c)(3). I have already expressed that view to the Speaker.

He didn’t consult me in advance, but I said, if I had been

advising you in advance. He said, why not. I said, because

the intersection of political activity and 501(c)(3) is such an

explosive mix in terms of the IRS view of things that I

would not advise you to move that close to the issue. You

should find a way of financing the course that doesn’t involve the use of 501(c)(3) funds. That would have been my

advice to him.

I said, that doesn’t mean I conclude that what you did

is a violation. In fact, I think we are kind of fairly far out

beyond the frontiers of what has been decided in the past

in this area. We are looking at the kind of case that I do

not think has ever been presented. I do not see how anyone can conclude that this is an open and shut case. It just

is not of that character.

(12/12/96 Holden Tr. 132–134). Mr. Holden said that an appropriate vehicle for the course might have been a 501(c)(4) organization because such an organization can engage in some political activity and the activity would not have used tax-deductible funds.
77

(12/12/96 Holden Tr. 132–134). Later, Mr. Holden re-iterated that

he would have not recommended that Renewing American Civilization be sponsored and funded by a 501(c)(3) organization and pointed out such activities are highly likely to attract the attention of

the IRS.

[T]hose funds are deductible and the conjunction of politics and a (c)(3) organization is so explosive as a mix that

it is bound to attract the attention of the Internal Revenue

Service. I wouldn’t have been thinking about this committee. I would have been thinking about whether the Internal Revenue Service would have been likely to challenge.

(12/12/96 Holden Tr. 146). After Mr. Holden made this comment,

the following exchange occurred:

Ms. Pelosi: So it would have raised questions[?]

Mr. Holden: Yes.

Mr. Goss: Isn’t that a little bit akin to having a yacht

and an airplane on your tax return for business

purposes[?]

Mr. Holden: It is one of those things that stands out.

(12/12/96 Holden Tr. 146–147).

VIII. SUMMARY OF FACTS PERTAINING TO STATEMENTS MADE TO

THE COMMITTEE

A. Background

On or about September 7, 1994, Ben Jones, Mr. Gingrich’s Democratic opponent in 1994, filed with the Committee a complaint

against Mr. Gingrich. The complaint centered on the course.

Among other things, it alleged that Mr. Gingrich had used his congressional staff to work on the course and that he had misused organizations that were exempt from taxation under section 501(c)(3)

of the Internal Revenue Code because the course was a partisan,

political project, with significant involvement by GOPAC, and was

not a permissible activity for a section 501(c)(3) organization. (Ex.

135).

On or about October 4, 1994, Mr. Gingrich wrote the Committee

in response to the complaint and primarily addressed the issues

concerning the use of congressional staff for the course. In doing so

he stated:

I would like to make it abundantly clear that those who

were paid for course preparation were paid by either the

Kennesaw State Foundation, [sic] the Progress and Freedom Foundation or GOPAC. * * * Those persons paid by

one of the aforementioned groups include: Dr. Jeffrey

Eisenach, Mike DuGally, Jana Rogers, Patty Stechschultez

[sic], Pamela Prochnow, Dr. Steve Hanser, Joe Gaylord

and Nancy Desmond.

(Ex. 136, p. 2).

After the Committee received and reviewed Mr. Gingrich’s October 4, 1994 letter, it sent him a letter dated October 31, 1994, asking for additional information concerning the allegations of misuse
78

of tax-exempt organizations in regard to the course. The Committee

also asked for information relating to the involvement of GOPAC

in various aspects of the course. As set forth in the letter, the Committee wrote:

There is, however, an allegation which requires explanation before the Committee can finalize its evaluation of

the complaint. This is the allegation that, in seeking and

obtaining funding for your course on Renewing American

Civilization, you improperly used tax-exempt foundations

to obtain taxpayer subsidization of political activity.

* * * * * * *

Your answers to [questions set forth in the letter] would

be helpful to the Committee in deciding what formal action

to take with respect to the complaint.

* * * * * * *

A number of documents submitted by Ben Jones, however, raise questions as to whether the course was in fact

exclusively educational in nature, or instead constituted

partisan political activity intended to benefit Republican

candidates.

(Ex. 137, pp. 1–2).

B. Statements Made by Mr. Gingrich to the Committee, Directly or

Through Counsel

1. MR. GINGRICH’S DECEMBER 8, 1994 LETTER TO THE COMMITTEE

In a letter dated December 8, 1994, Mr. Gingrich responded to

the Committee’s October 31, 1994 letter. (Ex. 138). In that letter,

Mr. Gingrich made the following statements, which he has admitted were inaccurate, incomplete, and unreliable.

1. [The course] was, by design and application, completely non-partisan. It was and remains about ideas, not

politics. (Ex. 138, p. 2).

2. The idea to teach ‘‘Renewing American Civilization’’

arose wholly independent of GOPAC, because the course,

unlike the committee, is non-partisan and apolitical. My

motivation for teaching these ideas arose not as a politician, but rather as a former educator and concerned American citizen * * *. (Ex. 138, p. 4).

3. The fact is, ‘‘Renewing American Civilization’’ and

GOPAC have never had any official relationship. (Ex. 138,

p. 4).

4. GOPAC * * * is a political organization whose interests are not directly advanced by this non-partisan educational endeavor. (Ex. 138, p. 5).

5. As a political action committee, GOPAC never participated in the administration of ‘‘Renewing American Civilization.’’ (Ex. 138, p. 4).

6. Where employees of GOPAC simultaneously assisted

the project, they did so as private, civic-minded individuals

contributing time and effort to a 501(c)(3) organization.

(Ex. 138, p. 4).
79

7. Anticipating media or political attempts to link the

Course to [GOPAC], ‘‘Renewing American Civilization’’ organizers went out of their way to avoid even the appearances of improper association with GOPAC. Before we had

raised the first dollar or sent out the first brochure, Course

Project Director Jeff Eisenach resigned his position at

GOPAC. (Ex. 138, p. 4).

The goal of the letter was to have the complaint dismissed.

(11/13/96 Gingrich Tr. 36).

2. MARCH 27, 1995 LETTER OF MR. GINGRICH’S ATTORNEY TO THE

COMMITTEE

On January 26, 1995, Representative Bonior filed with the Committee an amended version of the Ben Jones complaint against Mr.

Gingrich. (Ex. 139). Among other things, the complaint re-alleged

that the Renewing American Civilization course had partisan, political purposes and was in violation of section 501(c)(3). The complaint also alleged substantial involvement of GOPAC in the

course. (Ex. 139, pp. 1–7). In a letter dated March 27, 1995, Mr.

Baran, Mr. Gingrich’s attorney and a partner at the law firm of

Wiley, Rein and Fielding, filed a response on behalf of Mr. Gingrich

to the amended complaint. (Ex. 140, PFF 4347). Prior to the letter

being delivered, Mr. Gingrich reviewed it and approved its submission to the Committee. (7/18/96 Gingrich Tr. 274–275).

Mr. Cole: If there was anything inaccurate in the letter,

would you have told Mr. Baran to change it?

Mr. Gingrich: Absolutely.

(7/18/96 Gingrich Tr. 275).

The letter contains the following statements, which Mr. Gingrich

has admitted were inaccurate, incomplete, and unreliable.

1. As Ex. 13 demonstrates, the course solicitation * * *

materials are completely non-partisan. (Ex. 140, p. 19, fn.

7).

2. GOPAC did not become involved in the Speaker’s academic affairs because it is a political organization whose

interests are not advanced by this non-partisan educational endeavor. (Ex. 140, p. 35).

3. The Renewing American Civilization course and

GOPAC have never had any relationship, official or otherwise. (Ex. 140, p. 35).

4. As noted previously, GOPAC has had absolutely no

role in funding, promoting, or administering Renewing

American Civilization. (Ex. 140, pp. 34–35).

5. GOPAC has not been involved in course fundraising

and has never contributed any money or services to the

course. (Ex. 140, p. 28).

6. Anticipating media or political attempts to link the

course to GOPAC, course organizers went out of their way

to avoid even the appearance of associating with GOPAC.

Prior to becoming Course Project Director, Jeffrey

Eisenach resigned his position at GOPAC and has not returned. (Ex. 140, p. 36).
80

The purpose of Mr. Baran’s letter was to have the Committee dismiss the complaints against Mr. Gingrich. (11/13/96 Gingrich Tr.

35–36).

C. Subcommittee’s Inquiry Into Statements Made to the Committee

On September 26, 1996, the Subcommittee expanded the scope of

the Preliminary Inquiry to determine:

[w]hether Representative Gingrich provided accurate, reliable, and complete information concerning the course entitled ‘‘Renewing American Civilization,’’ GOPAC’s relationship to the course entitled ‘‘Renewing American Civilization,’’ or the Progress and Freedom Foundation in the

course of communicating with the Committee, directly or

through counsel * * *.

On October 1, 1996, the Subcommittee requested that Mr. Gingrich

produce to the Subcommittee all documents that were used or relied upon to prepare the letters at issue—the letters dated October

4, 1994, December 8, 1994 and March 27, 1995. Mr. Gingrich responded to the Committee’s request on October 31, 1996. (Ex. 141).

In his response, Mr. Gingrich described how extremely busy he was

at the time the October 4, 1994, and December 8, 1994 letters were

prepared. He said, the October 4, 1994 letter was written ‘‘in [the]

context of exhaustion and focused effort’’ on finishing a congressional session, traveling to over a hundred congressional districts,

tending to his duties as Whip, and running for re-election in his

district. (Ex. 141, p. 1). At the time of the December 8, 1994 letter,

he said that he and his staff were ‘‘making literally hundreds of decisions’’ as part of the transition in the House from Democratic to

Republican Control. (Ex. 141, p. 2; 11/13/96 Gingrich Tr. 6, 10, 26).

With respect to his level of activity at the time the March 27, 1995

letter was created Mr. Gingrich said the following:

[W]e were going through passing the Contract with

America in a record 100 days in what many people believe

was a forced march. I was, in parallel, beginning to lay out

the base for the balanced budget by 2002, and I was,

frankly, being too noisy publicly and damaging myself in

the process.

I had three projects—four; I was writing a book. So

those four projects were ongoing as I was going home to

report to my district, and we were being battered as part

of this continuum by Bonior and others, and we wanted it

handled in a professional, calm manner. We wanted to

honor the Ethics process.

(11/13/96 Gingrich Tr. 33–34).

Mr. Gingrich wrote in his October 31, 1996 response to the Subcommittee that ‘‘although [he] did not prepare any of the letters in

question, in each case [he] reviewed the documents for accuracy.’’

(Ex. 141, p. 3). Specifically, with respect to the October 4, 1994 letter, his assistant, Annette Thompson Meeks, showed him the draft

she had created and he ‘‘read it, found it accurate to the best of

[his] knowledge, and signed it.’’ (Ex. 141, p. 2). With respect to the

December 8, 1994 letter, he wrote, ‘‘Again I would have read the
81

78Mr. Gingrich appeared twice before the Subcommittee to discuss these letters. The first

time was on November 13, 1996, in response to a request from the Subcommittee that he appear

and testify about the matter under oath. The second time was on December 10, 1996, as part

of his opportunity to address the Subcommittee pursuant to Rule 17(a)(3) of the Committee’s

Rules. Pursuant to Committee Rules, that appearance was also under oath.

letter carefully and concluded that it was accurate to the best of

my knowledge and then signed it.’’ (Ex. 141, p. 2). With respect to

the March 27, 1995 letter, he wrote that he ‘‘read [it] to ensure

that it was consistent with [his] recollection of events at that time.’’

(Ex. 141, p. 3).

D. Creation of the December 8, 1994 and March 27, 1995 Letters

Mr. Gingrich appeared before the Subcommittee on November

13, 1996 to testify about these letters.78 He began his testimony by

stating that the ‘‘ethics process is very important.’’ (11/13/96 Gingrich Tr. 4). He then went on to state:

On Monday I reviewed the 380-page [July 1996] interview with Mr. Cole, and I just want to begin by saying to

the [C]ommittee that I am very embarrassed to report that

I have concluded that reasonable people could conclude,

looking at all the data, that the letters are not fully responsive, and, in fact, I think do fail to meet the standard

of accurate, reliable and complete.

(11/13/96 Gingrich Tr. 5). Mr. Gingrich said several times that it

was only on the Monday before his testimony—the day when he reviewed the transcript of his July interview with Mr. Cole—that he

realized the letters were inaccurate, incomplete, and unreliable.

(11/13/96 Gingrich Tr. 5, 8, 10, 149, 150, 195; 12/10/96 Gingrich Tr.

75). In his testimony before the Subcommittee the next month, Mr.

Gingrich ‘‘apologized for what was clearly a failure to communicate

accurately and completely with this [C]ommittee.’’ (12/10/96 Gingrich Tr. 5). Mr. Gingrich said the errors were a result of ‘‘a failure

to communicate involving my legal counsel, my staff and me.’’

(12/10/96 Gingrich Tr. 5). Mr. Gingrich went on to say:

After reviewing my testimony, my counsel’s testimony,

and the testimony of two of his associates, the ball appears

to have been dropped between my staff and my counsel regarding the investigation and verification of the responses

submitted to the [C]ommittee.

As I testified, I erroneously, it turns out, relied on others

to verify the accuracy of the statements and responses.

This did not happen. As my counsel’s testimony indicates,

there was no detailed discussion with me regarding the

submissions before they were sent to the [C]ommittee.

Nonetheless, I bear responsibility for them, and I again

apologize to the [C]ommittee for what was an inadvertent

and embarrassing breakdown.

* * * * * * *

At no time did I intend to mislead the [C]ommittee or

in any way be less than forthright.

(12/10/96 Gingrich Tr. 5–7). Of all the people involved in drafting,

reviewing, or submitting the letters, the only person who had first-
82

79Mr. Gaylord was the one to contact the firm because his position was ‘‘advisor to Congressman Gingrich’’ and he coordinated ‘‘all of the activities that were outside the official purview

of [Mr. Gingrich’s] congressional responsibilities.’’ (11/14/96 Gaylord Tr. 19; 11/13/96 Baran Tr.

7).80Mr. Gingrich waived his attorney/client privilege and asked Mr. Baran to testify before the

Committee. (11/13/96 Gingrich Tr. 5). 81Mr. Gaylord said that he did not give any instructions to Mr. Baran about how the response

should be prepared. (11/14/96 Gaylord Tr. 16–17). Mr. Baran, however, recalled that Mr. Gaylord said that the response should be completed quickly ‘‘because there was hope that the Ethics

Committee would meet before the end of the year to consider this matter’’ and that it should

not be too expensive. (11/13/96 Baran Tr. 7, 46–48). 82The attachments to the October 31, 1994 letter were selected from materials that were part

of the complaint filed by Mr. Jones. 83Mr. Mehlman left Wiley, Rein & Fielding in February 1996 and is now an attorney with

the National Republican Congressional Committee. (11/19/96 Mehlman Tr. 5).

hand knowledge of the facts contained within them with respect to

the Renewing American Civilization course was Mr. Gingrich.

1. CREATION OF THE DECEMBER 8, 1994 LETTER

According to Mr. Gingrich, after he received the Committee’s October 31, 1994 letter, he decided that the issues in the letter were

too complex to be handled by his office and he sought the assistance of an attorney. (11/13/96 Gingrich Tr. 11). Mr. Gaylord, on behalf of Mr. Gingrich, contacted Jan Baran and the Mr. Baran’s firm

began representing Mr. Gingrich on November 15, 1994. (11/14/96

Gaylord Tr. 16; 79 11/13/96 Baran Tr. 4; 80 12/10/96 Gingrich Tr. 5).

The response prepared by Mr. Baran’s firm became the letter from

Mr. Gingrich to the Committee dated December 8, 1994.

According to Mr. Baran, he did not receive any indication from

Mr. Gaylord or Mr. Gingrich that Mr. Baran was to do any kind

of factual review in order to prepare the response. (11/13/96 Baran

Tr. 47–48). 81 Mr. Baran and his staff did not seek or review documents other than those attached to the complaint of Mr. Jones and

the Committee’s October 31, 1994 letter to Mr. Gingrich 82 and did

not contact GOPAC, Kennesaw State College, or Reinhardt College.

(11/13/96 Baran Tr. 13, 15, 18). Mr. Baran did not recall speaking

to Mr. Gingrich about the letter other than possibly over dinner on

December 9, 1994—one day after the letter was signed by Mr.

Gingrich. (11/13/96 Baran Tr. 18, 33). Mr. Baran did contact Mr.

Eisenach, but did not recall the ‘‘nature of the contact.’’ (11/13/96

Baran Tr. 16). Mr. Eisenach said he had no record of ever having

spoken to Mr. Baran about the letter and does not believe that he

did so. (11/14/96 Eisenach Tr. 18–19, 22). The conversation he had

with Mr. Baran concerned matters unrelated to the letter.

