Nelly Bly Investigations
501(c)mania! The Burbank Chamber of Commerce – Part Two
Most of us are familiar with at least one type of IRS nonprofit designation. We look to donate to a 501(c)(3) nonprofit as they strive to serve a public good and we get a tax deduction for our donation. But there are other types of nonprofits in different 501(c) categories. These also don’t technically make a profit and they don’t pay taxes, but unlike most nonprofits that you know of, these seek to have political power and control over voters and through them impact our communities.
501(c)(3)’s are not allowed to be politically active. But other 501(c)’s are, and you should know some of the 501(c)’s in Burbank, how they are connected and how they are trying to influence you and your vote.
Let’s start with a discussion about 501(c)(6) organizations, and if you read THIS, you learned that the Burbank Chamber of Commerce is a 501(c)(6). What does that mean in regard to what it does and doesn’t have do?
“A 501(c)(6) membership-based nonprofit is an organization that exists to promote its members’ business interests, without the goal of making a profit. In addition, these organizations must make sure that no one individual or shareholder benefits financially from the organization’s income. While charitable nonprofits must serve a public good and be supported by the public, a trade association and similar organizations do not have to serve the public good.”
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Confidentially of donors can be guaranteed with a 501(c)(6):
“A nonprofit business group may also accept unlimited contributions from corporations, individuals, and labor unions without disclosing names or amounts of specific donations.”
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Of note, a business can deduct its Chamber dues from its taxes as a business expense.
What about political activities?
“501(c)(6) organizations may engage in unlimited lobbying in furtherance of their exempt purposes. However, a 501(c)(6) organization that engages in lobbying (and certain political activities) may be required to either:1) notify its members about the percentage of dues that are used for lobbying (and certain political activities) that are consequently nondeductible or 2) pay a proxy tax.”
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Does the Chamber do either one of these – let its members know that a portion of their dues is NOT deductible due to its political activities, or pay a proxy tax? Just curious. Because the actions the Chamber takes or doesn’t take will directly affects their members’ tax returns.
Here is the bottom line:
“501(c)(6) organizations may engage in political campaign intervention activities so long as such activities do not represent their primary activity. Interpreting the limitation with a high risk tolerance, some 501(c)(6) organizations spend 49% of their resources on electioneering.”
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So, just to say it out loud, up to 49% of the Chamber’s income can be spent on trying to influence elections.
What form has that influence taken? How has the Chamber acted in regard to decisions being made by Burbank voters?
Let’s talk about the failed 2018 Measure QS which was a proposed parcel tax to fund BUSD. It barely did not achieve the 2/3 margin of victory needed to pass as it received 64.33% of the vote. (BTW about 39,000 residents voted in 2018 as opposed to the almost 60,000 ballots cast in the November 2020 election. Stay engaged!)
After this 2018 election, the Chamber brass gave an interview to the Burbank Leader about how they wanted the School Board to approach the concerning loss of funding to our public schools. The headline reads:
And what exactly was this proposed tweak?
“Tom Flavin, the chamber’s chief executive, unveiled a plan during a school board retreat on Saturday that he says seeks “equity” by raising the amount homeowners and small businesses pay, lowering contributions from large businesses by setting a ceiling and incorporating a 12-year sunset clause, which was absent from Measure QS. “
The Chamber wanted this tax on the backs of homeowners and small businesses. They wanted to make sure that multi-billion dollar Burbank companies like Disney and Warner Bros paid as little as possible.
“If Burbank Unified officials agree to the chamber’s proposal, the business organization will fund a “Yes” campaign for a parcel tax next year.
“Of course, we want to see the parcel tax pass this time,” Flavin said. “We just want equity with our business community.””
There is a comment in the article from Superintendent Matt Hill:
““We feel that this would put a disproportionate burden on homeowners and businesses who own small properties.”
Everyone knew what was being proposed.
Of course, this all came with an ultimatum:
“If Burbank Unified officials agree to the chamber’s proposal, the business organization will fund a “Yes” campaign for a parcel tax next year.”
If BUSD didn’t agree to this “proposal”, well, too bad so sad.
The School Board did not incorporate the Chamber’s demand to add a tax cap for the City’s largest businesses in Measure I, the follow-up ballot measure voted on in 2020. The Chamber then did exactly what it threatened it would do and refused to support the School Board and the ballot measure.
Measure I lost by almost the same margin as QS. So much for Flavin’s statement, which bears repeating,
“Of course, we want to see the parcel tax pass this time.”
The failure of Measure I to pass resulted in the dire loss of funding to our schools and the resulting inability to match salaries in competing districts. We are still seeing this ripple effect of this election loss in the recent exodus in 2021 and 2022 of numerous well respected BUSD staff to better paying school jobs in places like Simi Valley. But hey, Disney and Warner Bros got to keep their billions.
At the same time that they did nothing to help pass the needed parcel tax, the Chamber worked to body slam Proposition 15, a statewide ballot measure also focused on bringing increased funding to public schools through increased property taxes for both residents and businesses.
Hey there, look who wrote an op-ed against Prop 15, noted Republican and past Chamber President Michael Cusumano:
https://myburbank.com/letter-to-the-editor-burbank-businessman-requests-no-vote-on-proposition-15/
The Chamber sure went all out:
