Legislators from California, Texas, and Illinois gathered last week to participate in the Independent Voter Project Business and Leadership Conference in Hawaii. Also in attendance were representatives from key business sectors including energy, high tech, bio tech, and manufacturing.
The stated goal of the annual conference is to create a space for open dialogue and candid policy discussion. Its location, alone, always stirs objections from Common Cause and the media. But, this year, the conference also sparked a challenge concerning IVN.us’ funding.
John Hrabe, on behalf of Cal Watchdog, a blog funded by the libertarian 501c3 nonprofit Pacific Research Institute, posted the critical email on IVN’s message center last Thursday. [Update: Mr. Hrabe, although a regular contributor, asserts that his inquiry was not made on behalf of Cal Watchdog. See discussion below.]
Hrabe’s questions are important ones given the increasing role of nonprofit entities in both journalism and in politics. IVP, a 501c4 nonprofit, is the founder and a principal funder of IVN.us.
IVP also sponsors conferences covering a wide spectrum of public policy issues including the annual Business and Leadership Conference that just wrapped up last week.
In the spirit of the IVN Etiquette©, we are publishing IVP’s response to Mr Hrabe’s email.
Here is Mr. Hrabe’s message:
---------- Forwarded message ----------
From: John Hrabe <email address redacted>
Date: Thu, Nov 21, 2013 at 12:43 PM
Subject: Media Request: Hawaii Trip
To Whom It May Concern:
I'm working on a piece about the Hawaii conference and the Independent Voter Project.
Can you share a list of the California legislators on the 2013 trip?
According to the LA Times, "Howle said rules of the conference include
a ban on lobbying lawmakers and on discussing specific bills." Can you
please share documentation to substantiate this claim? Were
participants given a handout with the list of rules? What are the
repercussions for breaking the rule?
Can you supply a copy of the most recent tax return for the organization?
How does the organization justify spending $280,872 on a website that
appears to be a basic web template?
How does the organization justify its tax exempt status when hundreds
of thousands of dollars go toward the enrichment of the board of
directors' family members?
IVP CO-Chair Jeff Marston responded:
Thanks for contacting us. Your questions are premised on a number of inaccurate assumptions that we will respond to in full. Let’s start with your organizational issues.
You ask: How does the organization justify spending $280,872 on a website that appears to be a basic web template?
Perhaps you were looking at the wrong site. IVN.us is a sophisticated news site, recognized by every major search engine. It is far more frequently visited than is Calwatchdog.com, for example.
Specifically, IVN.us is custom built on a responsive bootstrap platform. It is the same platform that powers Twitter. It is anchored by a custom built edit-flow system. IVN's unique backend is designed specifically for an open publishing environment that allows independent contributors (including you or Mr. Reed or Mr. Perkins) to log into and publish -- as long as the author adheres to the IVN Etiquette©.
You can access IVN's archive of over 1,400 original articles published since the IVN.us launch in 2011. You will find a wide range of subjects and a broad spectrum of opinion.
Currently, IVN enjoys over 150,000 organically generated unique visitors and more than 250,000 page views per month. In the weeks leading up to the 2012 election, supported by a modest promotional budget, IVN saw more than 1 million visitors per week.
By comparison, Calwatchdog.com sees less than 50,000 visitors per month, despite being an affiliate of the larger Watchdog.org organization.
On Facebook, Calwatchdog has 17,000 “likes” vs. 47,000 for IVN. In the more significant category of engagement, the contrast is even sharper, where IVN outscores Calwatchdog 8,300 to 8. [Calwatchdog v. Independent Voter]
The payment you reference is to IVCMedia which, in addition to development, is responsible for the production of daily, original, national news coverage focused on subjects of interest to our target audience: independent and independent-thinking voters looking for diverse opinions and civil debate.
IVP contracted services to IVCMedia and its subcontractors include:
-Coordination of a state-by-state litigation strategy (see http://endpartisanship.com)
-All IVN editorial, management, social media, administration, advertising, marketing, content and video production.
-IVP presentations, offline communications, data management, IT and accounting.
As a modestly budgeted nonprofit, IVP has embraced a private sector business model that relies on performance-based contracting, minimum overhead, and thousands of volunteer hours.
