Nonprofit Raises Money When Unions Can’t

A nonprofit organization founded by Los Angeles labor chief Miguel Contreras and other union officials has successfully tapped Hollywood studios, energy companies and other large corporations for hefty donations to finance its activities over the last eight years.

Through the Voter Improvement Program, union officials have found a legal end-run around a federal law that prohibits employers from giving money to organized labor. Created in 1997 to conduct voter registration, educate voters and campaign for ballot measures, the new entity had the advantage of being able to receive unlimited donations. Unions have not been able to directly receive corporate donations for almost 60 years, as a result of congressional reaction to corruption scandals.

Though Contreras and other VIP officials say the organization is independent of the Los Angeles County Federation of Labor, the group’s agenda closely mirrors that of organized labor.

In the last several years, VIP fought for a living wage measure in Santa Monica, helped block the San Fernando Valley’s secession from Los Angeles and slowed Wal-Mart’s expansion efforts in Inglewood, all campaigns that local unions supported.

VIP and the labor federation have more than a common purpose: Contreras serves as the head of both groups, which share a phone number and address on state and federal documents. (The federation is actually listed as a “related” organization on VIP’s federal tax forms. D. William Heine, an attorney for VIP, called that inaccurate and said the organization would file amended returns to reflect a separation of the two groups.)

An examination of VIP’s finances and activities revealed how Contreras and other union officials have leveraged the reach of organized labor through the organization, which has maintained a low profile despite its successes.

VIP has raised about $5 million since 1997, most of it through a lavish awards dinner, held every other year, that honors prominent figures for their support of the labor movement. Participation has been boosted by local union officials, who have persuaded their national organizations and their employers to buy tables at the dinners.

Attendees have included representatives from a slew of corporations with unionized workforces, including energy companies ChevronTexaco, ConocoPhillips and ExxonMobil, which own local oil refineries.

“There are companies that value a good relationship with the labor movement, and this is a good way of maintaining a relationship,” said Madeline Janis-Aparicio, a living wage advocate who serves on VIP’s board.

The organization has received public money, as well; the city’s Department of Water and Power has been one of VIP’s most reliable contributors. A handful of elected officials have given donations to VIP, including City Councilman Antonio Villaraigosa, Mayor James K. Hahn’s challenger in the May mayoral runoff election.

With its revenues, VIP has financed programs to register more Latinos, African Americans and other potentially labor-friendly voters and has supported ballot initiatives that reflect the unions’ political goals. State records do not make clear which donations financed the group’s campaigning.

The group has also bolstered the personal finances of Assembly Speaker Fabian Nunez (D-Los Angeles), a former political director for the federation. He has earned about $35,000 a year from VIP as a consultant since 2002, the same year he was elected to the Assembly. Nunez said that, when the Legislature is not in session, he spends about 10 to 15 hours a month providing “strategic advice” to VIP about voter trends and demographic patterns.

VIP was the brainchild of Contreras and Ricardo Icaza, president of the labor federation and head of Local 770 of the United Food and Commercial Workers.

“We wanted, initially, to use it to promote a good relationship between labor and management,” said Contreras, chairman of VIP’s unpaid board of directors, which is made up solely of union leaders and their allies.

Close to 1,000 union leaders, corporate executives and elected officials have attended past events, which were co-hosted by heavy hitters like billionaire investor Ron Burkle, AFL-CIO President John J. Sweeney, News Corp. Chairman Rupert Murdoch and former Paramount chief Sherry Lansing.

In 2001, VIP honored Bill Clinton with its biennial award. The Temptations performed for the former president and the crowd at the Regent Beverly Wilshire.

The dinners are ostensibly held to honor friends of labor, but VIP has turned the award into a potent fundraising tool.

Since Kaiser Permanente’s then-Chief Executive David M. Lawrence was honored at a 1999 dinner, the health management organization has donated more than $335,000 to VIP. In 2003, VIP gave an award to August A. Busch IV, president of Anheuser Busch Inc. -- which in turn gave the organization a six-figure donation.

By selecting as honorees such industry heavyweights as the late MCA Chief Executive Lew Wasserman, former Motion Picture Assn. of America President Jack Valenti and DreamWorks SKG co-founder Jeffrey Katzenberg, VIP guaranteed that Hollywood would turn out in force for the events.

“Who’s going to say no?” asked Kent Wong, director of the UCLA’s Center for Labor Research and Education, who attended two of the dinners as a guest of a community group that had been invited.

After honoring Wasserman at its first dinner, VIP named its biennial award the “Lew Wasserman Spirit of Democracy Award.” The Wasserman Foundation, in turn, has consistently supported the group, and after the studio chief died in 2002, his grandson, Casey Wasserman, replaced him as a dinner co-host the following year

“Labor and labor unions are vital to Hollywood in every way, every day,” said Wasserman, who added that he hopes the entertainment community continues to support VIP. “That relationship is important, whether people want it to be or not.”