(11/14/96 Eisenach Tr. 17–18). Mr. Eisenach also said that no one

has ever given him a copy of the December 8, 1994 letter and asked

him to verify its contents. (11/14/96 Eisenach Tr. 22).

The other attorney at Wiley, Rein and Fielding involved in preparing the response was Bruce Mehlman. (11/13/96 Baran Tr. 19;

11/19/96 Mehlman Tr. 17). He was a first-year associate who had

been at Wiley, Rein and Fielding since September 1994. (11/19/96

Mehlman Tr. 5). 83 Mr. Mehlman’s role was to create the first draft.

(11/19/96 Mehlman Tr. 15). The materials Mr. Mehlman had available to him to prepare the draft were:

1. correspondence between Mr. Gingrich and the Committee, including the October 4, 1994 letter;

2. course videotapes;
83

84The information obtained from his brother used as the basis of the statement in Mr. Gingrich’s response that the course contained ‘‘as many references to Franklin Roosevelt, Jimmy

Carter, and Martin Luther King, Jr. as there are to Ronald Reagan or Margaret Thatcher.’’ (11/

19/96 Mehlman Tr. 20). Mr. Mehlman, however, personally reviewed only one course videotape.

(11/19/96 Mehlman Tr. 21).

3. the book used in the course called ‘‘Renewing American Civilization’’;

4. a course brochure;

5. the complaint filed by Ben Jones against Mr. Gingrich; and

6. documents produced pursuant to a Georgia Open

Records Act request.

(11/19/96 Mehlman Tr. 15–16, 20). Mr. Mehlman said that he did

not attempt to gather any other documents because he did not see

a need to go beyond these materials in order to prepare a response.

(11/19/96 Mehlman Tr. 19–20). With the exception of contacting his

brother, who had taken the course,84 Mr. Mehlman did not make

any inquiries of people regarding the facts of the matter. (11/19/96

Mehlman Tr. 18). He did not, for example, contact GOPAC or Mr.

Eisenach. (11/19/96 Mehlman Tr. 28). After he completed his first

draft, he gave it to Mr. Baran. (11/19/96 Mehlman Tr. 22). He assumed that Mr. Baran would make sure that any factual questions

would have been answered to his satisfaction before the letter went

out. (11/19/96 Mehlman Tr. 51). However, Mr. Mehlman did not

know what, if anything, Mr. Baran did with the draft after he gave

it to him. (11/19/96 Mehlman Tr. 22).

When Mr. Gaylord asked Mr. Baran to prepare the letter, it was

Mr. Baran’s understanding that Annette Thompson Meeks, an Administrative Assistant for Mr. Gingrich’s office, would help. (11/13/

96 Baran Tr. 5, 7). According to Mr. Baran, Ms. Meeks’ role was:

basically to take a draft product from us and review it for

accuracy [from] her personal knowledge and basically

make sure that it was acceptable. And in that regard, I believed that she may have spoken with other people to confirm that, but you will be talking to her, and you will have

to confirm it with her. I tried to not talk to her about that.

(11/13/96 Baran Tr. 10). Mr. Baran described the process for reviewing the letter as follows:

Well, you know, as a counsel who was retained relatively

late in that process at that time and as someone who had

no firsthand knowledge about any of the underlying activities and with a marching order of trying to prepare a draft

that was usable by the staff, we were pretty much focused

on getting something together and over to Annette Meeks

so that it could be used. Verification was something that

would have been available through those who had firsthand knowledge about these facts, who had reviewed the

draft.

(11/13/96 Baran Tr. 15). Mr. Baran did not, however, know whether

the letter was reviewed by others to determine its accuracy. (11/13/

96 Baran Tr. 48).
84

Ms. Meeks said that at the time the letter was being prepared,

she had no knowledge of whether:

1. the course was a political or partisan activity by design or application;

2. GOPAC was involved in the course;

3. GOPAC was benefited by the course;

4. GOPAC created, funded, or administered the course;

5. the idea to teach the course arose wholly independent

of GOPAC;

6. Mr. Gingrich’s motivation for teaching the course

arose not as a politician but rather as a historian;

7. Mr. Eisenach resigned his position at GOPAC.

(11/14/96 Meeks Tr. 45–47). Ms. Meeks also said she was unaware

that GOPAC’s theme was Renewing American Civilization. (11/14/

96 Meeks Tr. 88).

Ms. Meeks said she had no role in drafting the letter, did not

talk to anyone to verify that the facts in the letter were accurate,

and had no knowledge of how the facts in the letter were checked

for accuracy. (11/14/96 Meeks Tr. 39, 48, 51). She did not indicate

to Mr. Baran that she had given the letter to anyone for the purpose of checking its accuracy. (11/14/96 Meeks Tr. 87). In this regard, Ms. Meeks said:

I will be very frank and tell you I don’t know how [Mr.

Baran] composed this information as far as who he spoke

with. I was not privy to any of that. The only thing I could

add to my answer is that once counsel is retained, we were

kind of out of the picture as far as the process, other than

typing and transmitting.

(11/14/96 Meeks Tr. 92). She said her role was to provide Mr.

Baran with: background information about Mr. McCarthy (the

Committee’s counsel who had conferred with Mr. Gingrich about

the course in 1993); a copy of the October 4, 1994 letter from Mr.

Gingrich to the Committee; copies of papers relating to Mr.

Hanser’s employment with Mr. Gingrich’s congressional office; and

copies of the course videotapes. (11/14/96 Meeks Tr. 36–37).

Mr. Gaylord had a similar expectation in that, by retaining

Wiley, Rein and Fielding, the firm was:

both protecting us and had done the proper and correct investigation in the preparation of the letters and that they,

in fact, did their job because that’s what they were paid to

do. And I presumed that they had extracted the information from Dr. Eisenach and others who were involved specifically in the course.

(11/14/96 Gaylord Tr. 62). Mr. Gaylord, however, did not know

what inquiry Mr. Baran made in order to prepare the letter. (11/

14/96 Gaylord Tr. 17).

After Mr. Baran sent Ms. Meeks a draft of the letter, Ms. Meeks

re-typed the letter and sent the new version to Mr. Baran to verify

that it was identical to what he had sent her. She then recalled

faxing a copy to Mr. Gaylord and to Mr. Gingrich’s executive assistant ‘‘to get Newt to take a look at it.’’ (11/14/96 Meeks Tr. 43–44).

Mr. Gingrich said about his review of the letter:
85

85 In early July 1993, Mr. Gingrich was interviewed about the course by a student reporter

with the KSC newspaper. In that interview the following exchange took place:

Interviewer: And how is GOPAC involved in this?

Mr. Gingrich: It’s not involved in this at all.

Interviewer: Are you going to bring a lot of your ideas to GOPAC though?

Mr. Gingrich: Absolutely. Every single one of them.

(Ex. 142, p. 10).

In other interviews over the past few years, Mr. Gingrich has made other statements about

GOPAC’s involvement in the course. They have included, for example, the following:

1.‘‘GOPAC had the most incidental involvement at the very beginning of the process.’’ (Atlanta

Constitution, section A, page 1 (Sept. 19, 1993)).

2.‘‘GOPAC provided some initial ideas on who might be interested in financing the course;

that’s all they did.’’ (Associated Press, AM cycle, (Sept. 2, 1993)).

3.‘‘The initial work was done before we talked with Kennesaw State College at GOPAC in organizing our thoughts.’’ (The Hotline, American Political Network, Inc. (Sept. 7, 1993)).

And I think in my head, I was presented a document—

I am not trying to blame anybody, or I am not trying to

avoid this, I am trying to explain how it happened. I was

presented a document and told, this is what we have collectively decided is an accurate statement of fact. I read

the document, and it did not at any point leap out to me

and say, boy, you had better modify paragraph 3, or that

this phrase is too strong and too definitive. I think I read

it one time, so that seems right to me, and I signed it.

(11/13/96 Gingrich Tr. 11). See also 11/13/96 Gingrich Tr. 10 (at the

time he read the letter, ‘‘nothing leaped out at [him] and said, ‘this

is wrong’ ’’) and 11/13/96 Gingrich Tr. 16 (the letter ‘‘seemed accurate’’ to him).85

Mr. Gaylord did not recall whether he reviewed the letter prior

to its being sent to the Committee. (11/14/96 Gaylord Tr. 18). Mr.

Gaylord said that the statement that GOPAC had no role in the

administration of the course was incorrect. (11/14/96 Gaylord Tr.

30–31). Mr. Gaylord said that the statement that GOPAC employees contributed time as private, civic-minded people was incorrect.

(11/14/96 Gaylord Tr. 31). Mr. Gaylord was not asked to verify the

facts in the letters. (11/14/96 Gaylord Tr. 20, 33).

2. BASES FOR STATEMENTS IN THE DECEMBER 8, 1994 LETTER

During their testimony, those involved in the creation of the letter were unable to explain the bases for many of the statements

in the letter. Explanations were, however, given for the bases of

some of the statements. A summary of those bases is set forth

below.

1. [The course] was, by design and application, completely non-partisan. It was and remains about ideas, not

politics. (Ex. 138, p. 2).

Mr. Baran said that the basis for this statement was his review

of the course tapes and course materials. (11/13/96 Baran Tr. 19).

Mr. Mehlman said the following about his understanding of the

basis of this statement:

Well, I don’t specifically recall. If I had to assume, it

would be some of the [Georgia Open Records Act] documents or some of the course materials that purport to be

nonpartisan, or to have created a course that was nonpartisan, that certainly would explain design.
86

86 Earlier in his testimony and as described above, Mr. Baran said that he had contacted Mr.

Eisenach at the time the letter was being prepared, but did not recall the ‘‘nature of the contact.’’ (11/13/96 Baran Tr. 16). As also discussed above, Mr. Eisenach recalled having a discussion with Mr. Baran at the time the letter was being prepared, but about topics unrelated to

the letter. (11/14/96 Eisenach Tr. 17–18).

As far as in application, probably the reference made by

my brother who had seen the course, who had participated

in it, I suppose, and my general basic review of the initial

writings about the course and viewing the first videotape

of the course, suggested that the course was nonpartisan.

(11/19/96 Mehlman Tr. 24–25).

According to Mr. Baran, the letter to the College Republicans—

which was one of the attachments to the September 7, 1994 Jones

complaint (Ex. 81)—did not raise a question in his mind that the

course was partisan or about politics. (11/13/96 Baran Tr. 23).

2. ‘‘The idea to teach ‘Renewing American Civilization’

arose wholly independent of GOPAC, because the course,

unlike the committee, is non-partisan and apolitical. My

motivation for teaching these ideas arose not as a politician, but rather as a former educator and concerned American citizen * * *.’’ (Ex. 138, p. 4).

Mr. Baran said that the basis of this statement was a review of

the course tapes and the belief that the course had originated from

a January 25, 1993 speech Mr. Gingrich had given on the House

floor. (11/13/96 Baran Tr. 24–25). At the time the letter was drafted, Mr. Baran was unaware of Mr. Gingrich’s December 1992 meeting with Owen Roberts where Mr. Gingrich first laid out his ideas

for the Renewing American Civilization movement and course. (11/

13/96 Baran Tr. 25). Mr. Mehlman did not speak with Mr. Gingrich

about his motivations for the course and did not know if Mr. Baran

had spoken with Mr. Gingrich about his motivations for teaching

the course. (11/19/96 Mehlman Tr. 27).

3. ‘‘The fact is, ‘Renewing American Civilization’ and

GOPAC have never had any official relationship.’’ (Ex. 38,

p. 4).

Mr. Baran said about this statement:

Well, I think the basis of [this] statement[] [was] essentially the characterizations that had been placed on the relationship between the course and GOPAC by people like

Jeff Eisenach 86 at that time, and it was consistent with

my limited knowledge of GOPAC’s association with the

course at that time. . . .

You know, the various materials, some of which we went

through this morning, were items that came to my attention in the course of the document production, which commenced, I think, around April of this year and took quite

a bit of time, or that came up in the course of your interviews with Mr. Gingrich.

* * * * * * *
87

87Mr. Toner has been an associate attorney with Wiley, Rein and Fielding since September

1992, except for a period during which we he worked with the Dole/Kemp campaign. (11/19/96

Toner Tr. 6).

Well, I think the basis is that these statements were

being reviewed by people who would presumably be in a

position to correct me if there [sic] was wrong.

(11/13/96 Baran Tr. 36–37).

When asked about the appearance of GOPAC fax cover sheets on

documents pertaining to the course, Mr. Baran said that such faxes

raised questions in his mind but that he ‘‘had an understanding at

that time that those questions were addressed by an explanation

that there were either incidental or inadvertent uses of GOPAC resources or there were uses of GOPAC resources that were accounted for by Mr. Eisenach.’’ (11/13/96 Baran Tr. 21). Mr. Baran

could not recall how he came to this understanding. (11/13/96

Baran Tr. 21–22).

With respect to whether Mr. Baran knew that GOPAC was involved in raising funds for the course, Mr. Baran said:

At that time my recollection of quote, GOPAC being involved in fund-raising [unquote] was focused on Ms.

Prochnow, the finance director who I don’t know and have

never met, but whose role was characterized, I believe, by

Jeff Eisenach to me at some point, as having helped raise

a couple of contributions, I think, Cracker Barrel was one

of them, that is a name that sticks in my mind. But it was

characterized as being sort of ancillary and just really not

material.

(11/13/96 Baran Tr. 41).

3. CREATION OF THE MARCH 27, 1995 LETTER

In addition to the associate, Mr. Mehlman, who had worked with

Mr. Baran in drafting Mr. Gingrich’s December 8, 1994 letter to

the Committee, another associate, Michael Toner, helped Mr.

Baran draft what became the March 27, 1995 letter.87 (11/19/96

Toner Tr. 10–11). As with the December 8, 1994 letter, Mr. Baran

did not receive any indication from Mr. Gaylord or Mr. Gingrich

that Mr. Baran was to do any kind of factual review in order to

prepare the March 27, 1995 letter. (11/13/96 Baran Tr. 48). Mr.

Baran did not recall contacting anyone outside the law firm for

facts relevant to the preparation of the letter with respect to the

course. He said that ‘‘the facts about the course, frankly, didn’t

seem to have changed any from the December period to the March

period. And our focus seemed to be elsewhere.’’ (11/13/96 Baran Tr.

28). Both Mr. Mehlman and Mr. Toner said that they did not contact anyone with knowledge of the facts at issue in order to prepare

the letter. (11/19/96 Toner Tr. 21–22, 38; 11/19/96 Mehlman Tr.

38).

Ms. Meeks said that she had no role in the preparation of the

letter. (11/14/96 Meeks Tr. 50). She saw it for the first time one day

prior to her testimony before the Subcommittee in November 1996.

(11/14/96 Meeks Tr. 50). Mr. Eisenach said that he did not have

any role in the preparation of the letter nor was he asked to review
88

it prior to its submission to the Committee. (11/14/96 Eisenach Tr.

24–25). Mr. Gaylord said that he had no role in the preparation of

the letter and did not provide any information that is in the letter.

(11/14/96 Gaylord Tr. 20). He also said that he did not discuss the

letter with Mr. Gingrich or Mr. Baran at the time of its preparation. (11/14/96 Gaylord Tr. 21). Mr. Gaylord said that he did not

know where Baran obtained the facts for the letter. He ‘‘presumed’’

that Mr. Baran and his associates had gathered the facts.

(11/14/96 Gaylord Tr. 21–22).

Mr. Baran said that his role in creating the letter was to meet

with Mr. Mehlman and Mr. Toner, review the status of their research and drafting and review their drafts. (11/13/96 Baran Tr.

28). Mr. Mehlman and Mr. Toner divided responsibility for drafting

portions of the letter. (11/19/96 Toner Tr. 12–14; 11/19/96 Mehlman

Tr. 36, 37, 40). Mr. Baran also made edits to the letter. (11/19/96

Mehlman Tr. 40). During his interview, Mr. Toner stressed that

there were many edits to the letter by Mr. Baran, Mr. Mehlman,

and himself and he could, therefore, not explain who had drafted

particular sentences in the letter. (see, e.g, 11/19/96 Toner Tr. 34).

After the letter was drafted, Mr. Baran said that Mr. Baran and

his associates then ‘‘would have sent a draft that they felt comfortable with over to the Speaker’s office.’’ (11/13/96 Baran Tr. 28).

Mr. Baran, Mr. Toner, and Mr. Mehlman each said during their

testimony that they assumed that Mr. Gingrich or someone in his

office reviewed the letter for accuracy before it was submitted to

the Committee. (11/19/96 Toner Tr. 16, 40, 44; 11/13/96 Baran Tr.

