Contribution By Nonprofit Economic Development Corporation Questioned

The Portage Economic Development Corporation on whose board the city's mayor, its city planner and city attorney serve, made a $500 campaign contribution to the re-election of Mayor Olga Velazquez (D) according to the Northwest Indiana Times. Typically, local governments establish these economic development agencies to act as an arm of the city in a quasi-governmental fashion and provide them with government financing. PEDCO's executive director defended the campaign contribution, claiming nonprofits are permitted to spend up to 20% of their expenses on lobbying, which is something altogether different from campaign contributions. He says because the contribution was made to participate in a golf outing, it did not view it as a campaign contribution to the mayor's re-election campaign.

Executive Director Bert Cook said his organization's decision to take part in Velazquez's Sept. 19 golf outing was for the purpose of networking among the city's business and community leaders.

"We weren't looking at it as a campaign contribution," he said.

Even if that were the case, Cook said his accountants assured him Tuesday the nonprofit has the legal right to spend up to 20 percent of its annual total expenditures on lobbying. The contribution for the golf foursome was taken from the marketing portion of the budget, which is made up of private contributions and other nontax dollars.

Cook said he intends to re-evaluate the decision to take part in the campaign fundraiser and probably will steer clear of this type of event in the future . . .

Velazquez said PEDCO's participation in the golf outing was a legitimate expense and any questions being raised are just a diversion from the real issues in the mayoral race.

"Let's get back to the issues of this campaign," she said . . . 

If that's not disturbing to you, consider the fact that the Portage Township School Corporation purchased a $500 ticket to that same golf outing fundraiser for the mayor out of its athletic department budget.

The Portage Township School Corp. also is re-evaluating a decision by its high school athletic department to take part in the same golf outing for a contribution of $500.

I'm not sure who is advising these entities that it is perfectly okay to make campaign contributions out of a nonprofit's budget or a school corporation's budget, but I'm pretty sure it's illegal. It's necessary to set up separate political action committees that are funded separately and operated separately in order to engage in partisan political activities. At any rate, economic development corporations have stayed above the political fray for the most part in this state and attempted to appear as nonpartisan as possible, primarily so they could justify continued government financial support. For this reason, there have been concerns raised about Indianapolis merging the Chamber of Commerce with the City's economic development arm, in large part, because the Chamber has historically endorsed and supported candidates for political office. As for the school corporation, I've never heard of a school corporation thinking it could legally support a candidate in a political race with a contribution. It looks like the State Board of Accounts has some educating to do.