IVN.us significantly outperforms sites such as No Labels, California Forward, and Calwatchdog, as well as all of the political blogs known to Sacramento watchers.
This is accomplished on a total budget that is less than the $431,000 that Calwatchdog’s publisher pays to its CEO (see below).
IVP benefits from a young, tech-savvy team willing to take and share risk. Our donors include sophisticated technology developers and investors. Their estimate is that a market-rate development cost for the IVN platform would run well past $5,000,000. Our development costs have been less than a tenth of that.
You ask: How does the organization justify its tax-exempt status when hundreds of thousands of dollars go toward the enrichment of the board of directors' family members?
The assertion is flatly untrue.
We strictly adhere to IRS rules for 501c4's — including those limiting compensation. IVN.us operates according to the more restrictive 501c3 rules and is therefore eligible for both 501c4 and 501c3 funding.
We assume this question is directed to the fact that IVCMedia is owned by Chad Peace, the son of IVP Co-chair Steve Peace.
First, let's correct your numbers.
At no time was his compensation or the compensation of anyone else equal to "hundreds of thousands of dollars" or even ONE hundred thousand dollars.
Payments to IVCMedia include compensation for the work of employees, subcontractors, and vendors of IVCMedia. Chad’s compensation is performance-based and has not exceeded $5,000 in any month.
Chad Peace, and his strategic partners, conceived of, developed and successfully launched IVN.us. It has proven to be an effective means to broaden IVP's ability to meet its IRS approved nonprofit mission.
In addition to his role in overseeing IVN.us, Chad has directed IVP's legal strategy and the coalition-building that led to the launch of Endpartisanship.org.
Candidly, we appreciate the entire team's willingness to take time that could be spent on more lucrative clients in favor of helping us make some sense out of our troubled political system.
In addition to IVCMedia’s work, IVP benefits from an audited internship program with the University of San Diego School of Law.
This program requires supervision by a member in-good-standing of the California Bar Association. Chad and Noel Ignatios, both members of the Bar, have provided this supervision pro bono. Full disclosure: Noel is a lawyer in private practice and is married to Breton Peace, who is a named partner at the international law firm Peace/Crowell (see PeaceCrowell.com).
Our mission at IVP is sincerely independent, transparent and inclusive. IVN’s diverse content matches our mission. Rather than promote a single view, we try to encourage civil debate. This is also the goal of our conferences.
You ask: Can you supply a copy of the most recent tax return for the organization?
You will note that our major contributors include diverse corporate entities such as Eli Lilly, Pacific Gas and Electric, the correctional officers labor union CCPOA, and high wealth individuals, such as Charles Munger Jr., John Moores, and Board Member Steve Peace.
IVP has been criticized by the left for accepting corporate contributions, by the right for our labor union support and by others because of the support from high wealth individuals.
Private news organizations sell advertising to the same groups. PBS collects funds from the same donor base, in addition to soliciting and accepting government funding. News organizations and reporters both sponsor and attend conferences as paid speakers.
As the news business has been squeezed financially, more and more news organizations have scurried into the sensationalist “watchdog” space. With IVN we are trying to do just the opposite. We are trying to recreate the plain old news space, provide variety and civility. We are steadily cultivating an educated and open-minded readership.
Our contributors, Board Members, reporters and readers include conservatives, liberals, Democrats, Republicans, Libertarians, Greens, and unaffiliated voters.
What we share is the belief that the right to vote is fundamental to citizenship and that this right should not be abridged or conditioned based upon an obligation to join any organization.
Our Board members are volunteers. We each have business and political activities outside of and unrelated to IVP.
We are often on opposites sides of candidates and issues and we encourage IVN to seek out viewpoints from all sides.
I supported Proposition 32 funded in large part by our contributor Charles Munger, Jr. Fellow Board member Steve Peace did not. IVN carried articles expressing both points of view.
During the Prop 14 campaign in 2010, the “No on 14” campaign had more than twice as much content on IVN than the “Yes” campaign despite the fact that IVP wrote the language contained in Prop 14 (open primary).
The IVP mission is transparent. Look at our archive of IVN news articles. IVP does not dictate content on IVN. We support nonpartisan open primaries because it is a process that ensures that elections are decided when the most people vote. We are not seeking a “left” or “right” or “moderate” result. We seek only civil debate and the protection of the voting rights of each individual voter.
