American Campaign Academy v. Commissioner
| Decision Date | 16 May 1989 |
| Citation | 92 T.C. 1053 |
| Court | U.S. Tax Court |
Gerald H. Sherman and Deborah M. Beers, for the petitioner.
Henry G. Salamy and Joan R. Domike, for the respondent.
OPINION
Petitioner seeks a declaratory judgment under section 7428(a) that it is exempt from Federal income taxation under section 501(a) as an organization meeting the requirements of section 501(c)(3). Further, should we declare petitioner to satisfy the requirements of section 501(c)(3), we are requested to also determine whether petitioner is classified as "other than a private foundation" by reason of sections 509(a)(1) and 170(b)(1)(A)(ii). Based upon our holding that petitioner is nonexempt undersection 501(c)(3), we do not reach the latter issue.
Pursuant to Rule 122, the case was submitted for decision with the stipulated administrative record, as defined in Rule 210(b)(11). For purposes of this proceeding, we accept the facts and representations contained in the administrative record as true and incorporate them herein by this reference. Petitioner has exhausted its administrative remedies within the Internal Revenue Service as required by section 7428(b)(2) and Rule 210(c)(4), received a final adverse ruling mailed on December 15, 1987, and invoked the jurisdiction of this Court by petition filed March 11, 1988.
Petitioner, American Campaign Academy (also referred to hereinafter as petitioner or the academy), is a Virginia corporation incorporated by Jan W. Baran, General Counsel of the National Republican Congressional Committee, on January 24, 1986, exclusively for charitable and educational purposes, including:
A. Organizing and operating a school to train individuals for careers as campaign managers, communications directors, finance directors or other political campaign professionals;
B. Sponsoring research and publishing instructional materials, reports, newsletters, pamphlets or books relating to the conduct of a political campaign;
C. Sponsoring research, to include public opinion research or polling, concerning the public's attitude toward political issues or problems and the publishing of reports, pamphlets, books or other materials to be made available to the general public;
D. Elevating the standards of professionalism, ethics and morality that prevail in the conduct of campaigns for election to public office at the national, state and local levels.
At the time petitioner filed its petition, its principal place of business was located in Arlington, Virginia.
As its primary activity, petitioner operates a school to train individuals for careers as political campaign professionals. Petitioner's school maintains a regularly scheduled curriculum, a regular faculty, and a full-time enrolled student body at the facilities it occupies. Petitioner claims that it is the only school to exclusively offer a highly concentrated and extensive campaign training curriculum. Similar campaign management courses are offered by American University, Kent State University, Westminster College in Utah, Georgia State University, North Florida State, San Francisco State College, University of California-Davis, University of Southern California and Bernard Baruch College in New York. Seminars offering campaign training are also sponsored by such groups as the Republican National Committee Campaign Management College, United States Campaign Academy, The Leadership Institute, Committee for the Survival of a Free Congress, and the Democratic National Committee. Petitioner has no connection with any of these training programs.
Prior to the organization of the academy, the National Republican Congressional Committee (NRCC), an unincorporated association comprised of Republican members of the United States House of Representatives, sponsored programs designed to train candidates and to train and subsequently place campaign professionals in Republican campaigns. A campaign professional works for a candidate. Campaign professionals typically occupy such strategic campaign positions as communications director, finance director, or campaign manager.
The academy stated on its Application for Recognition of Exemption (Form 1023) that it was an "outgrowth" of the course of instruction run by the NRCC. NRCC contributed physical assets such as furniture and computer hardware to the academy. Two of the academy's six full-time faculty were previously involved in the NRCC's training program. One of the academy's three initial directors, Joseph Gaylord, is the Executive Director of the NRCC. Another initial director, John C. McDonald, is a member of the Republican National Committee.
NRCC continues to offer training for Republican candidates and staff members of incumbent Republican congressmen. The administrative record does not reveal to what extent, if any, NRCC continues to offer training to campaign professionals.
The academy program for training campaign professionals differs from its predecessor NRCC program. Significantly, unlike the NRCC, the academy limits its students to "campaign professionals." The academy does not train candidates nor participate in, nor intervene in, any political campaign on behalf of any candidate. Neither does the academy engage in any activities tending to influence legislation. Moreover, while the academy actively refers resumes and provides recommendations of graduates to requesting campaigns, it assumes no formal placement responsibilities. Nonetheless, in June 1986, after the first 1986 primary elections were completed, the academy included in its newsletter (see discussion infra) the following invitation to all graduates:
LOST YOUR PRIMARY?
Hate your candidate? Can't deal with the weather? The primary's over, you lost. NEED A NEW JOB??
Having troubles finding that new job because someone's unfairly trashing your work? Nobody's listening to your side of the story? NEED HELP?
Call your friends at the ACA.
Just because we don't send you checks on Fridays doesn't mean we don't still stand ready to try to help you out of those sticky professional wickets.
Think about it -- it's in our best interest that you do well. The success of the Academy can only be based on the contributions of our students. Our futures are inextricably linked.
* * * *
Thanks to you all and the good work you're doing out there on the battlefields of democracy, the world is pretty aware that the Academy exists. More than that, that same world does call us looking for good folks to fill their urgent campaign needs.
If the need arises, call us up, send us a current resume, we'll see what we can do about getting you off the streets.
At least 15 graduates secured new campaign positions with Congressional and Senatorial candidates following publication of petitioner's invitation.
No training materials developed by the NRCC are used by the academy. Rather, the academy has generally hired its own faculty, developed its own courses, and enhanced the training curriculum. The academy's faculty consists of 5-6 full-time members and approximately 141 adjunct members. Training materials used by students include compilations and handouts, published textbooks, trade books and articles, and faculty-prepared lecture materials.
The academy has more applicants for admission than its physical facilities can accommodate. Thus, its admissions criteria are competitive. The academy seeks to admit applicants who have a strong commitment to professional campaign involvement on the Congressional level. The academy believes committed applicants will possess at least four of the following qualifications:
1. Paid campaign experience. Applicant should have worked on a political campaign as a campaign staff member with considerable responsibility on the local, state or federal level.
2. Volunteer campaign experience. Applicant should have volunteered time to a campaign to assist the efforts of the campaign.
3. Journalism/Public relations background. Applicant should have either a journalism background or practical experience working for a newspaper, radio or television station, advertising agency or political consulting firm.
4. College graduate.
5. Political experience. Applicant should have worked in a congressional office, state office, trade association, state or national political committee.
6. Civic responsibility. Applicant should have actively served in a civic/volunteer organization or campus political organization.
7. Fundraising experience. Applicant should have worked in a fundraising campaign (for an organization, school, political campaign, etc.), preferably in a management or direct solicitation role.
8. Organizational experience. Applicant should have played a principle role in the production of a program, event, organization, etc., which required coordinating people and resources in a defined time frame.
Each applicant provides the academy with the details of his or her qualifications in each applicable category. In addition, applicants are asked to provide at least two political and two professional references. And while applicants are not required to formally declare their political affiliation to attend the academy, such affiliations may often be deduced from the campaign experiences and political references contained in the application. Applicants may freely volunteer their political party affiliation. The academy maintains no records indicating the number of applicants who are Republicans, Democrats, associated with other parties, or independent.
Completed applications for admission to the academy are evaluated by an admissions panel. The academy has no requirement that a member of the admissions panel be affiliated with any particular political party. However, the academy believes that a substantial number of the members of its admissions panel are...
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