32–33, 37–38; Mehlman Tr. 41). They, however, did not know

whether Mr. Gingrich or anyone in his office with knowledge of the

facts at issue ever actually reviewed the letter prior to its submission to the Committee. (11/19/96 Toner Tr. 17, 40, 44; 11/13/96

Baran Tr. 37–38; Mehlman Tr. 41).

With respect to Mr. Baran’s understanding of whether Mr. Gingrich reviewed the letter, the following exchange occurred:

Mr. Cole: Did you have any discussions with Mr. Gingrich concerning this letter prior to it going to the committee?

Mr. Baran: I don’t recall any. I just wanted to make sure

that he did review it before it was submitted.

Mr. Cole: How did you determine that he had reviewed

it?

Mr. Baran: I don’t recall today, but I would not file anything until I had been assured by somebody that he had

read it.

Mr. Cole: Would that assurance also have involved him

reading it and not objecting to any of the facts that are asserted in the letter?

Mr. Baran: I don’t know what his review process was regarding this letter.

* * * * * * *

Mr. Cole: If he just read it, you may still be awaiting

comments from him. Would you have made sure that he

had read it and approved it, or just the fact that he read
89

it is all you would have been interested in, trying to make

sure that we don’t blur that distinction?

Mr. Baran: No, I would have wanted him to be comfortable with this on many levels.

Mr. Cole: And were you satisfied that he was comfortable with it prior to filing it with the committee?

Mr. Baran: Yes.

Mr. Cole: Do you know how you were satisfied?

Mr. Baran: I can’t recall the basis upon which that happened.

(11/13/96 Baran Tr. 32–33).

4. BASES FOR STATEMENTS IN THE MARCH 27, 1995 LETTER

With respect to the bases for the statements in the letter in general, Mr. Baran said that it was largely based on the December 8,

1994 letter and any information he and his associates relied on to

prepare it. (11/13/96 Baran Tr. 37–38).

IX. ANALYSIS AND CONCLUSION

A. Tax Issues

In reviewing the evidence concerning both the AOW/ACTV

project and the Renewing American Civilization project, certain

patterns became apparent. In both instances, GOPAC had initiated

the use of the messages as part of its political program to build a

Republican majority in Congress. In both instances there was an

effort to have the material appear to be non-partisan on its face,

yet serve as a partisan, political message for the purpose of building the Republican Party.

Under the ‘‘methodology test’’ set out by the Internal Revenue

Service, both projects qualified as educational. However, they both

had substantial partisan, political aspects. Both were initiated as

political projects and both were motivated, at least in part, by political goals.

The other striking similarity is that, in both situations, GOPAC

was in need of a new source of funding for the projects and turned

to a 501(c)(3) organization for that purpose. Once the projects had

been established at the 501(c)(3) organizations, however, the same

people continued to manage it as had done so at GOPAC, the same

message was used as when it was at GOPAC, and the dissemination of the message was directed toward the same goal as when the

project was at GOPAC—building the Republican Party. The only

significant difference was that the activity was funded by a

501(c)(3) organization.

This was not a situation where one entity develops a message

through a course or a television program for purely educational

purposes and then an entirely separate entity independently decides to adopt that message for partisan, political purposes. Rather,

this was a coordinated effort to have the 501(c)(3) organization help

in achieving a partisan, political goal. In both instances the idea

to develop the message and disseminate it for partisan, political

use came first. The use of the 501(c)(3) came second as a source

of funding.
90

This factual analysis was accepted by all Members of the Subcommittee and the Special Counsel. However, there was a difference of opinion as to the result under 501(c)(3) when applying

the law to these facts. Ms. Roady, the Subcommittee’s tax expert,

was of the opinion that the facts presented a clear violation of

501(c)(3) because the evidence showed that the activities were intended to benefit Mr. Gingrich, GOPAC, and other Republican candidates and entities. Mr. Holden, Mr. Gingrich’s tax attorney, disagreed. He found that the course was non-partisan in its content,

and even though he assumed that the motivation for disseminating

it involved partisan, political goals, he did not find a sufficiently

narrow targeting of the dissemination to conclude that it was a private benefit to anyone.

Some Members of the Subcommittee and the Special Counsel

agreed with Ms. Roady and concluded that there was a clear violation of 501(c)(3) with respect to AOW/ACTV and Renewing American Civilization. Other Members of the Subcommittee were troubled by reaching this conclusion and believed that the facts of this

case presented a unique situation that had not previously been addressed by the legal authorities. As such, they did not feel comfortable supplanting the functions of the Internal Revenue Service

or the Tax Court in rendering a ruling on what they believed to

be an unsettled area of the law.

B. Statements Made to the Committee

The letters Mr. Gingrich submitted to the Committee concerning

the Renewing American Civilization complaint were very troubling

to the Subcommittee. They contained definitive statements about

facts that went to the heart of the issues placed before the Committee. In the case of the December 8, 1994 letter, it was in response

to a direct request from the Committee for specific information relating to the partisan, political nature of the course and GOPAC’s

involvement in it.

Both letters were efforts by Mr. Gingrich to have the Committee

dismiss the complaints without further inquiry. In such situations,

the Committee does and should place great reliance on the statements of Members.

The letters were prepared by Mr. Gingrich’s lawyers. After the

Subcommittee deposed the lawyers, the reasons for the statements

being in the letters was not made any clearer. The lawyers did not

conduct any independent factual research. Looking at the information the lawyers used to write the letters, the Subcommittee was

unable to find any factual basis for the inaccurate statements contained therein. A number of exhibits attached to the complaint

were fax transmittal sheets from GOPAC. While this did not on its

face establish anything more than GOPAC’s fax machine having

been used for the project, it certainly should have put the attorneys

on notice that there was some relationship between the course and

GOPAC that should have been examined before saying that

GOPAC had absolutely no involvement in the course.

The lawyers said they relied on Mr. Gingrich and his staff to ensure that the letters were accurate; however, none of Mr. Gingrich’s

staff had sufficient knowledge to be able to verify the accuracy of
91

the facts. While Mr. Gaylord and Mr. Eisenach did have sufficient

knowledge to verify many of the facts, they were not asked to do

so. The only person who reviewed the letters for accuracy, with sufficient knowledge to verify those facts, was Mr. Gingrich.

The Subcommittee considered the relevance of the reference to

GOPAC in Mr. Gingrich’s first letter to the Committee dated October 4, 1994. In that letter he stated that GOPAC was one of the

entities that paid people to work on the course. Some Members of

the Subcommittee believed that this was evidence of lack of intent

to deceive the Committee on Mr. Gingrich’s part because if he had

planned to hide GOPAC’s involvement, he would not have made

such an inconsistent statement in the subsequent letters. Other

Members of the Subcommittee and the Special Counsel appreciated

this point, but believed the first letter was of little value. The statement in that letter was only directed to establishing that Mr. Gingrich had not used congressional resources in developing the course.

The first letter made no attempt to address the tax issues, even

though it was a prominent feature of the complaint. When the

Committee specifically focused Mr. Gingrich’s attention on that

issue and questions concerning GOPAC’s involvement in the

course, his response was not accurate.

During his testimony before the Subcommittee, Mr. Gingrich

stated that he did not intend to mislead the Committee and apologized for his conduct. This statement was a relevant consideration

for some Members of the Subcommittee, but not for others.

The Subcommittee concluded that because these inaccurate

statements were provided to the Committee, this matter was not

resolved as expeditiously as it could have been. This caused a controversy over the matter to arise and last for a substantial period

of time, it disrupted the operations of the House, and it cost the

House a substantial amount of money in order to determine the

facts.

C. Statement of Alleged Violation

Based on the information described above, the Special Counsel

proposed a Statement of Alleged Violations (‘‘SAV’’) to the Subcommittee on December 12, 1996. The SAV contained three counts:

(1) Mr. Gingrich’s activities on behalf of ALOF in regard to AOW/

ACTV, and the activities of others in that regard with his knowledge and approval, constituted a violation of ALOF’s status under

section 501(c)(3); (2) Mr. Gingrich’s activities on behalf of Kennesaw State College Foundation, the Progress and Freedom Foundation, and Reinhardt College in regard to the Renewing American

Civilization course, and the activities of others in that regard with

his knowledge and approval, constituted a violation of those organizations’ status under section 501(c)(3); and (3) Mr. Gingrich had

provided information to the Committee, directly or through counsel,

that was material to matters under consideration by the Committee, which Mr. Gingrich knew or should have known was inaccurate, incomplete, and unreliable.
92

1. DELIBERATIONS ON THE TAX COUNTS

There was a difference of opinion regarding whether to issue the

SAV as drafted on the tax counts. Concern was expressed about deciding this tax issue in the context of an ethics proceeding. This led

the discussion to the question of the appropriate focus for the Subcommittee. A consensus began to build around the view that the

proper focus was on the conduct of the Member, rather than a resolution of issues of tax law. From the beginning of the Preliminary

Inquiry, there was a desire on the part of each of the Members to

find a way to reach a unanimous conclusion in this matter. The

Members felt it was important to confirm the bipartisan nature of

the ethics process.

The discussion turned to what steps Mr. Gingrich had taken in

regard to these two projects to ensure they were done in accord

with the provisions of 501(c)(3). In particular, the Subcommittee

was concerned with the fact that: (1) Mr. Gingrich had been ‘‘very

well aware’’ of the American Campaign Academy case prior to embarking on these projects; (2) he had been involved with 501(c)(3)

organizations to a sufficient degree to know that politics and taxdeductible contributions are, as his tax counsel said, an ‘‘explosive

mix;’’ (3) he was clearly involved in a project that had significant

partisan, political goals, and he had taken an aggressive approach

to the tax laws in regard to both AOW/ACTV; and (4) Renewing

American Civilization projects. Even Mr. Gingrich’s own tax lawyer

told the Subcommittee that if Mr. Gingrich had come to him before

embarking on these projects, he would have advised him to not use

a 501(c)(3) organization for the dissemination of AOW/ACTV or Renewing American Civilization. Had Mr. Gingrich sought and followed this advice, he would not have used the 501(c)(3) organizations, would not have had his projects subsidized by taxpayer

funds, and would not have created this controversy that has caused

significant disruption to the House. The Subcommittee concluded

that there were significant and substantial warning signals to Mr.

Gingrich that he should have heeded prior to embarking on these

projects. Despite these warnings, Mr. Gingrich did not seek any

legal advice to ensure his conduct conformed with the provisions of

501(c)(3).

In looking at this conduct in light of all the facts and circumstances, the Subcommittee was faced with a disturbing choice.

Either Mr. Gingrich did not seek legal advice because he was

aware that it would not have permitted him to use a 501(c)(3) organization for his projects, or he was reckless in not taking care that,

as a Member of Congress, he made sure that his conduct conformed

with the law in an area where he had ample warning that his intended course of action was fraught with legal peril. The Subcommittee decided that regardless of the resolution of the 501(c)(3)

tax question, Mr. Gingrich’s conduct in this regard was improper,

did not reflect creditably on the House, and was deserving of sanction.

2. DELIBERATIONS CONCERNING THE LETTERS

The Subcommittee’s deliberation concerning the letters provided

to the Committee centered on the question of whether Mr. Gingrich
93

intentionally submitted inaccurate information. There was a belief

that the record developed before the Subcommittee was not conclusive on this point. The Special Counsel suggested that a good argument could be made, based on the record, that Mr. Gingrich did act

intentionally, however it would be difficult to establish that with

a high degree of certainty.

The culmination of the evidence on this topic again left the Subcommittee with a disturbing choice. Either Mr. Gingrich intentionally made misrepresentations to the Committee, or he was

again reckless in the way he provided information to the Committee concerning a very important matter.

The standard applicable to the Subcommittee’s deliberations was

whether there is reason to believe that Mr. Gingrich had acted as

charged in this count of the SAV. All felt that this standard had

been met in regard to the allegation that Mr. Gingrich ‘‘knew’’ that

the information he provided to the Committee was inaccurate.

However, there was considerable discussion to the effect that if Mr.

Gingrich wanted to admit to submitting information to the Committee that he ‘‘should have known’’ was inaccurate, the Subcommittee would consider deleting the allegation that he knew the

information was inaccurate. The Members were of the opinion that

if there were to be a final adjudication of the matter, taking into

account the higher standard of proof that is involved at that level,

‘‘should have known’’ was an appropriate framing of the charge in

light of all the facts and circumstances.

3. DISCUSSIONS WITH MR. GINGRICH’S COUNSEL AND RECOMMENDED

SANCTION

On December 13, 1996, the Subcommittee issued an SAV charging Mr. Gingrich with three counts of violations of House Rules.

Two counts concerned the failure to seek legal advice in regard to

the 501(c)(3) projects, and one count concerned providing the Committee with information which he knew or should have known was

inaccurate.

At the time the Subcommittee voted this SAV, the Members discussed the matter among themselves and reached a consensus that

it would be in the best interests of the House for the matter to be

resolved without going through a disciplinary hearing. It was estimated that such a hearing could take up to three months to complete and would not begin for several months. Because of this, it

was anticipated that the House would have to deal with this matter for another six months. Even though the Subcommittee Members felt that it would be advantageous to the House to avoid a disciplinary hearing, they all were committed to the proposition that

any resolution of the matter had to reflect adequately the seriousness of the offenses. To this end, the Subcommittee Members discussed and agreed upon a recommended sanction that was fair in

light of the conduct reflected in this matter, but explicitly recognized that the full Committee would make the ultimate decision as

to the recommendation to the full House as to the appropriate

sanction. In determining what the appropriate sanction should be

in this matter, the Subcommittee and Special Counsel considered

the seriousness of the conduct, the level of care exercised by Mr.

Gingrich, the disruption caused to the House by the conduct, the
94

cost to the House in having to pay for an extensive investigation,

and the repetitive nature of the conduct.

As is noted above, the Subcommittee was faced with troubling

choices in each of the areas covered by the Statement of Alleged

Violation. Either Mr. Gingrich’s conduct in regard to the 501(c)(3)

organizations and the letters he submitted to the Committee was

intentional or it was reckless. Neither choice reflects creditably on

the House. While the Subcommittee was not able to reach a comfortable conclusion on these issues, the fact that the choice was

presented is a factor in determining the appropriate sanction. In

addition, the violation does not represent only a single instance of

reckless conduct. Rather, over a number of years and in a number

of situations, Mr. Gingrich showed a disregard and lack of respect

for the standards of conduct that applied to his activities.

Under the Rules of the Committee, a reprimand is the appropriate sanction for a serious violation of House Rules and a censure

is appropriate for a more serious violation of House Rules. Rule

20(g), Rules of the Committee on Standards of Official Conduct. It

was the opinion of the Subcommittee that this matter fell somewhere in between. Accordingly, the Subcommittee and the Special

Counsel recommend that the appropriate sanction should be a reprimand and a payment reimbursing the House for some of the costs

of the investigation in the amount of $300,000. Mr. Gingrich has

agreed that this is the appropriate sanction in this matter.

Beginning on December 15, 1996, Mr. Gingrich’s counsel and the

Special Counsel began discussions directed toward resolving the

matter without a disciplinary hearing. The discussions lasted

through December 20, 1996. At that time an understanding was

reached by both Mr. Gingrich and the Subcommittee concerning

this matter. That understanding was put on the record on December 21, 1996 by Mr. Cole follows:

Mr. Cole: The subcommittee has had an opportunity to

review the facts in this case, and has had extensive discussion about the appropriate resolution of this matter.

Mr. Cardin: If I might just add here to your next understanding, the Members of the subcommittee, prior to the

adoption of the Statement of Alleged Violation, were concerned that the nonpartisan deliberations of the subcommittee continue beyond the findings of the subcommittee. Considering the record of the full Ethics Committee in

the 104th Congress and the partisan environment in the

full House, the Members of the subcommittee felt that it

was important to exercise bipartisan leadership beyond the

workings of the subcommittee. * * *

Mr. Cole: It was the opinion of the Members of the subcommittee and the Special Counsel, that based on the facts

of this case as they are currently known, the appropriate

sanction for the conduct described in the original Statement of Alleged Violations is a reprimand and the payment of $300,000 toward the cost of the preliminary inquiry.

In light of this opinion, the subcommittee Members and

the Special Counsel intend to recommend to the full committee that this be the sanction recommended by the full
95

88These changes included the removal of the word ‘‘knew’’ from the original Count 3, making

the charge read that Mr. Gingrich ‘‘should have known’’ the information was inaccurate.

committee to the House. The Members also intend to support this as the sanction in the committee and on the Floor

of the House.

However, if new facts are developed or brought to the attention of the Members of the subcommittee, they are free

to change their opinions.

The Subcommittee, through its counsel, has communicated this to Mr. Gingrich, through his counsel. Mr.