Unions also wield substantial influence at City Hall -- especially Local 18 of the International Brotherhood of Electrical Workers, which represents Department of Water and Power employees.

DWP gave VIP a total of $62,500 from its corporate communications account to purchase a table at each of the last three award dinners, according to documents obtained by The Times under the California Public Records Act. In 2001, the public utility co-sponsored a table with Local 18.

S. David Freeman, then DWP’s general manager, approved a $25,000 donation to VIP in 1999. Then-chief administrative officer Frank Salas signed off on other contributions in 2001 and 2003. Both have since left the utility.

Carol Tucker, a DWP spokeswoman, said the purpose of the donations is unclear.

“We haven’t been able to find any documentation to find out what they were hoping to accomplish,” said Tucker, who added that the DWP no longer does such sponsorships.

Salas could not be reached for comment. Freeman said that DWP sponsored many events with community groups during his tenure, but he did not remember the donation to VIP.

“I think we thought we were giving to a citizen education fund,” he said. “If they were engaged in advocacy for a particular point of view or issue, that is not something that I knew about or approved of.”

Although a description of VIP in its award dinner program emphasizes its voter registration and education activities, a large share of the group’s money has been spent on ballot advocacy, which is permitted under its 501(c)(4) tax status.

In the last five years, VIP spent more than $637,000 on ballot measure campaigns, according to campaign finance reports filed with the secretary of state.

In some cases, the group donated directly to a campaign; in 2002, it gave $58,500 to L.A. United, Hahn’s anti-secession effort. Last fall, VIP spent $26,000 on campaign mailers and precinct walkers in the campaign against an Inglewood measure that would have allowed Wal-Mart to build a Supercenter without environmental reviews or public hearings.

One of the biggest recipients of VIP’s political spending has been the Organization of Los Angeles Workers, a union political field operation that has received at least $120,000 for get-out-the-vote activities since 2001.

Contreras and Icaza spoke in general terms about VIP’s activities in initial interviews. But once The Times requested copies of its tax forms -- which must be disclosed under IRS law -- they referred further questions to the organization’s lawyer.

In a letter, attorney Heine said donors were advised that their contributions could be used for ballot advocacy.

Nonetheless, some were taken aback when told about VIP’s campaign activities.

“We would have been surprised if [the donations] were used for things other than voter registration and/or administration,” said Jim Anderson, a spokesman for Kaiser Permanente. “Anything partisan we don’t do, and when we do get involved in ballot measures, they’re about healthcare.”

John McLemore, a spokesman for ConocoPhillips, was equally puzzled when asked why the Houston-based energy company was supportive of VIP’s ballot activities.

“I don’t think that we knew that,” said McLemore, whose company gave VIP $5,000 in 2003. “It was a dinner, for a get-out-the-vote type program.”

VIP has devoted significant funds to expanding the electorate and getting people to the polls. According to federal tax forms, the organization spent $391,000 on voter registration and turnout activities between June 2001 and May 2003. It gave $318,000 more to other groups, including the Southwest Voter Registration Education Project, to do similar work in the same time period.

VIP does not have any record of how many voters it has registered in the last eight years but believes it is “substantial,” according to Heine.

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VIP’s political activity

Founded by union leaders in 1997, the nonprofit Voter Improvement Program has raised about $5 million from a vast network of donors, including organized labor, Hollywood studios and large corporations. The group has used its revenues to finance voter registration programs and fund ballot initiative campaigns, which it is permitted to do as a 501(c)(4) organization. Among recent campaigns:

County supervisors: Supported a 2000 effort to expand the Los Angeles County Board of Supervisors. The measure failed.

Living wage: Successfully fought Proposition KK, a 2000 ballot measure that would have blocked the Santa Monica City Council from raising the minimum wage. Supported Proposition JJ in the fall of 2002, which would have boosted the wages of privately employed hotel maids, food-service workers and others. That measure ultimately failed.

School bond: Supported the Los Angeles Unified School District’s $3.87-billion bond measure in 2004, which passed.

Secession: Boosted Mayor James K. Hahn’s L.A. United campaign, which successfully blocked the secession of the San Fernando Valley and Hollywood in 2002.

Budget rules: Campaigned for Proposition 56, a labor-backed state ballot initiative in 2004 that would have lowered the number of legislative votes needed for budget approval and new taxes from a two-thirds to a 55% majority. The measure failed.

Wal-Mart: Helped defeat an Inglewood measure in 2004 that would have allowed the big-box store to build a Supercenter without environmental review or public hearings.

Source: Campaign finance reports filed with California secretary of state.

Times staff writer Nancy Vogel contributed to this report.