HAWAII: Anti-Gay Group May Lose Tax-Exempt Status Over Lobbying

The anti-gay Hawaii Family Forum is being challenged for spending far more on lobbying than is allowed by federal law. Pro-gay activists are calling for the group to lose its tax-exempt status over the amount spent to fight the state's still-pending civil unions bill, which awaits approval from the governor.

Under federal tax law, Hawaii Family Forum may use no more than 20 percent of its overall expenditures on lobbying. That figure is based on its size and the fact that it is a 501(c)(3) nonprofit charity and is exempt from income taxes and eligible to receive tax-deductible charitable donations. "We try to be very careful because we have to stay within a certain percentage," said Executive Director Dennis Arakaki, who took over as lobbyist for Hawaii Family Forum last year. Until last year the forum reported on its federal tax returns that it had spent virtually nothing on lobbying -- $2,000 in 2007 and nothing in 2008. Instead the bulk of its money went to "community education" and "dissemination of educational materials": $67,800 in 2008 and $134,400 in 2007.

But things changed when the civil unions issue heated up at the Legislature and Arakaki took over the job. Hawaii Family Forum spent $74,000 on lobbying in 2009, mostly for media advertising, according to an expenditure report Arakaki filed with the state Ethics Commission. To justify that much lobbying, the forum would need to show overall expenses of $370,000 in 2009 -- more than five times what it spent the previous year. "Where is that 80 percent that they're spending on charitable purposes?" asked Miyamoto. "They would have to be one of the most prominent charitable organizations in the state if they were devoting that much, and they're not."

The Hawaii Family Forum has requested an extension on filing its 2009 paperwork, no doubt to give them time to cook the books.

(Tipped by JMG reader Todd)