Gingrich has agreed that if the subcommittee will amend

the Statement of Alleged Violations to be one count, instead of three counts, however, still including all of the

conduct described in the original Statement of Alleged Violations, and will allow the addition of some language

which reflects aspects of the record in this matter concerning the involvement of Mr. Gingrich’s counsel in the preparation of the letters described in the original Count 3 of

the Statement of Alleged Violations,88 he will admit to the

entire Statement of Alleged Violation and agree to the

view of the subcommittee Members and the Special Counsel as to the appropriate sanction.

In light of Mr. Gingrich’s admission to the Statement of

Alleged Violation, the subcommittee is of the view that the

rules of the committee will not require that an adjudicatory hearing take place; however, a sanction hearing will

need to be held under the rules.

The subcommittee and Mr. Gingrich desire to have the

sanction hearing concluded as expeditiously as possible,

but it is understood that this will not take place at the expense of orderly procedure and a full and fair opportunity

for the full committee to be informed of any information

necessary for each Member of the full committee to be able

to make a decision at the sanction hearing.

After the subcommittee has voted a new Statement of

Alleged Violation, Mr. Gingrich will file his answer admitting to it. The subcommittee will seek the permission of

the full committee to release the Statement of Alleged Violation, Mr. Gingrich’s answer, and a brief press release

which has been approved by Mr. Gingrich’s counsel. At the

same time, Mr. Gingrich will release a brief press release

that has been approved by the subcommittee’s Special

Counsel.

Both the subcommittee and Mr. Gingrich agree that no

public comment should be made about this matter while it

is still pending. This includes having surrogates sent out

to comment on the matter and attempt to mischaracterize

it.

Accordingly, beyond the press statements described

above, neither Mr. Gingrich nor any Member of the subcommittee may make any further public comment. Mr.

Gingrich understands that if he violates this provision, the

subcommittee will have the option of reinstating the origi-
96

89 It was also agreed that in the private conversations Mr. Gingrich was not to disclose the

terms of the agreement with the Subcommittee.

nal Statement of Alleged Violations and allowing Mr.

Gingrich an opportunity to withdraw his answer.

And I should note that it is the intention of the subcommittee that ‘‘public comments’’ refers to press statements; that, obviously, we are free and Mr. Gingrich is

free to have private conversations with Members of Congress about these matters.89

After the Subcommittee voted to issue the substitute SAV, the

Special Counsel called Mr. Gingrich’s counsel and read to him what

was put on the record concerning this matter. Mr. Gingrich’s counsel then delivered to the Subcommittee Mr. Gingrich’s answer admitting to the Statement of Alleged Violation.

D. Post-December 21, 1996 Activity

Following the release of this Statement of Alleged Violation, numerous press accounts appeared concerning this matter. In the

opinion of the Subcommittee Members and the Special Counsel, a

number of the press accounts indicated that Mr. Gingrich had violated the agreement concerning statements about the matter. Mr.

Gingrich’s counsel was notified of the Subcommittee’s concerns and

the Subcommittee met to consider what action to take in light of

this apparent violation. The Subcommittee determined that it

would not nullify the agreement. While there was serious concern

about whether Mr. Gingrich had complied with the agreement, the

Subcommittee was of the opinion that the best interests of the

House still lay in resolving the matter without a disciplinary hearing and with the recommended sanction that its Members had previously determined was appropriate. However, Mr. Gingrich’s counsel was informed that the Subcommittee believed a violation of the

agreement had occurred and retained the right to withdraw from

the agreement with appropriate notice to Mr. Gingrich. To date no

such notice has been given.

X. SUMMARY OF FACTS PERTAINING TO USE OF UNOFFICIAL

RESOURCES

The Subcommittee investigated allegations that Mr. Gingrich

had improperly utilized the services of Jane Fortson, an employee

of the Progress in Freedom Foundation (‘‘PFF’’), in violation of

House Rule 45, which prohibits the use of unofficial resources for

official purposes.

Ms. Fortson was an investment banker and chair of the Atlanta

Housing Project who had experience in urban and housing issues.

In January 1995 she moved to Washington, D.C., from Atlanta to

work on urban and housing issues as a part-time PFF Senior Fellow and subsequently became a full-time PFF Senior Fellow in

April, 1995.

The Subcommittee determined that Mr. Gingrich sought Ms.

Fortson’s advice on urban and housing issues on an ongoing and

meaningful basis. During an interview with Mr. Cole, Mr. Gingrich

stated that although he believed he lacked the authority to give
97

Ms. Fortson assignments, he often requested her assistance in connection with urban issues in general and issues pertaining to the

District of Columbia in particular. The investigation further revealed that Ms. Fortson appeared to have had unusual access to

Mr. Gingrich’s official schedule and may have occasionally influenced his official staff in establishing his official schedule.

In her capacity as an unofficial policy advisor to Mr. Gingrich,

Ms. Fortson provided ongoing advice to Mr. Gingrich and members

of Mr. Gingrich’s staff to assist Mr. Gingrich in conducting official

duties related to urban issues. Ms. Fortson frequently attended

meetings with respect to the D.C. Task Force during which she met

with Members of Congress, officials of the District of Columbia, and

members of their staffs. Although Mr. Gingrich and principal members of his staff advised the Subcommittee that they perceived Ms.

Fortson’s assistance as limited to providing information on an informal basis, the Subcommittee discovered other occurrences which

suggested that Mr. Gingrich and members of his staff specifically

solicited Ms. Fortson’s views and assistance with respect to official

matters.

The Subcommittee acknowledges that Members may properly solicit information from outside individuals and organizations, including nonprofit and for-profit organizations. Regardless of whether

auxiliary services are accepted from a nonprofit or for-profit organization, Members must exercise caution to limit the use of outside

resources to ensure that the duties of official staff are not improperly supplanted or supplemented. The Subcommittee notes that although Mr. Gingrich received two letters of reproval from the Committee on Standards regarding the use of outside resources, Ms.

Fortson’s activities ceased prior to the date the Committee issued

those letters to Mr. Gingrich. While the Subcommittee did not find

that Ms. Fortson’s individual activities violated House Rules, the

Subcommittee determined that the regular, routine, and ongoing

assistance she provided Mr. Gingrich and his staff over a tenmonth period could create the appearance of improper commingling

of unofficial and official resources. The Subcommittee determined,

however, that these activities did not warrant inclusion as a Count

in the Statement of Alleged Violation.

XI. AVAILABILITY OF DOCUMENTS TO INTERNAL REVENUE SERVICE

In light of the possibility that documents which were produced

to the Subcommittee during the Preliminary Inquiry might be useful to the IRS as part of its reported ongoing investigations of various 501(c)(3) organizations, the Subcommittee decided to recommend that the full Committee make available to the IRS all relevant documents produced during the Preliminary Inquiry. It is the

Committee’s recommendation that the House Committee on Standards of Official Conduct in the 105th Congress establish a liaison

with the IRS to fulfill its recommendation and that this liaison be

established in consultation with Mr. Cole.

(99)

A P P E N D I X

SUMMARY OF LAW PERTAINING TO ORGANIZATIONS EXEMPT FROM

FEDERAL INCOME TAX UNDER SECTION 501(c)(3) OF THE INTERNAL

REVENUE CODE

A. Introduction

Section 501(a) of the Internal Revenue Code generally exempts

from federal income taxation numerous types of organizations.

Among these are section 501(c)(3) organizations which include corporations: Organized and operated exclusively for religious, charitable, scientific * * * or educational purposes * * * no part of the

net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which

is carrying on propaganda, or otherwise attempting, to influence

legislation, * * * and which does not participate in, or intervene in

* * * any political campaign on behalf of (or in opposition to) any

candidate for public office.

I.R.C. § 501(c)(3). Organizations described in section 501(c)(3) are

generally referred to as ‘‘charitable’’ organizations and contributions to such organizations are generally deductible to the donors.

I.R.C. § 170(a)(1), (c)(2).

B. The Organizational Test and the Operational Test

The requirement that a 501(c)(3) organization be ‘‘organized and

operated exclusively’’ for an exempt purpose has given rise to an

‘‘organizational test’’ and an ‘‘operational test.’’ Failure to meet either test will prevent an organization from qualifying for exemption under section 501(c)(3). Treas. Reg. § 1.501(c)(3)–1(a); Levy

Family Tribe Foundation v. Commissioner, 69 T.C. 615, 618 (1978).

1. ORGANIZATIONAL TEST

To satisfy the organizational test, an organization must meet

three sets of requirements. First, its articles of organization must:

(a) limit its purposes to one or more exempt purposes, and (b) not

expressly permit substantial activities that do not further those exempt purposes. Treas. Reg. §1.501(c)(3)–1(b)(1). Second, the articles

must not permit: (a) devoting more than an insubstantial part of

its activities to lobbying, (b) any participation or intervention in the

campaign of a candidate for public office, and (c) objectives and activities that would characterize it as an ‘‘action’’ organization.

Treas. Reg. §1.501(c)(3)–1(b)(3). Third, the organization’s assets

must be dedicated to exempt purposes. Treas. Reg. §1.501(c)(3)–
100

90 501(c)(3) organizations must also: (a) not be operated primarily to conduct an unrelated

trade or business (Treas. Reg. §1.501(c)(3)–1(e)(1)), and (b) not violate ‘‘public policy.’’ See Bob

Jones University v. United States, 461 U.S. 574 (1983) (educational organization’s tax-exempt

status denied because of its racially discriminatory policies).

1(b)(4). The IRS determines compliance with the organizational

test solely by reference to an organization’s articles of organization.

2. OPERATIONAL TEST

To satisfy the operational test, an organization must be operated

‘‘exclusively’’ for an exempt purpose. Though ‘‘exclusively’’ in this

context does not mean ‘‘solely,’’ the presence of a substantial nonexempt purpose will cause an organization to fail the operational

test. Treas. Reg. §1.501(c)(3)–1(c)(1); The Nationalist Movement v.

Commissioner, 102 T.C. 558, 576 (1994). The presence of a single

non-exempt purpose, if substantial in nature, will destroy the exemption regardless of the number or importance of truly exempt

purposes. Better Business Bureau of Washington, D.C. v. United

States, 326 U.S. 276, 283 (1945); Manning Association v. Commissioner, 93 T.C. 596, 611 (1989).

To meet the operational test under section 501(c)(3) organization,

the organization must satisfy the following requirements: 90

1. The organization must be operated for an exempt purpose,

and must serve a public benefit, not a private benefit. Treas.

Reg. §1.501(c)(3)–1(d)(1)(ii).

2. It must not be an ‘‘action’’ organization. Treas. Reg.

§1.501(c)(3)–1(c)(3). An organization is an ‘‘action’’ organization

if:

a. it participates or intervenes in any political campaign

(Treas. Reg. §1.501(c)(3)–1(c)(3)(iii));

b. a substantial part of its activities consists of attempting to influence legislation (Treas. Reg. §1.501(c)(3)–

1(c)(3)(ii)); or

c. its primary objective may be attained: only by legislation or defeat of proposed legislation, and it advocates the

attainment of such primary objective (Treas. Reg.

§1.501(c)(3)–1(c)(3)(iv)).

3. Its net earnings must not inure to the benefit of any person in a position to influence the organization’s activities.

Treas. Reg. §1.501(c)(3)–1(c)(2).

‘‘[F]ailure to satisfy any of the [above] requirements is fatal to [an

organization’s] qualification under section 501(c)(3).’’ American

Campaign Academy v. Commissioner, 92 T.C. 1053, 1062 (1989).

The application of these requirements, moreover, is a factual exercise. Id. at 1064; Christian Manner International v. Commissioner, 71 T.C. 661, 668 (1979). Thus, in testing compliance with

the operational test, courts look ‘‘beyond the four corners of the organization’s charter to discover ‘the actual objects motivating the

organization and the subsequent conduct of the organization.’ ’’

American Campaign Academy, 92 T.C. at 1064 (citing Taxation

with Representation v. United States, 585 F.2d 1219, 1222 (4th Cir.

1978)); see also Sound Health Association v. Commissioner, 71 T.C.

158, 184 (1978) (‘‘It is the purpose toward which an organization’s

activities are directed that is ultimately dispositive of the organization’s right to be classified as a section 501(c)(3) organization.’’)
101

91 An organization may also qualify for section 501(c)(3) exemption if it is organized and operated for, e.g., ‘‘religious,’’ ‘‘charitable,’’ or ‘‘scientific’’ purposes. The other methods by which an

organization can qualify for exemption are not discussed in this summary.

‘‘What an organization’s purposes are and what purposes its activities support are questions of fact.’’ American Campaign Academy, 92 T.C. at 1064 (citing Christian Manner International v.

Commissioner, 71 T.C. 661, 668 (1979)). Courts may ‘‘draw factual

inferences’’ from the record when determining whether organizations meet the requirements of the tax-exempt organization laws

and regulations. Id. (citing National Association of American

Churches v. Commissioner, 82 T.C. 18, 20 (1984)).

a. ‘‘Educational’’ Organizations May Qualify for Exemption Under

Section 501(c)(3)

As discussed above, an organization may qualify for exemption

under section 501(c)(3) if it is ‘‘educational.’’ 91 The Regulations define the term ‘‘educational’’ as relating to:

(a) [t]he instruction or training of the individual for the

purpose of improving or developing his capabilities; or

(b) [t]he instruction of the public on subjects useful to

the individual and beneficial to the community.

Treas. Reg. §1.501(c)(3)–1(d)(3)(i). The Regulations continue:

An organization may be educational even though it advocates a particular position or viewpoint so long as it presents a sufficiently full and fair exposition of the pertinent

facts as to permit an individual or the public to form an

independent opinion or conclusion. On the other hand, an

organization is not educational if its principal function is

the mere presentation of unsupported opinion.

Id. Guidance on the phrase ‘‘advocates a particular position or

viewpoint’’ can be found in the preceding section in the Regulations

pertaining to the definition of ‘‘charitable.’’

The fact that an organization, in carrying out its primary purpose, advocates social or civil changes or presents

opinion on controversial issues with the intention of molding public opinion or creating public sentiment to an acceptance of its views does not preclude such organization

from qualifying under section 501(c)(3) so long as it is not

an ‘‘action’’ organization.* * *

Treas. Reg. §1.501(c)(3)–1(d)(2).

In applying the Regulations under section 501(c)(3) pertaining to

educational organizations, the IRS has stated that its goal is to

eliminate or minimize the potential for any public official to impose

his or her preconceptions or beliefs in determining whether the

particular viewpoint or position is educational. Rev. Proc. 86–43,

1986–2 C.B. 729. IRS policy is to ‘‘maintain a position of disinterested neutrality with respect to the beliefs advocated by an organization.’’ Id. The focus of the Regulations pertaining to educational organizations and of the IRS’s application of these Regulations ‘‘is not upon the viewpoint or position, but instead upon the
102

method used by the organization to communicate its viewpoint or

positions to others.’’ Id.

Two court decisions considered challenges to the constitutionality

of the definition of ‘‘educational,’’ in the Regulations cited above.

One decision held that the definition was unconstitutionally vague.

Big Mama Rag, Inc. v. United States, 631 F.2d 1030 (D.C. Cir.

1980). In National Alliance v. United States, 710 F.2d 868 (D.C.

Dir. 1983), the court upheld the IRS’s position that the organization in question was not educational. Without ruling on the constitutionality of the ‘‘methodology test’’ used by the IRS in that case

to determine whether the organization was educational, the court

found that the application of that test reduced the vagueness found

in Big Mama Rag. The IRS later published the methodology test

in Rev. Proc. 86–43 in order to clarify its position on how to determine whether an organization is educational when it advocates

particular viewpoints or positions. As set forth in the Revenue Procedure:

The presence of any of the following factors in the presentations made by an organization is indicative that the method

used by the organization to advocate its viewpoints or positions

is not educational.

(a) The presentation of viewpoints or positions unsupported by facts is a significant portion of the organization’s

communications.

(b) The facts that purport to support the viewpoints or

positions are distorted.

(c) The organization’s presentations make substantial

use of inflammatory and disparaging terms and express

conclusions more on the basis of strong emotional feelings

than of objective evaluations.

(d) The approach used in the organization’s presentations is not aimed at developing an understanding on the

part of the intended audience or readership because it does

not consider their background or training in the subject

matter.

According to Rev. Proc. 86–43, the IRS uses the methodology test

in all situations where the educational purpose of an organization

that advocates a viewpoint or position is in question. However,

‘‘[e]ven if the advocacy undertaken by an organization is determined to be educational under [the methodology test], the organization must still meet all other requirements for exemption under

section 501(c)(3) * * *’’ Rev. Proc. 86–43. That is, organizations

deemed to be ‘‘educational’’ must also abide by the section 501(c)(3)

prohibitions on: (a) private benefit, (b) participating or intervening

in a political campaign, (c) engaging in more than insubstantial

lobbying activities, and (d) private inurement.

b. To Satisfy the Operational Test, an Organization Must Not

Violate the ‘‘Private Benefit’’ Prohibition

Section 501(c)(3) requires, inter alia, that an organization be organized and operated exclusively for one or more exempt purposes.

