HSUS Fraud

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Groups allege HSUS fraud

HSUS leader defends group's lobbying efforts, tax-deductible status

By Wes Sander

Capital Press

An animal-owners organization is hoping to persuade the Internal Revenue Service to investigate whether political lobbying by the Humane Society of the United States is illegal.

HSUS's lobbying on national and state levels likely surpasses the boundaries set by its nonprofit status under the IRS code, said Susan Wolf, spokeswoman for the Sportsmen's and Animal Owners' Voting Alliance.

"Many of us who oppose HSUS legislation have felt for a long time that HSUS flaunts the privilege of being a nonprofit by manipulating funds into affiliated umbrella organizations," Wolf said.

The alliance also claims a conflict of interest by Michael Markarian, who serves as HSUS's chief operating officer as well as president of an affiliated lobbying charity, the Humane Society Legislative Fund.

Markarian said funds are not shared between the two organizations. Furthermore, when HSUS staff members perform work for the fund, those hours are billed to the fund separately, he said.

Markarian said HSUS's spending on lobbying is roughly 4 percent of its budget, keeping the organization within its limits. In 2008, HSUS reported that it spent about $4.2 million on lobbying, out of a total budget of nearly $100 million.

According to HSUS's 2008 tax return, the organization's efforts included a $2.25 million grant to Californians for Humane Farms, a committee that campaigned in favor of Proposition 2. That ballot measure, which passed in 2008, imposes restrictions on the confinement of farm animals.

Under IRS rules, a nonprofit can either register its lobbying expenditures, or it can meet an "insubstantial activities" test. While the IRS does not specify the limits of the term, HSUS believes its lobbying qualifies as insubstantial, Markarian said.

"We believe 4.3 percent by any definition is a small percentage of anyone's work," Markarian said.

The legislative fund is not bound by the same rules. That entity, termed a "social welfare" organization under IRS code section 501(c)(4), can spend all its money on lobbying. Donations are not tax-deductible.

Several charity watchdog groups monitor HSUS. One of them, Charity Navigator, has awarded the organization four stars, its highest rating, for the past four years.

"We feel this is an anemic campaign, and they're barking up the wrong tree," Markarian said. "We very carefully document our lobbying expenditures, and they're publicly available on our Web site."

But the Animal Owners' Voting Alliance calls attention to HSUS's claims of having pushed through hundreds of animal-rights laws, arguing that the charity must be surpassing its limits to sustain such activity.

"It hardly seems possible that HSUS can pay 26 or 28 state directors to constantly lobby legislatures, file numerous ballot initiatives yearly, some 50 pieces of state legislation, federal bills, pay federal lobbyists, and file three dozen or so lawsuits against USDA and federal agencies -- and still remain under allotted lobbying regulations," Wolf said.

An IRS spokesman declined to comment on the case.