Wednesday Jun 26

EXCERP T FROM Fighting for NOW: Diversity and Discord in the National Organization for Women By Kelsy Kretschmer: Splitting Satellites: Nonprofit Status and Schism in Social Movements

In 1970, after years of infighting and financial distress on its Legal Committee, NOW created the NOW Legal Defense and Education Fund (LDEF; later renamed Legal Momentum), a legally distinct organization that would be able to accept tax-exempt donations from donors and foundations. By 1977, NOW had further divided its functions to include a national political action committee (PAC) and a system of state-level PACs for lower-level feminist candidates. In 1986, NOW formed the legally distinct NOW Foundation, with the mission to raise money for NOW’s feminist educational campaigns. Each of these new divisions is a legally distinct organization, with their own governing system, goals, and, most importantly, state-sanctioned ways of raising money. Even NOW’s state-level chapters have created separate foundations to support their local work. By creating satellite organizations, NOW transformed from a single-membership organization into an organizational system, with the membership group operating as its controlling center and each new satellite group fulfilling a specific, peripheral function. NOW’s not alone in dividing this way; Sierra Club, for example, has created a notably elaborate system, including a membership organization, a tax-exempt foundation, a student coalition, a PAC, and a publishing arm.

This kind of bureaucratic division is a microcosm of the broader advocacy structure. Since the 1970s and 1980s, the United States has seen a boom in both membership groups and “memberless” organizations. In contrast to membership associations, which mobilize individual members into activist and civic organizations, memberless organizations are “public law groups, think tanks, foundations, and political action committees” (Skocpol 2004). A large literature has developed in the effort to understand the causes and consequences of these different kinds of organizational structures, with particular concern that memberless groups are replacing membership groups. Despite this fear, Walker, McCarthy, and Baumgartner (2011) found that these organizational forms develop together—rather than competing, they represent distinct organizational repertoires that serve complementary functions in a social movement (see also Akchurin and Lee 2013; McCarthy and Walker 2004). These organizational types do not just emerge at the same time; they often emerge as the satellite organizations of membership groups.

In NOW, the decision to create these new organizations did not emerge from any thorny ideological or personality disputes; instead, it seems NOW leaders unanimously agreed that the organization needed to develop a peripheral set of separate organizations that would operate semi-independently. In fact, they merely saw it as one further elaboration of organizational bureaucracy—a slight differentiation of roles that would allow everyone to more easily do the jobs they were already doing. However, this view of the organizational shift did not work out seamlessly. In fact, it produced surprising factionalism and carried consequences no one anticipated at the outset.

Across the political spectrum, many formalized social movement groups are, legally speaking, actually systems of independent organizations, sharing a name and a general mission, while carrying out distinct functions, with a distinct message, for distinct audiences. Satellite groups are crafted to work closely, even indistinguishably, from a parent organization. They are often referred to as the “legal arm,” partners or sister organizations to the better-known parent organization. But these labels imply a mutual, equal relationship that does not quite fit their arrangement. I prefer the term satellite group because it better captures the structural inequality built into the relationship. As we will see, satellite groups are peripheralized in ways that can provoke factionalism and produce deeper organizational splits than leaders originally intended.

This pattern of organizational splitting fits neatly with the bureaucratic capacity to divide functions into division into core and peripheral clusters. Movement organizations create new satellites to comply with external authorities and state policies. Creating a new group can also help craft a slightly differentiated organizational identity designed to better attract support from elites and foundations. All movement groups interact with these environmental forces to some degree, and splitting into legally separate entities is a common response to these routine pressures (Reid 2006). Because bureaucratic movement organizations are often large with diverse memberships, they must find ways to manage many simultaneous and conflicting demands for particular goals, ideologies, and tactics. This problem is compounded by their constant need to raise money for new organizational projects and routine maintenance. Dues are an important source of support that keep members invested in the organization, but outside donations can offer greater flexibility in renewing programs, building reserves, and moving in new directions. Nonprofit tax policy makes meeting these needs difficult— members often want to engage in explicitly political activism, but donors often prefer tax-exempt organizations, which have tight restrictions on the kinds of political work in which they can engage. By splitting, the core membership organization can maintain a relatively more aggressive agenda, while the peripheral satellite group can cultivate a more reserved reputation in compliance with external rules and preferences.

The decision to split off some functions into peripheral organizations is straightforward. However, the consequences of the splitting are not always clear at the outset. Leaders in the parent and the satellite group plan on a close working relationship, collaborating much as they had before. But the structure of their relationships has changed, introducing new sources of tension, and even factionalism, between the closely allied groups. Leaders in both groups are forced to repeatedly negotiate which group represents the organizational brand, which should get credit for successful campaigns, and which should get blamed for bad press. These problems are compounded as the organizations drift further from each other, driven by their different needs, different audiences, and distinct visions.