Treas. Reg. 1.501(c)(3)–1(d)(1)(ii) provides that an organization

does not meet this requirement:
103

unless it serves a public rather than a private purpose. Thus,

* * * it is necessary for an organization to establish that it is

not organized or operated for the benefit of private interests

such as designated individuals, the creator or his family,

shareholders of the organization, or persons controlled, directly

or indirectly, by such private interests.

The ‘‘private benefit’’ prohibition serves to ensure that the public

subsidies flowing from section 501(c)(3) status, including income

tax exemption and the ability to receive tax-deductible charitable

contributions, are reserved for organizations that are formed to

serve public and not private interests. Treas. Reg. 1.501(c)(3)–

1(c)(1) defines the application of the private benefit prohibition in

the context of the operational test:

An organization will be regarded as ‘‘operated exclusively’’

for one or more exempt purposes only if it engages primarily

in activities which accomplish one or more of such exempt purposes specified in section 501(c)(3). An organization will not be

so regarded if more than an insubstantial part of its activities

is not in furtherance of an exempt purpose.

The Regulations and cases applying them make it clear that the

private benefit test focuses on the purpose or purposes served by

an organization’s activities, and not on the nature of the activities

themselves. See, e.g., B.S.W. Group, Inc. v. Commissioner, 70 T.C.

352 (1978). Where an organization’s activities serve more than one

purpose, each purpose must be separately examined to determine

whether it is private in nature and, if so, whether it is more than

insubstantial. Christian Manner International v. Commissioner, 71

T.C. 661 (1979).

The leading case on the application of the private benefit prohibition in the context of an organization whose activities served both

exempt and nonexempt purposes is Better Business Bureau v. United States, 326 U.S. 279 (1945). Better Business Bureau was a nonprofit organization formed to educate the public about fraudulent

business practices, to elevate business standards, and to educate

consumers to be intelligent buyers. The Court did not question the

exempt purpose of these activities. The Court found, however, that

the organization was ‘‘animated’’ by the purpose of promoting a

profitable business community, and that such business purpose

was both nonexempt and more than insubstantial. The Court denied exemption, stating (in language that is cited in virtually all

later private benefit cases), that:

[I]n order to fall within the claimed exemption, an organization must be devoted to educational purposes exclusively. This plainly means that the presence of a single

noneducational purpose, if substantial in nature, will destroy the exemption regardless of the number or importance of truly educational purposes.

Id. at 283.

Many of the cases interpreting the private benefit prohibition involve private benefits that are provided in a commercial context—

as in the Better Business Bureau case. Impermissible private benefit, however, need not be financial in nature. Callaway Family Association v. Commissioner, 71 T.C. 340 (1978), involved a family as-
104

sociation formed as a nonprofit corporation to study immigration to

and migration within the United States by focusing on its own family history and genealogy. The organization’s activities included researching the genealogy of Callaway family members in order to

publish a family history. The organization argued that its purposes

were educational and intended to benefit the general public, asserting that its use of a research methodology focusing on one family’s

development was a way of educating the public about the country’s

history.

In Callaway, the court noted (and the IRS conceded) that the organization’s activities served an educational purpose. The issue

was not whether the organization had any exempt purposes, but

whether it also engaged in activities that furthered a nonexempt

purpose more than insubstantially. Agreeing with the IRS that ‘‘petitioner aimed its organizational drive at Callaway family members, and appealed to them on the basis of their private interests,’’

the court concluded that the organization ‘‘engages in nonexempt

activities serving a private interest, and these activities are not insubstantial.’’ Id. at 343–44. Accordingly, the court held that the organization did not qualify for exemption under section 501(c)(3).

Kentucky Bar Foundation v. Commissioner, 78 T.C. 921 (1982),

is one of the relatively few cases in which a court found private

benefit to be insubstantial and therefore not to preclude exemption

under section 501(c)(3). The Kentucky Bar Foundation was formed

to conduct a variety of activities recognized by the IRS to serve exclusively educational purposes, including a continuing legal education program and the operation of a public law library. The IRS,

however, asserted that the Foundation’s operation of statewide lawyer referral service also served private purposes. Through the referral service, a person seeking a lawyer was referred to an attorney

selected on a rotating basis within a convenient geographic area.

The fee for an initial half-hour consultation was $10; any charge

for further consultation or work had to be agreed upon by the attorney and the client. The court found that the purposes of the referral service were to assist the general public in locating an attorney to provide a consultation for a reasonable fee, to encourage

lawyers to recognize the obligation to provide legal services to the

general public, and to acquaint people in need of legal services with

the value of consultation with a lawyer to identify and solve legal

problems.

The IRS asserted that a purpose of the referral service was to

benefit lawyers, particularly to help young law school graduates establish a practice, and that this was a substantial nonexempt purpose. Based on a careful examination of the facts, however, the

court found that:

[t]he referral service is open to all responsible attorneys,

and there is no evidence a selected group of attorneys are

the primary beneficiaries of the service. The referral service is intended to benefit the public and not to serve as a

source of referrals. We find any nonexempt purpose served

by the referral service and any occasional economic benefit
105

92Private letter rulings and general counsel memoranda are made available to the public

under section 6110 of the Code. These documents are based on the facts of particular cases, and

may not be relied on as precedent. However, they provide useful insights as to how the IRS

interprets and applies the law in particular factual situations.

flowing to individual attorneys through a referral incidental to the broad charitable purpose served.

Id. at 926.

Reiterating the proposition that ‘‘the proper focus is the purpose

or purposes toward which the activities are directed,’’ the court

found that the purpose of the legal referral service was to benefit

the public, that any private benefit was broadly distributed, not

conferred on any select group of attorneys and incidental to the

public purpose, and that the organization qualified for exemption

under section 501(c)(3). Id. at 923, 925–26 (citing B.S.W. Group v.

Commissioner, 70 T.C. 352, 356–57 (1978)).

As the cases described above show, the determination as to

whether private benefit is incidental (and therefore permissible) or

more than incidental (and therefore prohibited) is inherently factual, and each case must be decided on its own facts and circumstances. See also Manning Association v. Commissioner, 93

T.C. 596 (1989). The IRS has issued several published and private

rulings and general counsel memoranda 92 that further explain the

private benefit prohibition. For example, in Rev. Rul. 70–186,

1970–1 C.B. 128, an organization was formed to preserve a lake as

a public recreational facility and to improve the lake water’s condition. Although the organization’s activities benefited the public at

large, there were necessarily significant benefits to the individuals

who owned lake-front property. The IRS, however, determined that

the private benefit to the lake-front property owners was incidental

because:

[t]he benefits to be derived from the organization’s activities flow principally to the general public through the

maintenance and improvement of public recreational facilities. Any private benefits derived by the lakefront property

owners do not lessen the public benefits flowing from the

organization’s operations. In fact, it would be impossible

for the organization to accomplish its purposes without

providing benefits to the lakefront property owners.

Id.

In Rev. Rul. 75–196, 1975–1 C.B. 155, the IRS ruled that a

501(c)(3) organization operating a law library whose rules essentially limited access and use to local bar association members conferred only incidental benefits to the bar association members. The

library’s availability only to a designated class of persons was not

a bar to recognition of exemption because:

[w]hat is of importance is that the class benefited be broad

enough to warrant a conclusion that the educational facility or activity is serving a broad public interest rather
106

than a private interest, and is therefore exclusively educational in nature.

Id. The library was available to a significant number of people, and

the restrictions on the library’s use were due to the limited size of

its facilities. Although attorneys who used the library might derive

personal benefit in their practice, the IRS ruled that this benefit

was incidental to the library’s exempt purpose and a ‘‘logical byproduct of an educational process.’’

Id.

Two other revenue rulings with similar fact patterns are also

helpful in understanding the application of the ‘‘incidental benefits’’

concept. In one ruling, the IRS ruled that an organization that limited membership to the residents of one city block did not qualify

as a 501(c)(3) organization because the organization’s members

benefited directly, thus not incidentally, from the organization’s activities. Rev. Rul. 75–286, 1975–2 C.B. 210. In another, the IRS

ruled that an organization dedicated to beautification of an entire

city qualified as a 501(c)(3) organization because benefits flowed to

the city’s entire population and were not targeted to the organization’s members. Rev. Rul. 68–14, 1968–1 C. B. 243. The benefits to

the organization’s members of living in a cleaner city were considered incidental.

The IRS issued a recent warning about the importance of the private benefit prohibition in Rev. Proc. 96–32, 1996–20 I.R.B. 14, a

Revenue Procedure issued for the purpose of establishing standards

as to whether organizations that own and operate low income housing (an activity conducted by both nonprofit and for-profit organizations) may qualify for exemption under section 501(c)(3). After reviewing the substantive criteria that must be present to establish

that the organization is formed for a charitable purpose, the IRS

added a final caution:

If an organization furthers a charitable purpose such as

relieving the poor and distressed, it nevertheless may fail

to qualify for exemption because private interests of individuals with a financial stake in the project are furthered.

For example, the role of a private developer or management company in the organization’s activities must be

carefully scrutinized to ensure the absence of inurement or

impermissible private benefit resulting from real property

sales, development fees, or management contracts.

Id.

One of the most detailed explanations of the private benefit prohibition is contained in G.C.M. 39862 (Nov. 22, 1991), involving the

permissibility of a hospital’s transaction with physicians. In the

G.C.M., the IRS explained the prohibition as follows:

Any private benefit arising from a particular activity

must be ‘‘incidental’’ in both a qualitative and quantitative

sense to the overall public benefit achieved by the activity

if the organization is to remain exempt. To be qualitatively

incidental, a private benefit must occur as a necessary concomitant of the activity that benefits the public at large;

in other words, the benefit to the public cannot be
107

achieved without necessarily benefiting private individuals. Such benefits might also be characterized as indirect

or unintentional. To be quantitatively incidental, a benefit

must be insubstantial when viewed in relation to the public benefit conferred by the activity.

Id.

The IRS also explained that the insubstantiality of the private

benefit is measured only in relationship to activity in which the

private benefit is present, and not in relation to the organization’s

overall activities:

It bears emphasis that, even though exemption of the

entire organization may be at stake, the private benefit

conferred by an activity or arrangement is balanced only

against the public benefit conferred by that activity or arrangement, not the overall good accomplished by the organization.

Id.

In G.C.M. 39862, the IRS balanced the private benefits to the

physicians from the transaction at issue with the public purposes

served by that particular activity—and not the public purposes

served by the hospital as a whole. Finding the private purposes

from the activity at issue to be more than incidental in relation to

the public purposes, the IRS determined that the hospital had jeopardized its exemption under section 501(c)(3).

Although most of the cases and IRS rulings (both public and private) follow the general analysis described above in determining

whether or not private benefit is insubstantial, a fairly recent Tax

Court case, American Campaign Academy v. Commissioner, 92 T.C.

1053 (1989) adopts a slightly different approach. In that case, the

primary activity of American Campaign Academy (‘‘ACA’’ or ‘‘the

Academy’’) was the operation of a school to train people to work in

political campaigns. The IRS denied ACA’s application for exemption under section 501(c)(3), and ACA appealed the denial to the

Tax Court. The Tax Court upheld the IRS’s denial of ACA’s application for exemption because ACA’s activities conferred an impermissible private benefit on Republican candidates and entities.

The school operated by ACA was an ‘‘outgrowth’’ of programs the

National Republican Congressional Committee (‘‘NRCC’’) once

sponsored to train candidates and to train campaign professionals

for Republican campaigns. The Academy program, however, differed from its NRCC predecessor in that it limited its students to

‘‘campaign professionals.’’ Id. at 1056. Without discussion, the IRS

stated that the Academy did not train candidates, participate in

any political campaign or attempt to influence legislation. Id. at

1056–57. The Academy did not use training materials developed by

the NRCC, generally did not use NRCC faculty, and developed its

own courses. Id. at 1057. Students were not explicitly required to

be affiliated with any particular party, nor were they required to

take positions with partisan organizations upon graduation. Id. at

1058.

The Academy had a number of direct and indirect connections to

Republican organizations. The NRCC contributed furniture and

computer hardware to the Academy. Id. at 1056. One of the Acad-
108

93This part of the Tax Court’s analysis in American Campaign Academy has been criticized

by a few commentators, who have disagreed with the court’s application of the ‘‘charitable class’’

doctrine in the context of an educational organization. See, e.g., Bruce R. Hopkins, Republican

emy’s three directors, Joseph Gaylord, was the Executive Director

of the NRCC; another director, John McDonald, was a member of

the Republican National Committee. Id. Jan Baran, General Counsel of the NRCC at the time of the Academy’s application to IRS,

incorporated the Academy. Id. at 1070. The National Republican

Congressional Trust funded the Academy. Id. The Academy curriculum included studies of the ‘‘Growth of NRCC, etc.’’ and ‘‘Why

are people Republicans,’’ but did not contain comparable studies

pertaining to the Democratic or other political parties. Id. at 1070–

71. People on the admissions panel were affiliated with the Republican Party. Id. at 1071. Furthermore, while the applicants were

not required to declare a party affiliation on their application, the

political references students were required to submit ‘‘often

permit[ted] the admission panel to deduce the applicant’s political

affiliation.’’ Id. Finally, the Court found that all but one of the

Academy graduates who could be identified as later serving in political positions ended up serving Republican candidates or Republican organizations. Id. at 1060, 1071, 1072.

In light of these facts, the Tax Court upheld the IRS’s denial of

the Academy’s application for exemption under section 501(c)(3) because the Academy ‘‘conducted its educational activities with the

partisan objective of benefiting Republican candidates and entities.’’ Id. at 1070. Any one of the facts listed in the previous paragraph did not alone support the IRS’s finding or the court’s holding

that the Academy was organized for a non-exempt purpose. The

IRS did not argue, and the court did not hold, for example, that

individuals who are all members of the same political party are

prohibited from operating a 501(c)(3) organization, or that an organization may not receive an exemption under section 501(c)(3) if a

partisan organization funds it. Rather, the Tax Court focused on

the purpose behind ACA’s activities. In determining this, it drew

‘‘factual inferences’’ from the record to discern that purpose. Those

inferences led to the court’s conclusion that the Academy ‘‘targeted

Republican entities and candidates to receive the secondary benefit

through employing its alumni * * *.’’ Id. at 1075.

The Tax Court’s analysis distinguished between ‘‘primary’’ private benefit and ‘‘secondary’’ private benefit, and made clear that

the latter can be a bar to section 501(c)(3) qualification. In this

case, the students received the primary private benefit of the Academy, and this benefit was permissible and consistent with the

Academy’s educational purposes. The students’ ultimate employers,

Republican candidates and entities, received the secondary benefits

of the Academy. ‘‘[W]here the training of individuals is focused on

furthering a particular targeted private interest [e.g., Republican

candidates and entities], the conferred secondary benefit ceases to

be incidental to the providing organization’s exempt purposes.’’ Id.

at 1074.

For the Academy to have prevailed, according to the Tax Court,

it needed to demonstrate: (1) that the candidates and entities who

received the benefit of trained campaigned workers possessed the

characteristics of a ‘‘charitable class,’’ 93 and (2) that it did not dis-
109

Campaign School Held Not Tax Exempt, The Nonprofit Counsel, July 1989, at 3; Laura B.

Chisolm, Politics and Charity: A Proposal for Peaceful Coexistence, 58 Geo. Wash. L. Rev. 308,

344 n.159 (1990).

Typically an educational organization is expected to serve a broad class representative of the

public interest, but not a ‘‘charitable class’’ per se. The court’s consideration of the question as

to whether political candidates and entities could constitute a charitable class might be misplaced, but is not critical to its holding. As the court notes, ‘‘even were we to find political entities and candidates to generally comprise a charitable class, petitioner would bear the burden

of proving that its activities benefited the members of the class in a nonselect manner.’’ The

court’s finding that such benefits were conferred in a select manner—to Republican candidates

and entities—was the basis for its holding that the organization served private purposes more

than incidentally and, therefore, failed to qualify for exemption under section 501(c)(3).

tribute benefits among that class in a select manner. Id. at 1076.

The Academy argued that Republican candidates and entities were

‘‘charitable’’ because the Republican party consists of millions of

people with ‘‘like ‘political sympathies’ ’’ and their activities benefited the community at large. Id. The Court ruled, however, that

size alone does not transform a benefited class into a charitable

class and that ACA had failed to demonstrate that political entities

and candidates possessed the characteristics of a charitable class.

Id. At 1077. Moreover, the Tax Court held that even if political

candidates and entities could be found to constitute a ‘‘charitable

class,’’ ACA’s benefits were distributed in a select manner to Republican candidates and entities. Id.

Finally, the Academy argued that although it hoped that alumni

would work in Republican organizations or for Republican candidates, it had no control over whether they would do so. Absent

an ability to control the students’ employment, the Academy argued, it lacked the ability to confer secondary benefits to Republican candidates and entities. Id. at 1078. The Court found that

there was no authority for the proposition that the organization

must be able to control non-incidental benefits. Furthermore, the

Court reiterated that the record supported the IRS’s determination

that the Academy was formed ‘‘with a substantial purpose to train

campaign professionals for service in Republican entities and campaigns, an activity previously conducted by NRCC.’’ Id. According

to the Court, accepting the Academy’s argument regarding its inability to control non-incidental benefits would ‘‘cloud the focus of

the operational test, which probes to ascertain the purpose towards

which an organization’s activities are directed and not the nature

of the activities themselves.’’ Id. at 1078–79 (citing B.S.W. Group

v. Commissioner, 70 T.C. 352, 356–57 (1978)). The Court noted that

had the record demonstrated that ‘‘the Academy’s activities were

nonpartisan in nature and that its graduates were not intended to

primarily benefit Republicans,’’ the Court would have found for the

Academy. Id. at 1079.

The American Campaign Academy case follows existing precedent. In reaching its decision, the court relies on Better Business

Bureau and Kentucky Bar Foundation, among other cases, for the

legal standards governing the private benefit prohibition. The court

recognizes that the ACA’s activities were intended to serve multiple

purposes, including the education of students (the permissible primary benefit) and the provision of trained campaign professionals

for candidates and entities (the secondary benefit). Finding the secondary benefit to be targeted to a select group—Republican candidates and entities—the court concludes that such benefit is more
110

than incidental and therefore precludes exemption under section

501(c)(3).

c. To Satisfy The Operational Test, An Organization Must Not Be

An ‘‘Action’’ Organization

An organization is not operated exclusively for one or more exempt purposes if it is an ‘‘action’’ organization. Treas. Reg.

§1.501(c)(3)–1(c)(3). Such an organization cannot qualify for exemption under section 501(c)(3). Treas. Reg. §1.501(c)(3)–1(c)(3)(v). An

organization is an action organization if:

(i) It ‘‘participates or intervenes, directly or indirectly, in any

political campaign on behalf of or in opposition to any candidate for public office;’’

(ii) a ‘‘substantial part’’ of its activities consists of ‘‘attempting to influence legislation by propaganda, or otherwise;’’ or

(iii) its primary objective may be attained ‘‘only by legislation

or a defeat of proposed legislation,’’ and ‘‘it advocates, or campaigns for, the attainment’’ of such primary objective.

Treas. Reg. §1.501(c)(3)–1(c)(3).

(i) If an Organization Participates in a Political Campaign, It is an

Action Organization Not Entitled to Exemption Under Section

501(c)(3)

Section 501(c)(3) provides that an organization is not entitled to

exemption if it ‘‘participate[s] in, or intervene[s] in (including the

publishing or distributing of statements) any political campaign on

behalf of (or in opposition to) any candidate for public office.’’ The

reason for this prohibition is clear. Contributions to section

501(c)(3) organizations are deductible for federal income tax purposes, but contributions to candidates and political action committees (‘‘PACs’’) are not. The use of section 501(c)(3) organizations to

support or oppose candidates or PACs would circumvent federal tax

law by enabling candidates or PACs to attract tax-deductible contributions to finance their election activities. As the U.S. Court of

Appeals for the Tenth Circuit explained, ‘‘[t]he limitations in Section 501(c)(3) stem from the congressional policy that the United

States Treasury should be neutral in political affairs and that substantial activities directed to attempts to * * * affect a political

campaign should not be subsidized.’’ Christian Echoes National

Ministry, Inc. v. United States, 470 F.2d 849, 854 (1972), cert. denied, 419 U.S. 1107 (1975) (emphasis in original).

The prohibition on political campaign intervention was added to

the Internal Revenue Code as a floor amendment to the 1954 Revenue Act offered by Senator Lyndon Johnson, who believed that a

section 501(c)(3) organization was being used to help finance the

campaign of an opponent. In introducing the amendment, Senator

Johnson said that it was to ‘‘deny[] tax-exempt status to not only

those people who influence legislation but also to those who intervene in any political campaign on behalf of any candidate for any

public office.’’ 100 Cong. Rec. 9604 (1954) (discussed in Bruce R.

Hopkins, ‘‘The Law of Tax-Exempt Organizations,’’ 327 (6th ed.

1992)). No congressional hearing was held on the subject and the

conference report did not contain any analysis of the provision. Ju-
111

94The 1993 Exempt Organizations Continuing Professional Education (CPE) Technical Instruction Program text was prepared by the IRS Exempt Organizations Division for internal

training purposes. 95 Indeed, under the common law of charitable trusts—the genesis of modern day section

501(c)(3)—it was recognized that ‘‘a trust to promote the success of a particular political party

is not charitable,’’ for the reason that ‘‘there is no social interest in the underwriting of one or

another of the political parties.’’ Restatement (Second) of Trusts §374 (1959). The continued importance of the common law doctrine of ‘‘charitability’’ to the standards for exemption under section 501(c)(3) is reflected in the Supreme Court decision in Bob Jones University v. United

States, 461 U.S. 574 (1983), in which the Supreme Court denied exemption to a private university that practiced racial discrimination, on the ground that racial discrimination was contrary

to public policy and therefore inconsistent with the common law standards for charitability.

dith E. Kindell and John F. Reilly, ‘‘Election Year Issues,’’ 1993 Exempt Organizations Continuing Professional Education Technical

Instruction Program 400, 401 (hereinafter ‘‘IRS CPE Manual’’). 94

Although the prohibition on political campaign intervention was

not formally added to section 501(c)(3) until 1954, the concept that

charities should not participate in political campaigns was not new.

As the Second Circuit noted, ‘‘[t]his provision merely expressly stated what had always been understood to be the law. Political campaigns did not fit within any of the specified purposes listed in

[Section 501(c)(3)].’’ The Association of the Bar of the City of New

York v. Commissioner, 858 F.2d 876, 879 (2d Cir. 1988) (hereinafter ‘‘New York Bar’’) (quoting 9 Mertens, Law of Federal Income Taxation §34.05 at 22 (1983)). 95 Furthermore, congressional concerns

that the government not subsidize political activity have existed

since at least the time when Judge Learned Hand wrote ‘‘[p]olitical

agitation * * * however innocent the aim * * * must be conducted

without public subvention * * *.’’ Slee v. Commissioner, 42 F.2d

184, 185 (2d Cir. 1930), quoted in New York Bar, 858 F.2d at 879.

In 1987, Congress amended section 501(c)(3) to clarify that the

prohibition on political campaign activity applied to activities in opposition to, as well as on behalf of, any candidate for public office.

Omnibus Budget Reconciliation Act, Pub. L. No. 100–203, §10711,

101 Stat. 1330, 1330–464 (1987). The House Report accompanying

the bill stated that ‘‘[t]he prohibition on political campaign activities * * * reflect[s] congressional policies that the U.S. Treasury

should be neutral in political affairs * * *.’’ H.R. Rep. No. 100–391,

at 1625 (1987); see also S. Rep. No. 91–552, at 46–49 (Tax Reform

Act of 1969) (interpreting section 501(c)(3) to mean that ‘‘no degree

of support for an individual’s candidacy for public office is permitted’’).

The scope of the prohibition on political campaign intervention

has been the subject of much discussion. While certain acts are

clearly proscribed, others may be permissible or prohibited, depending on the purpose and effect of the activity. The regulations interpreting the prohibition add little to the statutory definition:

Activities which constitute participation or intervention

in a political campaign on behalf of or in opposition to a

candidate include, but are not limited to, the publication

or distribution of written or printed statements or the

making of oral statements on behalf of or in opposition to

such a candidate.

Treas. Reg. §1.501(c)(3)–1(c)(3)(iii). Under this provision, a section

501(c)(3) organization is prohibited from making a written or oral

endorsement of a candidate and from distributing partisan cam-
112

96Some churches assert that they have a First Amendment right to participate in political

campaign activities where doing so furthers their religious beliefs. However, courts have ruled

that tax exemption is a privilege and not a right, and that section 501(c)(3) does not prohibit

churches from participating in political campaigns but merely provides that they will not be entitled to tax exemption if they do so. See, e.g., Christian Echoes National Ministry, Inc. v. United

States, 470 F.2d 849 (10th Cir. 1972).

paign literature. IRS CPE Manual at 410. Following the enactment

of section 527 of the Code in 1974 (governing the federal tax treatment of PACs), the prohibition also prevents section 501(c)(3) organizations from establishing or supporting a PAC. IRS CPE Manual

at 437. (The application of the prohibition in this context is discussed further below.)

It is clear, however, that section 501(c)(3) organizations also may

violate the prohibition by engaging in activity that falls short of a

direct endorsement, and even may—on its face—appear neutral, if

the purpose or effect of the activity is to support or oppose a candidate. The IRS CPE Manual describes a variety of situations in

which section 501(c)(3) organizations may violate the prohibition

without engaging in a direct candidate endorsement, including inviting a particular candidate to make an appearance at an organization event, holding candidate forums or distributing voter guides

which evidence a bias for or against a candidate, and similar activities that may support or oppose a particular candidate. IRS CPE

Manual at 419–424, 430–432. In a recent election year news release, the IRS reminded 501(c)(3) organizations of the breadth of

the prohibition, stating not only that they cannot endorse candidates or distribute statements in support of or opposition to candidates, but also that they cannot ‘‘become involved in any other

activities that may be beneficial or detrimental to any candidate.’’

IRS News Release IR–96–23 (Apr. 24, 1996).

While it is easy for the IRS to determine whether the prohibition

on political campaign intervention has been violated when a section

501(c)(3) organization endorses a candidate or distributes partisan

campaign literature, it is more difficult to determine whether there

is a violation if the activity at issue is not blatant or serves a nonpolitical purpose as well. The IRS relies on a ‘‘facts and circumstances’’ test in analyzing ambiguous behavior to determine

whether there has been a violation. According to the IRS:

[i]n situations where there is no explicit endorsement or

partisan activity, there is no bright-line test for determining if the IRC 501(c)(3) organization participated or intervened in a political campaign. Instead, all the facts and

circumstances must be considered.

IRS CPE Manual at 410.

Despite the lack of bright-line standards concerning all aspects

of the prohibition, there is a substantial body of authority concerning what section 501(c)(3) organizations can and cannot do, and

many section 501(c)(3) organizations have little difficulty applying

existing precedents to develop internal guidelines for what activities are permissible and prohibited. For example, the Office of General Counsel of the United States Catholic Conference issued guidelines on political activities to Catholic organizations on February

14, 1996, in anticipation of the 1996 election season. 96 The guidelines outline the parameters of permissible activity, including unbi-
113

97See also G.C.M. 38137 (Oct. 22, 1979): [T]he prohibition on political activity makes no reference to the intent of the organization. An organization can violate the proscription even if it

acts for reasons other than intervening in a political campaign. For example, an organization

that hires a political candidate to do commercials for its charity drive and runs the commercials

frequently during the political campaign may have no interest in supporting the candidate’s

campaign. Nevertheless, its action would constitute, at least, indirect intervention or support of

the political campaign.

However, the same G.C.M. goes on to say:

We do not mean to imply that every activity that has an effect on a political campaign is prohibited political activity. We recognize that organizations may inadvertently support political

candidates. In these instances the organizations have not ‘‘intervened’’ or ‘‘participated’’ in political campaigns. A hospital that provides emergency health care for a candidate acts on behalf

of the candidate during the election, but only inadvertently supports his campaign.

ased voter education, nonpartisan get-out-the-vote drives, and nonpartisan public forums. They also describe what activity is prohibited, including the endorsement of candidates, the distribution of

campaign literature in support or opposition to candidates, and the

provision of financial and in-kind support to candidates or PACs.

With respect to the latter, the guidelines state flatly that:

[A] Catholic organization may not provide financial support to any candidate, PAC, or political party. Likewise, it

may not provide or solicit in-kind support, such as free or

selective use of volunteers, paid staff, facilities, equipment,

mailing lists, etc.

‘‘Political Activity Guidelines for Catholic Organizations’’ (United

States Catholic Conference, Office of the General Counsel, Washington, D.C.), Feb. 14, 1996, reprinted in Paul Streckfus’ EO Tax

Journal, November 1996 at 35, 42.

The generally accepted aspects of the campaign intervention prohibition, as well as some areas of uncertainty, are discussed below.

(a) The Prohibition Is ‘‘Absolute’’

The prohibition on political campaign intervention or participation is ‘‘absolute.’’ IRS CPE Manual at 416. Unlike the prohibition

on lobbying, there is no requirement that political campaign participation or intervention be substantial. New York Bar, 858 F.2d

at 881. It is, therefore, irrelevant that the majority, or even all but

a small portion, of an organization’s activities would, by themselves, support exemption under section 501(c)(3). United States v.

Dykema, 666 F.2d 1096, 1101 (7th Cir. 1981); see also G.C.M.

39694 (Jan. 22, 1988) (‘‘An organization described in section

501(c)(3) is precluded from engaging in any political campaign activities’’) and P.L.R. 9609007 (Dec. 6, 1995). (‘‘For purposes of section 501(c)(3), intervention in a political campaign may be subtle

or blatant. It may seem to be justified by the press of events. It

may even be inadvertent. The law prohibits all forms of participation or intervention in ‘any’ political campaign.’’) 97

Although the prohibition on political campaign intervention

under section 501(c)(3) is absolute, Congress recognized that the

sanction of loss of tax exemption could, in some cases, be disproportionate to the violation. In 1987, Congress added section 4955 to

the Code, which imposes excise tax penalties on section 501(c)(3)

organizations that make ‘‘political expenditures’’ in violation of the

prohibition, as well as organization managers who knowingly approve such expenditures. The legislative history provides that the

enactment of section 4955 was not intended to modify the absolute
114

98Prior to the enactment of section 4955 in 1987, the IRS was reluctant to impose revocation

in cases where the violation was not blatant and the organization had a record of otherwise

charitable activities. For example, P.L.R. 8936002 (May 24, 1989) involved a section 501(c)(3)

organization that engaged in voter education and issue advocacy relating to the 1984 Presidential election. Describing the case as ‘‘a very close call,’’ the IRS ‘‘reluctantly’’ concluded that

the organization’s voter education activities did not constitute prohibited political campaign

intervention, despite the use of ‘‘code words’’ that could be viewed as evidencing support for a

particular candidate.

The IRS appeared unwilling to seek revocation with respect to the organization, probably because of its history of legitimate educational activities. Had section 4955 been in effect when

the activity took place, the IRS would have had another enforcement alternative: it could have

imposed excise tax penalties on the organization’s expenditures for the activities it found so

troublesome.

prohibition of section 501(c)(3), but to provide an alternative remedy that could be used by the IRS in cases where the penalty of

revocation seems disproportionate to the violation:

i.e., where the expenditure was unintentional and involved

only a small amount and where the organization subsequently has adopted procedures to assure that similar expenditures would not be made in the future.

H.R. Rep. No. 100–391, at 1623–24 (1987).

The legislative history also provides that the excise tax may be

imposed in cases involving significant, uncorrected violations of the

prohibition, where revocation alone may be ineffective because the

organization has ceased operations after diverting its assets to an

improper purpose. In these cases, the excise tax penalty on organization managers may be the only effective way to penalize the violation. Id. at 1624–25.

The IRS has shown an inclination to impose the excise tax under

section 4955 in lieu of revocation of exemption in cases where the

violation appears to be minor in relation to the organization’s other

exempt purpose activities.98 For example, P.L.R. 9609007 (Dec. 6,

1995) involved a section 501(c)(3) organization that sent out a fundraising letter linking the organization to issues raised in the particular campaigns. The IRS concluded that the letters evidenced a

bias for one candidate over the other. The organization sought to

defend itself by saying only a few of the letters were sent to the

states whose elections were mentioned in the letters. The IRS rejected this defense, stating that:

[I]t is common knowledge that in recent times the primary source of a candidate’s support in such elections is

often derived from out-of-state sources. Although a particular reader may not have been eligible to actually vote for

the described candidate, he or she could have been charged

by [the organization], in our view, to participate in the

candidate’s campaign through direct monetary or in-kind

support, volunteerism, molding of public opinion, or the

like.

Id. The IRS found that the organization violated the political campaign intervention prohibition and imposed an excise tax on the organization under section 4955; it did not, however, propose revocation of the organization’s exemption under section 501(c)(3).
115

99For example, section 501(c)(4) and (6) organizations are permitted to establish and/or support PACs. If these exempt organizations provide support for PACs, they are subject to tax,

under section 527, on the lesser of their net investment income or their ‘‘exempt function’’ income.