You have looked at our IRS filing, drawn some inaccurate conclusions and asked some questions that we have responded to openly. To put your questions in perspective, we took a look at your 501c3 IRS filing as well. It raises some questions that we assume also have reasonable answers that we request that you provide:
-Please explain the salary of $421,000 to President & CEO of PRI Sara Pipes.
While we have no quarrel with this figure, the IRS generally finds Nonprofit CEO compensation above $150,000 to be questionable and a "high value" audit target.
-Please explain Laffer Associates receipt of a $165,000 honorarium.
While we have great respect for Dr. Laffer, we note that he is a member of the PRI Board of Directors. Ironically, Dr. Laffer in 2009 agreed to attend the IVP Business and Leadership Conference in Hawaii for a fee of $35,000 plus expenses. At the time IVP could not justify the cost of a private plane from Florida necessary for Dr. Laffer to be able to keep his busy schedule.
-How does your organization justify such a "robust" overhead?
Your publisher has 7 executives that make between $107,000 and $180,000 a year. By contrast IVP has no paid executive staff, no one associated with the organization makes close to $100,000 from IVP and all IVP Board Members are volunteers.
-What is your explanation for the small Calwatchdog.com footprint?
PRI spent $400,000 on advertising and promotion, $40,000 more than the entire IVN news operation budget, yet Calwatchdog appears to have a reach less than 20% than that of IVN.
We also have questions regarding the expenditures related to your website. It appears that it is a standard "cookie cutter" blog. Perhaps, just as you misidentified our platform, we have missed something.
- How was it built?
- What was the budget?
- Who built it?
- Who generates the content?
- Does it include ghostwritten content from Keybridge Communications?
We noted a $235,000 payment to Keybridge who reportedly (Mother Jones) ghostwrote healthcare articles paid for by PRI but published under a third party name.
Finally, Calwatchdog.com bills itself as "independent" but it is, in fact, a libertarian publication. We have no problem with the promotion of the libertarian view. We have a valued libertarian readership as well as libertarians involved in our organization.
In fact, Chad Peace began his online political involvement organizing the early Tea Parties, launching “money bombs” for Ron Paul, and then creating the draft Rand Paul movement in Kentucky. But IVN supports the IVP “process” mission not a philosophical one.
-Why the cloak and dagger at CalWatchdog?
-Why use the word “independent” rather than “libertarian”?
Now, to your questions concerning the IVP conferences.
The legislative attendees at the Business and Leadership Conference are required to report their participation and all expenses incurred annually as a matter of public record. Some attendees pay all of their own expenses. Some are reimbursed for travel by IVP. The FPPC regulates this process. No public funds may be used. The filing occurs in March, well before election time.
All attendees participated in structured roundtable discussions covering 5 subjects. The subject matters this year were Public Safety, Energy, Bioscience and Innovation, Healthcare, and Economic Development.
All legislative participants attended all five roundtables in rotation.
In addition to these breakout sessions, the following full-group panel presentations were made: (1) Life Sciences and Biotechnology: Texas vs. California, (2) Diabetes: The State of the States, (3) Atmospheric Rivers and Extreme Weather Prediction, (4) Educating Tomorrow’s Students To Compete in a New Technology World, (5) California Campaign Finance Reform and Re-Organizing the Legislative Session.
With respect to our prohibition on discussing pending legislation, the participants in this conference have numerous other opportunities to discuss bills. They are informed of the format and the prohibition before agreeing to participate and they like it.
Dan Howle reviews all of the presentation materials in advance. We have never found that anyone had any incentive to break the rule. If it were to occur, we would simply ask them to stop and not include them in future conferences.
To be clear, this is our rule, there is no legal prohibition on such discussions. We simply find that the discussions are more productive and more interesting as a result of this rule.
We understand that there is fundamental disagreement about the conference because of its location and because of the social time in the late afternoon and evening.
This is something that we are likely to simply continue to disagree about. We encourage legislators to bring their families because, as former legislators ourselves, Steve Peace and I know how valuable it is for Republicans and Democrats to spend time together with their families, without the artificialities of politics.
What they often find is that there are real people hiding behind the political posturing that, unfortunately, is often imposed upon them by a strident and shallow public dialogue.
