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Shills R Us: Organizations That Get AT&T Cash Endorse its Mega-Merger with T-Mobile

A growing number of nonprofits are recipients of AT&T grants; are they violating their IRS nonprofit status by shilling for the company's interests?

The first real blood in the fight to derail AT&T’s proposed acquisition of T-Mobile’s wireless business was spilled on Saturday, June 19th, when Jarrett Barrios, president of the Gay & Lesbian Alliance Against Defamation (GLAAD), was forced to resign his position.  This is a remarkable occurrence because it came as a result of the group’s board of directors’ opposition to the merger.

One of the rituals that take place during a Federal Communications Commission (FCC) merger hearing is the introduction of statements of support of the merger by a gaggle of nonprofit organizations.  This is a traditional, rubber-stamp exercise used to present a patina of legitimacy or social benefit to an obvious corporate consolidation grab.   

Amidst the current and well-scripted Noh theater performance now taking place in Washington, DC, over the merger, AT&T has pulled out all the stops.  It has called in the chips from three hundred nonprofit groups, labor unions, trade associations, state and local politicians, and private corporations.  AT&T wants the acquisition to go through.

The action by the GLAAD board joins a growing chorus of public-interest groups and senators raising concerns about the merger.   

Earlier this month, reported that GLAAD had received $50,000 from AT&T and was among a long list of nonprofit recipients of AT&T largesse.  GLAAD supported the merger on the spurious grounds that “the merger will increase functionality and speed, thus growing engagement and improving the effectiveness of the online advocacy work that is advancing equality for all.”  While insisting, “we do not make policy decisions based on what’s best for our corporate sponsors,” it nonetheless backed the deal.

Equally troubling for GLAAD, AT&T is one of the staunchest opponents of “net neutrality,” the defining policy that has assured that all Internet data is transported at the same speed.  AT&T, and the other major players of the Communications Trust, wants to end net neutrality and turn the Internet into a toll road benefiting high-volume media companies, thus screwing small publishers and popular democracy.  GLAAD had long backed net neutrality, so its support for the merger surprised many, including board members.

The action by the GLAAD board joins the call by, a Black activist organization, and others challenging the AT&T merger. Rashad Robinson, director of Color of Change, noted:

The deal is likely to destroy jobs, raise the price of cellular service, and threaten net neutrality for wireless high-speed Internet. Net neutrality is the principle that prevents large corporations from marginalizing voices they disagree with or that get in the way of their profits. It's critical for groups that challenge the political and corporate status quo to protect net neutrality. Wireless broadband is increasingly important as more and more people use their phones to access the Internet, especially African Americans.

One can only hope that these voices will inspire more nonprofits to question the PR hype pushed by AT&T, along with hat-in-hand senators and an oh-so-compliant FCC, to block the merger.  More critically, long-term, one hopes that this will lead to a call for the divestiture of the telecom conglomerates’ wireless operations.

Remarkably, no one has yet raised a far more troubling question.  Does the hand-and-glove relations between AT&T and the nonprofits it supports violate these groups’ charitable exemption status?   According to the IRS :

To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization , i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.

The key questions remains: a tax-exempt entity “may not attempt to influence legislation as a substantial part of its activities ...”  Does the active campaign by so many nonprofit recipients of AT&T’s largesse on behalf of an interested party in an FCC deliberation constitute “influence”?   

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