(b) Section 501(c)(3) Organizations May Not Establish or

Support a PAC

Although organizations exempt from tax under some categories

of section 501(c) are permitted to establish or support PACs,99

those exempt under section 501(c)(3) are not. When section 527

(governing the tax treatment of PACs) was added to the Code in

1974, the legislative history provided that ‘‘this provision is not intended to affect in any way the prohibition against certain exempt

organizations (e.g., sec. 501(c)(3)) engaging in ‘electioneering’ * * *’’

S. Rep. No. 93–1357 (1974), reprinted in 1975–1 C.B. 517, 534. The

regulations under section 527 reflect this congressional intent:

Section 527(f) and this section do not sanction the intervention in any political campaign by an organization described in section 501(c) if such activity is inconsistent

with its exempt status under section 501(c). For example,

an organization described in section 501(c)(3) is precluded

from engaging in any political campaign activities. The

fact that section 527 imposes a tax on the exempt function

income (as defined in section 1.527–2(c)) expenditures of

section 501(c) organizations and permits such organizations to establish separate segregated funds to engage in

campaign activities does not sanction the participation in

these activities by section 501(c)(3) organizations.

Treas. Reg. §1.527–6(g).

Since the enactment of section 527 in 1974, it has been clear that

a section 501(c)(3) organization will violate the prohibition on political campaign intervention by providing financial or nonfinancial

support for a PAC. IRS CPE Manual at 438–40. While the use of

a section 501(c)(3)’s facilities, personnel, or other financial resources for the benefit of a PAC is impermissible, the prohibition

does not stop there. In its CPE Manual, the IRS also noted that

‘‘[a]n IRC 501(c)(3) organization’s resources include intangible assets, such as its goodwill, that may not be used to support the political campaign activities of another organization.’’ Id. at 440.

Some leading practitioners have interpreted this provision to prohibit a charity from allowing its name to be used by a PAC, even

if the charity provides no financial support or assistance; by allowing a PAC to use its name, the charity implies to its employees and

to the public that it endorses the activity of the PAC. See Gregory

L. Colvin et al., Commentary on Internal Revenue Service 1993 Exempt Organizations Continuing Professional Education Technical

Instruction Program Article on ‘‘Election Year Issues,’’ 11 Exempt

Org. Tax Rev. 854, 871 (1995) [hereinafter ‘‘EO Comments’’].

(c) ‘‘Express Advocacy’’ is Not Required, and Issue Advocacy

is Prohibited if Used to Convey Support for or Opposition

to a Candidate

An organization does not need to violate the ‘‘express advocacy’’

standard applied under federal election law for it to violate the po-
116

100The FEC’s ‘‘express advocacy’’ standard came into being because the Supreme Court held

a provision of the Federal Elections Campaign act relating to contributions ‘‘to reach only funds

used for communications that expressly advocate the election or defeat of a clearly identified

candidate.’’ See IRS CPE Manual at 412 (quoting Buckley v. Valeo, 424 U.S. 1, 77 (1976)). Examples of ‘‘express advocacy’’ include ‘‘vote for,’’ ‘‘elect,’’ and ‘‘Smith for Congress’’ or ‘‘vote against,’’

‘‘defeat,’’ and ‘‘reject.’’ Id. at 413 (referring to 11 C.F.R. § 109.1(b)(2)).

litical campaign prohibition of section 501(c)(3).100 T.A.M. 8936002

(May 24, 1989). That is, it is not necessary to advocate the election

or defeat of a clearly identified candidate to violate the prohibition.

IRS CPE Manual at 412–13.

Moreover, an organization may violate the prohibition even if it

does not identify a candidate by name. The IRS has stated that

‘‘issue advocacy’’ may serve as ‘‘the opportunity to intervene in a

political campaign in a rather surreptitious manner’’ if a label or

other coded language is used as a substitute for a reference to identifiable candidates. Id. at 411.

The concern is that an IRC 501(c)(3) organization may

support or oppose a particular candidate in a political campaign without specifically naming the candidate by using

code words to substitute for the candidate’s name in its

messages, such as ‘‘conservative,’’ ‘‘liberal,’’ ‘‘pro-life,’’ ‘‘prochoice,’’ ‘‘anti-choice,’’ ‘‘Republican,’’ ‘‘Democrat,’’ etc., coupled with a discussion of the candidacy or the election.

When this occurs, it is quite evident what is happening—

an intervention is taking place.

Id. 411–412. Furthermore:

[a] finding of political campaign intervention from the use

of coded words is consistent with the concept of ‘‘candidate’’—the words are not tantamount to advocating support for or opposition to an entire political party, such as

‘‘Republican,’’ or a vague and unidentifiably large group of

candidates, such as ‘‘conservative’’ because the sender of

the message does not intend the recipient to interpret

them that way. Code words, in this context, are used with

the intent of conjuring favorable or unfavorable images—

they have pejorative or commendatory connotations.

Id. at 412 n. 6.

(d) Educational Activities May Constitute Participation or

Intervention

As discussed above, the IRS considers activities that satisfy the

‘‘methodology test’’ to be ‘‘educational.’’ Just as educational activities may result in impermissible private benefit, however, so too

may they violate the prohibition on political campaign intervention.

The IRS takes the position that ‘‘[a]ctivities that meet the methodology test * * * may nevertheless constitute participation or

intervention in a political campaign.’’ IRS CPE Manual at 415.

New York Bar, 858 F.2d 876 (2d Cir. 1988), referred to above, is

the leading case on point. In that case, a bar association published

ratings of judicial candidates. The ratings were distributed to bar

members and law libraries. The Association also issued press releases regarding its ratings, but did not conduct publicity campaigns to announce its ratings. Id. at 877. The Second Circuit held
117

101See also T.A.M. 9635003 (Apr. 19, 1996). T.A.M. 9635003 involved a section 501(c)(3) organization that conducted ‘‘citizens’ juries,’’ a form of voter education in which a cross-section of

citizens are selected to determine which issues are most relevant in the context of a particular

campaign, to hear presentations by candidates on those issues, and to rate the candidates’ positions on the issues. The section 501(c)(3) organization disseminated the citizen jury’s report, including the candidate ratings. In its dissemination, the organization made it clear that it did

not support or oppose any candidate, and that the views expressed were those of the citizen jurors and not the organization. The IRS found that the dissemination of the report constituted

impermissible participation in a political campaign, and that all expenditures in connection with

the conduct of the citizens’ jury—and not just the expenditures of the dissemination—constituted ‘‘political expenditures’’ under section 4955: This culmination shows that all the activity

of the organization leading up to the final report is intimately connected with and a part of the

process to put on the [citizens’ jury], and thus publication of the final report makes the entire

process with respect to the [citizens’ jury] a proscribed political activity.

that although the Association’s publications were educational, the

distribution of the publications constituted prohibited campaign

intervention. By disseminating the educational publications with

the hope that they would ‘‘ ‘ensure’ that candidates whom [the Association] consider[ed] to be ‘legally and professionally unqualified’ ’’

would not be elected, the court held that the Association ‘‘indirectly’’ participated in a political campaign on behalf of or in opposition to a candidate for public office. Id. at 881.

An implication of the holding in New York Bar is that one must

consider not only whether the activity itself, e.g., publishing educational materials such as candidate ratings, violates the political

campaign prohibition, but also whether the intended consequences

of the activity violates the prohibition.101 The need to consider the

consequences of an otherwise educational activity is clear from a

review of several IRS rulings finding that an organization violated

the prohibition by disseminating material that was deemed educational, but nonetheless affected voter preferences in violation of

the prohibition.

For example, in Rev. Rul. 67–71, 1967–1 C.B. 125, the IRS ruled

that a 501(c)(3) organization created to improve the public educational system by engaging in campaigns on behalf of candidates

for school board was not exempt. Every four years, when the school

board was to be elected, the organization considered the qualification of the candidates and selected those it thought most qualified.

The organization then ‘‘engage[d] in a campaign on their behalf by

publicly announcing its slate of candidates and by publishing and

distributing a complete biography of each.’’ Id. Although the selection process ‘‘may have been completely objective and unbiased and

was intended primarily to educate and inform the public about the

candidates,’’ the IRS nonetheless ruled it to be intervention or participation in a political campaign. Id.

In Rev. Rul. 76–456, 1976–2 C.B. 151, the IRS ruled that an organization formed for the purpose of elevating the morals and ethics of political campaigning was nevertheless intervening in a political campaign when it solicited candidates to sign a code of fair

campaign practices and released the names of those candidates

who signed and those candidates who refused to sign. The IRS stated that this was done to educate citizens about the election process

and so that they could ‘‘participate more effectively in their selection of government officials.’’ Id. at 152. Nonetheless, such activity,

although educational, ‘‘may result * * * in influencing voter opinion’’ and thus constituted a prohibited participation or intervention

in a political campaign. Id.
118

(e) Nonpartisan Activities May Constitute Prohibited Political

Campaign Participation

The IRS takes the position that the nonpartisan motivation for

an organization’s activities is ‘‘irrelevant when determining whether the political campaign prohibition’’ has been violated. IRS CPE

Manual at 415. As support for this position, the IRS cites Rev. Rul.

76–456 and New York Bar, both of which are discussed above. In

those cases, the court or the IRS found that the activities in question were nonpartisan, but nevertheless held that they constituted

participation in a political campaign. As noted by the IRS in its

CPE Manual, the court in New York Bar ‘‘made the rather wry observation [that] [a] candidate who receives a ‘not qualified’ rating

will derive little comfort from the fact that the rating may have

been made in a nonpartisan manner.’’ IRS CPE Manual at 416.

Similarly, in G.C.M. 35902 (July 15, 1974), the IRS stated:

The provision in the Code prohibiting participation or

intervention in ‘‘any political campaign’’ might conceivably

be interpreted to refer only to participation or intervention

with a partisan motive; but the provision does not say this.

It seems more reasonable to construe it as referring to any

statements made in direct relation to a political campaign

which affect voter acceptance or rejection of a candidate

***

(f) The IRS Has Found Violations of the Prohibition on Political Campaign Participation When an Activity Could Affect or Was Intended to Affect Voters’ Preferences

As discussed above, the courts and the IRS have found prohibited

political campaign intervention when the activity in question, although educational, affected or could reasonably be expected to affect voter preferences, even where the organization’s motives in undertaking the activity were nonpartisan. G.C.M. 35902 is to similar

effect. In that case, the IRS held that a public broadcasting station’s nonpartisan educational motivation was irrelevant in determining whether its provision of free air time to candidates for elective office was permissible under section 501(c)(3). The IRS found

that the station’s procedures for providing air time, including an

equal time doctrine for all candidates and an on-air disclaimer of

support for any particular candidate, were sufficient to ensure that

the activity would not constitute an impermissible political campaign intervention. The fact that the station’s motivation was to

educate the public and not to influence an election, however, was

deemed to be irrelevant.

The cases and rulings cited above make it clear that simply having an educational or nonpartisan motive for engaging in prohibited political activity is not a defense to a finding of violation. The

relevance and irrelevance of motive is sometimes misstated, however. While the absence of an improper political motivation is irrelevant, evidence showing the existence of a political motivation is

relevant and one of the facts and circumstances that the IRS will

consider in determining whether there is a violation. Indeed, the

IRS has found the existence of evidence showing an intent to participate in a political campaign to be sufficient to support a finding
119

of violation, despite the lack of evidence that the activity achieved

the intended results.

For example, in G.C.M. 39811 (Feb. 9, 1990), a religious organization encouraged its members to seek election to positions as precinct committee-persons in the Republican or Democratic Party

structures. Although none of the organization’s members actually

ran for such positions, the IRS found that urging its members to

become involved in the local party organizations was part of the organization’s larger plans to ‘‘someday control the political parties.’’

The first step in the Foundation’s long-term strategy was

to encourage members to be elected as precinct committeemen. These individuals could then exert influence within

the party apparatus, beginning with the county central

committee. Precinct committeemen could sway the precinct

caucuses, a step in the selection of delegates to the party’s

presidential nominating convention. * * * Intervention at

this early stage in the elective process in order to influence

political parties to nominate such candidates is, we believe, sufficient to constitute intervention in a political

campaign.

Id. The IRS went on to say:

In its discussion of the Tax Court opinion [in New York

Bar], the [Second Circuit] observed that the ratings of candidates were ‘‘published with the hope that they will have

an impact on the voter.’’ The effort, and not the effect, constituted intervention in a political campaign. Therefore,

whether anyone heeded the call to run for precinct committee, whether that individual was elected, and if so,

what he or she subsequently did are all immaterial.

Id.

In G.C.M. 39811, the IRS did not contend that the organization’s

urging of members to run for office alone constituted the violation.

Rather, the organization’s ‘‘long-term strategy’’ of seeking to influence the political parties’ nomination of candidates by having its

members elected to office, and its urging of members to run for office so as to carry out that strategy, were sufficient to support a

finding of impermissible campaign participation, despite the fact

that the effort was not successful.

Other cases and rulings have also looked to an organization’s intent as an important element of a finding of prohibited participation or intervention. In 1972, a court held that an organization violated the participation or intervention prohibition when it ‘‘used its

publications and broadcasts to attack candidates and incumbents

who were considered too liberal.’’ Christian Echoes National Ministry, Inc. v. United States, 470 F.2d 849, 856 (10th Cir. 1972). The

court did not discuss whether the activities actually influenced voters or were reasonably likely to do so. Rather, it concluded that the

organization’s ‘‘attempts to elect or defeat certain political leaders

reflected [the organization’s] objective to change the composition of

the federal government.’’ Id.

The IRS also found an organization’s intent relevant in P.L.R.

9117001 (Sept. 5, 1990). As described in that ruling, an organiza-
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tion mailed out material indicating that it was intending to help

educate conservatives on the importance of voting in the 1984 general election. According to facts stated in the ruling letter, the material contained language ‘‘intended’’ to induce conservative voters

to vote for President Reagan, even though his name was not included in the materials. The IRS thus concluded that ‘‘the material

was targeted to influence a segment of voters to vote for President

Reagan.’’ Id.

Based on the above, the IRS position is that an organization can

violate the political campaign prohibition by either: (a) conducting

activities that could have the effect of influencing voter acceptance

or rejection of a candidate or group of candidates (the ‘‘effect’’

standard), or (b) engaging in activities that are intended to influence voter acceptance or rejection of a candidate or group of candidates, whether they do so or not (the ‘‘effort’’ standard). Most of

the uncertainty over the scope of the prohibition on political campaign intervention relates to the ‘‘effect’’ standard—the possibility

that an organization may, without intending to do so, engage in an

activity that could have the effect of influencing voter acceptance

of a candidate and, as a result, place its tax exemption in jeopardy

and/or risk incurring excise tax penalties under section 4955. The

legislative history of section 4955 makes it clear that an inadvertent action may indeed violate section 501(c)(3), and suggests that

the IRS may appropriately apply the excise tax penalty rather than

revocation as a sanction in such situations. Nevertheless, some

practitioners have expressed the view that, in interpreting whether

ambiguous behavior is violative of the campaign intervention prohibition, primary reliance should be placed on whether there was a

political purpose to the behavior at issue. See EO Comments at

856–57. In other words, ‘‘to violate the 501(c)(3) prohibition, the organization’s actions have to include an intentional ’tilt’ for or

against one or more people running for public office.’’ Id. at 857.

In this regard, it was noted that:

In most cases, the presence of a political purpose will be

clear from the charity’s paper trail, because organizational

activities in the political arena are usually accompanied by

assertive behavior, much internal discussion, and explicit

written communications. * * *

Id.

To date, the IRS has shown no intention to abandon its position

that an organization may violate the prohibition against political

campaign intervention based on the unintended or inadvertent effect of its actions, as well as by an engaging in activities with ‘‘an

intentional tilt’’ in favor of a candidate or in support of a PAC. Indeed, its recent election year warning to section 501(c)(3) organizations not to ‘‘become involved in any other activities that may be

beneficial or detrimental to any candidate’’ (discussed above) evidences an apparent intention to adhere to a broad interpretation

of the prohibition. IRS News Release IR–96–23 (Apr. 24, 1996).
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102 As stated in the legislative history with respect to I.R.C. § 501(h): ‘‘The language of the lobbying provision was first enacted in 1934. Since that time neither Treasury regulations nor

court decisions gave enough detailed meaning to the statutory language to permit most charitable organizations to know approximately where the limits were between what was permitted

by the statute and what was forbidden by it. This vagueness was, in large part, a function of

the uncertainty in the meaning of the terms ‘substantial part’ and ‘activities’. * * * Many believed that the standards as to the permissible level of activities under prior law was too vague

and thereby tended to encourage subjective and selective enforcement.’’