Our mission is rooted in the promotion of civil discourse. This does not mean avoidance of conflict, or a watered-down “centrist” monologue.
On the contrary, we find that the better folks get to know each other, the more comfortable they are letting loose and we saw some spirited examples of this at the conference and during the unscheduled time.
Finally, let me extend a formal invitation for you and your colleagues to submit articles for publication on IVN.us. As journalists, you will find the proprietary back-end to be user friendly and the opportunity to have your work included in an intellectually competitive environment rewarding.
Thank you, John, for your interest.
Co-chair Independent Voter Project
IVP sponsors multiple conferences throughout the year covered by IVN, the most recent in Sacramento on Privacy Rights and at UC Merced on Fracking. A Conference on Water will take place in December at the Maddy Center at Fresno State. Conferences in Sonoma, San Diego and LA are scheduled for the spring.
But, the annual Business and Leadership Conference consistently draws criticism, in particular from Common Cause and the media, principally because of its Maui locale.
"I understand the criticism and there is nothing in life that is free of abuse. However, getting Republicans and Democrats together with their families is almost as important as the open, free-wheeling discussions that drive the conference each morning," said IVP Co-Chair Steve Peace.
California Assembly Republican Leader Connie Conway paid her way to attend the conference, "I wish we could do a lot more of what we're doing here, back in Sacramento," she said during closing statements. "It is a tremendous learning experience and it doesn’t hurt to have candid, open dialogue," she concluded.
Co-chair Jeff Marston points to the IVN Etiquette© as the cornerstone of the conference success. "There is nothing being said here that isn't discussed elsewhere. The difference is tone and depth. It often gets heated in the morning. But, when legislators get to know each other, and their families, they tend to find more common ground than they thought possible."
You can learn more about the folks behind IVN.us by clicking About Us. Below is a rundown on IVP’s oversight and leadership team.
Jeff Marston is a principal in Marston and Marston, a public relations firm in San Diego. He currently serves or has served on numerous boards and commissions in the public, private and non-profit sectors in such areas as the arts, economic development, education, energy, environment, healthcare, water and youth development.
Mr. Marston overseas IVP’s community relations.
Steve Peace served as an Executive Producer and Chief Financial Officer for Four Square Productions before the company was acquired in 2001. He continues to serve on the Board of family-owned Killer Tomato Entertainment, Inc. which manages the Killer Tomato® films, cartoons and related intellectual property rights (see Killertomato.com).
Mr. Peace also serves as Chairman of the Board of Authentify, Inc., a Chicago-based Internet security company. He is a former Director of Finance for the State of California and provides consulting services through JS Peace and Associates.
But, Killer Tomato® fans know him as Wilbur Finnletter, the character he played in Four Square’s series of Killer Tomato® feature films and then carried into the Fox Children’s Network cartoons “Attack of the Killer Tomatoes”© for which he also served as Executive Producer.
Mr. Peace is a principal financial donor to IVN.us and oversees fundraising.
Mr. Marston and Mr. Peace both served in the California legislature more than a decade ago; Marston as a Republican, Peace as a Democrat.
Dan Howle, IVP Co-Founder, is a former senior legislative staffer in California. He has also co-owned and operated a custom woodworking and cabinet-manufacturing firm in Northern California. He is currently a government relations executive for Eli Lilly and Co. based in Nevada and serving Texas, the Far West, and California.
Mr. Howle has more than 30 years experience in organizing public policy conferences and oversees all IVP conference programing.
IVCMedia and CreativeRound have been strategic partners in creating and producing the IVN.us network. The two companies provide media development and management services for companies, law firms, and organizations as well as political communication strategies.
IVN.us is an open access journalism platform. The opinions expressed on IVN.us are those of the writers and the writers alone. A diversity of opinion is encouraged, including those that may be in conflict with IVP’s support for Nonpartisan Open Primaries.
The only editorial control exercised over content is adherence to the IVN Etiquette©.
Update: The following e-mail exchange occurred after the original publication of this article. It has been published below to clarify information concerning the exchange presented above.
Mr. Hrabe’s response:
From: John Hrabe <email address redacted> To: Jeff Marston <email address redacted> Sent: Monday, November 25, 2013 12:59 PM Subject: Re: IVP Conference Info
Thanks for the response.