Satellite organizations are not typically categorized as organizational splitting because they are intentionally and pragmatically created. But when we think of them as simple spin-offs, or different versions of the same organization, we are not able to see how the unequal structure of their relationship seeds conflict and factionalism or how those conflicts are shaped by the broader social movement field. Their distinct collective identities, cultures, and audiences reinforce their diverging trajectories, pushing them further apart from each other. In this space, friction grows between the parent and the satellite over how to maintain a coherent shared agenda.

Division of Labor and Nonprofit Status in Social Movements

Nonprofit organizations are defined by the state as “self-governing organizations that do not distribute profits to those who control them and [if 501c3’s] are exempt from federal income taxes by virtue of being organized for public purposes” (Boris 2006, 3). Advocacy organizations that wish to claim a [tax-exempt] nonprofit status must abide by the rules established by the IRS, the Federal Election Commission, and state governments. Some social movement groups are
incorporated with the IRS as 501(c) (4) nonprofit groups, allowing them to engage in greater amounts of political advocacy on behalf of their members, including some electioneering, political lobbying, and partisan communication with members, without paying taxes on their income. However, a 501(c) (4) designation prevents donors to these groups from deducting their gifts from their own taxes, making them less attractive to large donors and foundations. Even with this trade-off, the amount of political activity they are allowed to conduct is limited and cannot be the primary purpose of the organization. Other groups incorporate with the IRS under the 501(c)(3) guidelines, allowing donors to deduct their gifts and forgoing political advocacy altogether. Tax-exempt organizations, particularly those with the designation 501(c)(3), are considered “charitable” organizations and, as such, are not allowed to engage in most kinds of political activities.

McCarthy, Britt, and Wolfson (1991) argue that tax regulations work to channel organizations into less threatening and contentious activities due to the pressure to retain the tax-exempt benefits. However appealing tax-exempt status is, it places considerable limits on a group’s choice in tactics, stripping them of some of their most powerful tools for social change by limiting their political influence. But social movement groups are inherently political—their aim, after all, is not just to raise money but to effect real change in the political world.

In response to the dilemma of how to register with the state, many large membership groups have expanded their bureaucratic structures by deploying some of their professional leaders in separate organizations. In splitting into multiple, closely networked organizations, movement groups incorporate the benefits of both organizational repertoires under a single identity umbrella (Clemens 1993; Walker and McCarthy 2010). The only way to engage in a broad range of political, educational, and charitable activities without risking the benefits of tax exemption is to slice these functions off into new organizations and, in effect, create peripheral satellites with specialized functions and tactics (Boris 2006; Reid 2006).

NOW leaders plainly stated this position in the early 1970s, when explaining to members why they had to form a new, distinct organization. Their explanation to members laid out the benefits of a 501(c)(3) designation:

Foundations, Government Agencies, Corporations and most Individuals do not give grants or sizeable charitable gifts to individuals; they give to organized groups. And in most cases they will not give to just any group. They give to groups organized for educational, scientific or charitable purposes and groups which are both tax exempt and can receive tax-deductible contributions. (NOW Legal Defense and Education Fund Records, n.d.-a, 1)

Later, when NOW divided again to include a 527 [political] division, leaders similarly explained their choice in the introduction to the first NOW/PAC manual, writing, “In order to avoid having to divert NOW energy to interpreting [tax-exemption] law, having to defend our actions, or having to open our books for IRS inspection, it is easier to avoid the problem by simply creating a Political Action Committee (PAC)” (National Organization for Women Records 1979b).

The relationships between the organizations are also subject to other restrictions. Each organization is legally distinct and cannot share day- to-day operations with any of the other groups that share its identity. In practice, however, they are often enmeshed to the point of being indistinguishable. The groups can have overlapping boards of directors as well as collaborate on goals and strategies. To some extent, they can also share financial resources. For example, a charitable 501(c)(3) organization can give money to an advocacy 501(c)(4) organization as long as the money does not go to support the activities in which the 501(c)(3) cannot itself engage, like partisan advocacy. But of course, any money from the 501(c)(3) frees up other resources in the 501(c)(4) to devote to political endeavors.

These sorts of organizational arrangements have been criticized for their lack of transparency and the difficulty outsiders have in untangling the relationships between the groups (Reid 2006). But there has been little effort to investigate how the structure of their relationship shapes the groups themselves—or the conflicts between them. In NOW, satellite groups were created to be virtually indistinguishable from the core membership organization. Yet, over time, its LDEF has drifted further from NOW’s core, introducing room for significant conflict and factionalism. NOW is not alone in experiencing this drift; both Sierra Club and the NAACP have experienced similar rifts with their own satellite groups. Importantly, these groups’ histories also provide strategies for how these factionalizing pressures can be minimized.

Excerpt from “Splitting Satellites: Nonprofit Status and Schism in Social Movements,” from Fighting for NOW: Diversity and Discord in the National Organization for Women by Kelsy Kretschmer appears courtesy of the University of Minnesota Press. Copyright 2019 by the Regents of the University of Minnesota. All rights reserved. https://www.upress.umn.edu/book-division/books/fighting-for-now

Kelsy Kretshmer is a professor of sociology in the School of Public Policy at Oregon State University.

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