(ii) If a Substantial Part of an Organization’s Activities is Attempting to Influence Legislation, or its Primary Goal can only be Accomplished through Legislation, it is an ‘‘Action’’ Organization

Section 501(c)(3) provides that an organization cannot be tax-exempt if a ‘‘substantial part’’ of its activities is ‘‘carrying on propaganda, or otherwise attempting, to influence legislation.’’ Although

there is virtually no legislative history on the prohibition, courts

have declared that the limitations in section 501(c)(3) ‘‘stem from

the policy that the United States Treasury should be neutral in political affairs and that substantial activities directed to attempts to

influence legislation should not be subsidized.’’ Haswell v. United

States, 500 F.2d 1133, 1140 (Ct. Cl. 1974), cert. denied, 419 U.S.

1107 (1975). (The court also noted that ‘‘[t]ax exemptions are matters of legislative grace and taxpayers have the burden of establishing their entitlement to exemptions.’’ Id.)

The Regulations provide that an organization is an ‘‘action’’ organization if ‘‘a substantial part of its activities is attempting to influence legislation by propaganda or otherwise.’’ Treas. Reg.

§ 1.501(c)(3)–1(c)(3)(ii). The Regulations also provide that an organization is an ‘‘action’’ organization if it has the following two characteristics:

(a) Its main or primary objective or objectives (as distinguished from its incidental or secondary objective) may be

attained only by legislation or a defeat of proposed legislation; and

(b) it advocates, or campaigns for, the attainment of such

main or primary objective or objectives as distinguished

from engaging in nonpartisan analysis, study, or research

and making the results thereof available to the public.

Treas. Reg. § 1.501(c)(3)–1(c)(3)(iv).

To determine whether a substantial part of an organization’s activities is attempting to influence legislation, two alternative tests

exist. Each test contains its own definition of ‘‘legislation’’ and what

constitutes an attempt to influence legislation. The two tests also

contain different ways of determining substantiality. One test is referred to as the ‘‘substantial-part test.’’ The other test, referred to

as the ‘‘expenditure test,’’ 102 was added to tax law in 1976 at sections 501(h) and 4911 as a result of uncertainty over the meaning

of the word ‘‘substantial.’’

The ‘‘expenditure test’’ sets forth specific, dollar levels of permissible lobbying expenditures. Section 501(h) did not amend section

501(c)(3), but rather provided charitable organizations an alternative to the vague ‘‘substantial-part’’ limitations of section

501(c)(3). A charitable organization may elect the ‘‘expenditure

test’’ as a substitute for the substantial-part test. A public charity

that does not elect the expenditure test remains subject to the sub-
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stantial part test. Treas. Reg. § 1.501(h)–1(a)(4). Joint Committee

in its General Explanation of the Tax Reform Act of 1976, 1976–

3 C.B. (Vol. 2) 419.

The substantial-part test is applied without regard to the provisions of section 501(h). The law, regulations and rulings regarding

the expenditure test may not be used to interpret the law, regulations and rulings of the substantial-part test. Section 501(h)(7)

(‘‘nothing [in section 501(h)] shall be construed to affect the interpretation of the phrase ‘no substantial part of the activities of

which is carrying on propaganda, or otherwise attempting, to influence legislation,’ under [section 501(c)(3)]’’).

Determining whether an organization violated the lobbying limitation requires an understanding of what constitutes: i. ‘‘legislation;’’ ii. an attempt to ‘‘influence’’ legislation; and iii. a ‘‘substantial’’ part of an organization’s activities. It is also necessary to understand the circumstances under which an organization’s ‘‘objectives can be achieved only through the passage of legislation.’’

(a) Definition of ‘‘Legislation’’

The Regulations define ‘‘legislation’’ to include ‘‘action by the

Congress, by any State legislature, by any local council or similar

governing body, or by the public in a referendum, initiative, constitutional amendment, or similar procedure.’’ Treas. Reg.

§ 501(c)(3)–1(c)(3)(ii). ‘‘Action by the Congress’’ includes the ‘‘introduction, amendment, enactment, defeat, or repeal of Acts, bills, resolutions, or similar items.’’ G.C.M. 39694 (Jan. 22, 1988). This definition does not include Executive Branch actions, or actions of

independent agencies. P.L.R. 6205116290A (May 11, 1962). Requesting executive bodies to support or oppose legislation, however,

is prohibited. The IRS does not recognize a distinction between

‘‘good’’ legislation and ‘‘bad’’ legislation. For example, in Rev. Rul.

67–293, 1967–2 C.B. 185, the IRS ruled that an organization substantially engaged in promoting legislation to protect animals was

not exempt even though the legislation would have benefited the

community.

(b) Definition of ‘‘attempting to influence legislation’’

Under the Regulations, an organization will be regarded as ‘‘attempting to influence legislation’’ if it:

(a) contacts members of a legislative body for the purpose of proposing, supporting, or opposing legislation

(Treas. Reg. § 1.501(c)(3)–1(c)(3)(ii)(a)) (referred to as ‘‘direct lobbying’’);

(b) urges the public to contact members of a legislative

body for the purpose of proposing, supporting, or opposing

legislation (id.) (referred to as ‘‘grassroots lobbying’’); or

(c) advocates the adoption or rejection of legislation

(Treas. Reg. § 1.501(c)(3)–1(c)(3)(ii)(b)).

Section 4945(e) of the Internal Revenue Code provides additional

guidance regarding the meaning of ‘‘attempting to influence legisla-
123

103 I.R.C. §§ 4945(d) and (e) contain definitions of ‘‘attempting to influence legislation’’ with respect to taxable expenditures by private foundations, not public charities. However, ‘‘[a]ctivities

which constitute an attempt to influence legislation under Code § 4945 * * * also constitute an

attempt to influence legislation under Code § 501(c)(3).’’ G.C.M. 36127 (Jan. 2, 1975). Congress

viewed section 4945(e) as a clarification of the phrase ‘‘attempting to influence legislation’’ in

tax-exempt law generally, not just with respect to private foundations. Id. 104See G.C.M. 36127 (Jan. 2, 1975) and Haswell v. United States, 500 F.2d 1133 (Ct. Cl. 1974). 105See also G.C.M. 36127 (Jan. 2, 1975). 106For example, the publications urged its readers to: ‘‘write their Congressmen in order to

influence the political decisions in Washington;’’ ‘‘work in politics at the precinct level;’’ ‘‘maintain the McCarran-Walter Immigration law;’’ ‘‘reduce the federal payroll by discharging needless

jobholders, stop waste of public funds and balance the budget;’’ ‘‘stop federal aid to education,

socialized medicine and public housing;’’ ‘‘abolish the federal income tax;’’ and ‘‘withdraw from

the United Nations.’’ Christian Echoes National Ministry, 470 F.2d at 855. In light of these

facts, the court upheld the IRS position that the organization failed to qualify as a 501(c)(3) organization.

tion.’’ 103 According to that provision, a taxable expenditure includes

any amount paid or incurred for:

(a) any attempt to influence any legislation through an

attempt to affect the opinion of the general public or any

segment thereof, and

(b) any attempt to influence legislation through communication with any member or employee of a legislative

body, or with any other government official or employee

who may participate in the formulation of the legislation

(except technical advice or assistance provided to a government body or to a committee or other subdivision thereof

in response to a written request by such body or subdivision . * * *) other than through making available the results of nonpartisan analysis, study, or research.

Treas. Reg. § 53.4945–2(d)(4), which is applicable to non-electing

public charities,104 discusses ‘‘nonpartisan analysis, study, or research’’ as follows:

Examinations and discussions of broad social, economic,

and similar problems are [not lobbying communications]

even if the problems are of the type with which government would be expected to deal ultimately * * * For example, [an organization may discuss] problems such as environmental pollution or population growth that are being

considered by Congress and various State legislatures, but

only where the discussions are not directly addressed to

specific legislation being considered, and only where the

discussions do not directly encourage recipients of the communication to contact a legislator, an employee of a legislative body, or a government official or employee who may

participate in the formulation of legislation.105

Even if specific legislation is not mentioned, however, an indirect

campaign to ‘‘mold public opinion’’ may violate the legislative lobbying prohibition. In Christian Echoes National Ministry, Inc. v.

United States, 470 F.2d 849 (10th Cir. 1972), the organization in

question produced religious radio and television broadcasts, distributed publications, and engaged ‘‘in evangelistic campaigns and

meetings for the promotion of the social and spiritual welfare of the

community, state and nation.’’ Id. at 852. The court found the publications attempted to influence legislation ‘‘by appeals to the public to react to certain issues.’’ Id. at 855.106
124

107The IRS has also concluded that an organization formed to ‘‘facilitate’’ the inauguration of

a state’s governor-elect and the ‘‘orderly transition of power from one political party to another

by legislative and personnel studies’’ violated the prohibition on attempting to influence legislation. G.C.M. 35473 (Sept. 10, 1973). The IRS ‘‘saw no logical way to avoid concluding that [the

organization’s] active advocacy of a proposed legislative program requires it to be [classified as

an action organization. * * *]’’ See also Rev. Rul. 74–117, 1974–1 C.B. 128.

Under the expenditure test, ‘‘grassroots lobbying’’ is ‘‘any attempt

to influence legislation through an attempt to affect the opinions of

the general public or any segment thereof.’’ Treas. Reg. § 56.4911–

2(b)(2)(i). Such a communication will be considered grassroots lobbying if it: (a) refers to specific legislation, (b) reflects a view on

such legislation, (c) [e]ncourages the recipient to take action with

respect to such legislation.

Treas Reg. § 56.4911–2(b)(2)(ii).107

(c) Definition of ‘‘Substantial’’

A bright-line test for determining when a ‘‘substantial’’ part of an

organization’s activities are devoted to influencing legislation does

not exist. Neither the regulations nor case law provide useful guidance as to whether the determination must be based on activity or

expenditures or both. In Seasongood v. Commissioner, 227 F.2d 907

(6th Cir. 1955), the court held that attempts to influence legislation

that constituted less than five percent of total activities were not

substantial. The percentage test of Seasongood was, however, explicitly rejected in Christian Echoes National Ministry, Inc.

The political [i.e. legislative] activities of an organization

must be balanced in the context of the objects and circumstances of the organization to determine whether a

substantial part of its activities was to influence legislation. (citations omitted.) A percentage test to determine

whether the activities were substantial obscures the complexity of balancing the organization’s activities in relation

to its objects and circumstances.

Id. at 855. Yet in Haswell v. United States, 500 F.2d 1133, 1145

(Ct. Cl. 1974), the court determined that while a percentage test

is not the only measure of substantiality, it was a strong indication

that the organization’s purposes were no longer consistent with

charity. In that case, the court concluded that approximately 20

percent of the organization’s total expenditures were attributable to

attempts to influence legislation, and they were found to be substantial. Id. at 1146.

The IRS has characterized the ambiguity over the meaning of

‘‘substantial’’ as a ‘‘problem [that] does not lend itself to ready numerical boundaries.’’ G.C.M. 36148 (January 28, 1975). In attempting to give some guidance on the subject, however, the IRS said:

[t]he percentage of the budget dedicated to a given activity

is only one type of evidence of substantiality. Others are

the amount of volunteer time devoted to the activity, the

amount of publicity the organization assigns to the activity, and the continuous or intermittent nature of the organization’s attention to it.
125

(d) Circumstances under which an organization’s ‘‘objectives

can be achieved only through the passage of legislation’’

The Regulations require that when determining whether an organization’s objectives can be achieved only through the passage of

legislation that ‘‘all the surrounding facts and circumstances, including the articles and all activities of the organization, are to be

considered.’’ Treas. Reg. §1.501(c)(3)–1(c)(3)(iv). There is little additional IRS or court guidance on the subject. In one of the few comments on this section of the Regulations, the IRS said in G.C.M.

33617 (Sep. 12, 1967) that an organization that was ‘‘an active advocate of a political doctrine’’ was an action organization because

its objectives could only be attained by legislation. In its publications, the organization stated that its objectives included:

the mobilization of public opinion; resisting every attempt

by law or the administration of law which widens the

breach in the wall of [redacted by IRS] working for repeal

of any existing state law which sanctions the granting of

public aid to [redacted by IRS]; and uniting all ‘patriotic’

citizens in a concerted effort to prevent the passage of any

federal law [redacted by IRS]. * * *’’

By advocating its position to others, thereby attempting to

secure general acceptance of its beliefs; by engaging in

general legislative activities to implement its views; by

urging the enactment or defeat of proposed legislation

which was inimical to its principles: the organization

ceased to function exclusively in the educator’s role of informant in that its advocacy was not merely to increase

the knowledge of the organization’s audience, but was to

secure acceptance of, and action on, the organization’s

views concerning legislative proposals, thereby encroaching

upon the proscribed legislative area.

In Rev. Rul. 62–71, 1962–1 C.B. 85, an organization was formed

‘‘for the purpose of supporting an educational program for the stimulation of interest in the study of the science of economics or political economy, particularly with reference to a specified doctrine or

theory.’’ It conducted research, made surveys on economic conditions available, moderated discussion groups and published books

and pamphlets. The research activities were principally concerned

with determining the effect various real estate taxation methods

would have on land values with reference to the ‘‘single tax theory

of taxation.’’ ‘‘It [was] the announced policy of the organization to

promote its philosophy by educational methods as well as by the

encouragement of political action.’’ Id. The tax theory advocated in

the publications, although educational within the meaning of section 501(c)(3), could be put into effect only by legislative action.

Without further elaboration of the facts involved or how the theory

could only be put into effect through legislative action, the IRS

ruled the organization was an action organization, and thus not operated exclusively for an exempt purpose.

In G.C.M. 37247 (Sept. 8, 1977), the IRS discussed whether a organization whose guiding doctrine was to propagate a ‘‘nontheistic,

ethical doctrine’’ of volunteerism could be considered a 501(c)(3) or-
126

ganization. The ‘‘ultimate goal’’ of the guiding doctrine was ‘‘freedom from governmental and societal control.’’ According to the IRS:

[t]his objective can obviously only be attained legally

through legislation, including constitutional amendments,

or illegally through revolution. If [the organization] should

advocate illegal activities, then it is not charitable; if it advocates legal attainment of its doctrine’s goal through legislation, then it is an action organization.

The IRS did not conclude that organization was an action organization, only that there was such a possibility and further investigation was warranted. Research has not uncovered further information about this case.

d. To Satisfy the Operational Test, an Organization Must Not

Violate the ‘‘Private Inurement’’ Prohibition

To qualify for tax-exempt status, section 501(c)(3) provides that

an organization must be organized and operated so that ‘‘no part

of [its] net earnings * * * inures to the benefit of any private

shareholder or individual.’’ The Regulations add little clarification

to this provision other than saying that ‘‘[a]n organization is not

operated exclusively for one or more exempt purposes if its net

earnings inure in whole or in part to the benefit of private shareholders or individuals.’’ Treas. Reg. §1.501(c)(3)–1(c)(2).

Although the private benefit and private inurement prohibitions

share common and often overlapping elements, the two are distinct

requirements which must be independently satisfied. American

Campaign Academy, 92 T.C. at 1068. The private inurement prohibition may be ‘‘subsumed’’ within the private benefit analysis, but

the reverse is not true. ‘‘[W]hen the Court concludes that no prohibited inurement of earnings exists, it cannot stop there but must

inquire further and determine whether a prohibited private benefit

is conferred.’’ Id. at 1069. It should be noted that the private

inurement prohibition pertains to net earnings of an organization,

while the private benefit prohibition can apply to benefits other

than those that have monetary value. Furthermore, unlike with the

private benefit prohibition, the prohibition on private inurement is

absolute. ‘‘There is no de minimis exception to the inurement prohibition.’’ G.C.M. 39862 (Nov. 22, 1991).

The IRS has described ‘‘private shareholders or individuals’’ as

‘‘persons who, because of their particular relationship with an organization, have an opportunity to control or influence its activities.’’

Id. ‘‘[I]t is generally accepted that persons other than employees or

directors may be in a position to exercise the control over an organization to make that person an insider for inurement purposes.’’

Hill, F. and Kirschten, B., Federal and State Taxation of Exempt

Organizations 2–85 (1994). ‘‘The inurement prohibition serves to

prevent anyone in a position to do so from siphoning off any of a

charity’s income or assets for personal use.’’ G.C.M. 39862 (Nov. 22,

1991). Furthermore, the IRS has stated that:

[I]nurement is likely to arise where the financial benefit

represents a transfer of the organization’s financial resources to an individual solely by virtue of the individual’s
127

relationship with the organization, and without regard to

accomplishing exempt purposes.

G.C.M. 38459 (July 31, 1980). Also IRS Exempt Organizations

Handbook (IRM 7751) §381.1(4) (‘‘The prohibition of inurement in

its simplest terms, means that a private shareholder or individual

cannot pocket the organization’s funds except as reasonable payment for goods or services’’); and Hopkins, supra, at 267 (Proscribed private inurement ‘‘involves a transaction or series of transactions, such as unreasonable compensation, unreasonable rental

charges, unreasonable borrowing arrangements, or deferred or retained interests in the organization’s assets’’).