To clarify, I freelance for CalWatchdog, but am not a salaried employee. That's why I never referenced CalWatchdog in my first request. I have absolutely no involvement with any editorial or management decisions at CalWatchdog. CalWatchdog also declines stories that I pitch them. I don't know yet whether this story will be picked up by CalWatchdog.com.
As an individual, I would be interested in learning more about submitting articles to IVN.us.
As a follow up, why won't the organization simply disclose the names of the legislators involved rather than forcing the public to wait until March 2014?
IVP CO-Chair Jeff Marston responded:
The FPPC has very precise regulations governing disclosure. The legislators are informed in writing of those rules when invited.
FPPC rules require them to exercise the option of paying some or all of the expenses. If they pay all the expenses then they do not report. Each legislator is sent a summary of what they are required to report within 7 days after the conference is over. Some pay all, some pay airfare, some pay airfare and other expenses. Republican Leader Connie Conway, for example, determined ahead of time that she would pay all of her own expenses and authorized the use of her quote in the IVN.us article posted this morning.
All the names of legislators who accept expenses are disclose in compliance with California law and this disclosure is made well before any election. It would be inappropriate for us to disclose without complete information. No public purpose is served by failing to adhere to the rules in order to satisfy an artificial deadline. Each attendee is free to adopt their own policy regarding earlier or more broad disclosure.
I also note that you claim that you have not gotten approval from Calwatchdog "yet" to publish your story and that you are not a salaried employee. I will note that your story on Democratic Senate Leader Darrel Steinberg is the lead story this morning on Calwatchdog. Moreover, the record shows that you are a regular contributor to Calwatchdog and only appear periodically in other publications. Being paid by contract rather than salary, as you know, is more the norm than the exception these days. Specifically, these are you publications we are aware of:
# contributions to CalWatchdog in the last 5 months - 19
# contributions to Flashreport in the last 5 months - 8 (which are cross-posted from your original publications at Calwatchdog.com)
# contributions to Huff Po in the last 5 months - 1
# of contributions to OC Politics blog in the last 5 months - 1
If you do not know the answers to our questions concerning the extraordinarily high executive salaries at Calwatchdog's nonprofit sponsor or the explanation for the six figure honorarium to one of their Board members, please avail yourself of your good relationship with your editors and respond to my questions as forthrightly as I have responded to yours.
With respect to interest in reporting for IVN we welcome contributions from widest possible spectrum of political journalists. All published material must meet the IVN Etiquette(c). Please know that this requirement is strictly enforced.
Update: Hrabe says he made inaccurate claims independent of Calwatchdog:
From: John Hrabe <redacted> Date: November 25, 2013, 5:21:06 PM PST To: Jeff Marston <redacted> Subject: Re: IVP Conference Info Reply-To: John Hrabe <redacted> Jeff, I have notified you that this request was not made on behalf of CalWatchdog.com. This statement, therefore, is known to be false. John Hrabe, on behalf of Cal Watchdog, a blog funded by the libertarian 501c3 nonprofit Pacific Research Institute, posted the critical email on IVN’s message center last Thursday. Given your own rules of IVN Etiquette, I am requesting that this false statement be corrected. John
Further Update: More from Jeff and John
John, Your notification has been noted in the form of an update in the article on IVN.us. With all due respect, your request, relative to our rules of IVN Etiquette is curious. Rule number three is the necessity to substantiate sources. Your inquiry relative to how IVP justifies our tax exempt status when “hundreds of thousands of dollars go towards the enrichment of the board of directors’ family members” questions our tax exempt status based on a “given” that there is family enrichment going on here. Really? Where’d you get that from? Who or what is your source? I’d like to add that question to our list of things we’d like to know. Thank you. Best, Jeff
From: John Sent: Monday, November 25, 2013 8:18 PMTo: Jeff Marston Subject: Re: IVP Conference Info
Jeff,This is also a false statement. "Update: Hrabe says he made inaccurate claims independent of Calwatchdog:" I have not made inaccurate claims. Best, John
John, Per my note below…the inaccurate claim relates to the hundreds of thousands of dollars of “enrichment.” You are not questioning that as in, is that true? You are citing it as fact relative to your question about our tax exempt status. Best, Jeff