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Democratic Ally Mobilizes In Housing Crunch
Acorn Leads Drive to Register Voters Likely to Back Obama; New Federal Funds

By ELIZABETH WILLIAMSON and BRODY MULLINS

July 31, 2008

The housing bill signed Wednesday by President George W. Bush will provide a stream of billions of dollars for distressed homeowners and communities and the nonprofit groups that serve them.

One of the biggest likely beneficiaries, despite Republican objections: Acorn, a housing advocacy group that also helps lead ambitious voter-registration efforts benefiting Democrats.

Acorn — made up of several legally distinct groups under that name — has become an important player in the Democrats’ effort to win the White House. Its voter mobilization arm is co-managing a $15.9 million campaign with the group Project Vote to register 1.2 million low-income Hispanics and African-Americans, who are among those most likely to vote Democratic. Technically nonpartisan, the effort is one of the largest such voter-registration drives on record.

The organization’s main advocacy group lobbied hard for passage of the housing bill, which provides nearly $5 billion for affordable housing, financial counseling and mortgage restructuring for people and neighborhoods affected by the housing meltdown. A third Acorn arm, its housing corporation, does a large share of that work on the ground.

Acorn’s multiple roles show how two fronts of activism — housing for the poor and voter mobilization — have converged closely in this election year. The fortunes of both parties will hinge in part on their plans for addressing the fall of the nation’s housing market and the painful economic slowdown. Some of the places buffeted worst by mounting foreclosures are states whose voters could swing the election. Five battleground states where Acorn has registration drives were among the top 10 states for foreclosure rates as of June: Colorado, Florida, Nevada, Michigan and Ohio.

Partly because of the role of Acorn and other housing advocacy groups, the White House and its allies in Congress resisted Democrats’ plans to include money for a new affordable-housing trust fund and $4 billion in grants to restore housing in devastated neighborhoods. In the end, the money stayed in the bill; the White House saw little choice.

What most riles Republicans about the bill is the symbiotic relationship between the Democratic Party and the housing advocacy groups, of which Acorn is among the biggest. Groups such as the National Council of La Raza and the National Urban League also lobby to secure government-funded services for their members and seek to move them to the voting booth. Acorn has been singled out for criticism because of its reach, its endorsements of Democrats, and past flaws in its bookkeeping and voter-registration efforts that its detractors in Congress have seized upon.

Republicans critical of Acorn’s roles say any money that it gets for housing makes it easier for the group to put money into voter drives. “These are taxpayer funds, in an indirect method, being used to subsidize political activism,” says Rep. Jeb Hensarling, Texas Republican and chairman of the conservative House Republican Study Committee. “I’m sure they’re not going out and registering any Republicans.”

Democrats say Republicans are simply opposed to housing aid and voter registration for the poor. Acorn also has a political arm that has endorsed Sen. Barack Obama’s presidential campaign…

“We’re trying to empower people in our communities to improve their lives,” says Acorn spokesman Charles Jackson. “That is through voter registration and helping them to save their homes.” He dismisses the idea that housing aid helps voter efforts: “The funds don’t intermingle,” he says. “There are clear walls with Acorn.” …

Acorn’s Mr. Jackson says that when the group registers voters, it also “aims to educate them on issues facing their communities” and tells them about its services. Other groups also recruit voters and members at the same time; laws for tax-exempt groups only prohibit them from promoting specific political parties.

Sen. Obama is especially reliant on registration drives, such as Acorn’s with Project Vote, to help him win the White House. The Illinois Democrat draws his strongest support from blacks, Hispanics and young people, groups that are among the least likely to be registered. After law school, Sen. Obama was the director of Project Vote in Chicago. The Obama campaign, noting that interest groups routinely register voters and endorse candidates through separate efforts, emphasizes that it accepts no donations from the groups’ political action committees.

Democrats on Capitol Hill have helped to steer millions of dollars in housing and other grants from the federal government toward Acorn and groups like it. The groups must qualify and compete for the money, which is typically doled out from the federal government to states and municipalities. The housing package includes a new, permanent source of affordable-housing money that congressional Democrats and grass-roots groups have sought for years. The Affordable Housing Trust Fund and the Capital Magnet Fund will be funded by a tax on mortgages backed by Fannie Mae and Freddie Mac, the government-sponsored mortgage titans.

That tax eventually will channel upwards of $600 million annually in grants for developing and restoring housing, mostly as low-income rentals, available to Acorn and other groups. Democrats on Capitol Hill and housing groups say the housing-assistance money is vital to helping Americans hit hardest by what some call the largest drop in home values since the Great Depression. But they acknowledge the perception of political conflict in giving federal funds to an organization that does political work.

“We are guarding against it,” said Massachusetts Rep. Barney Frank in an interview. He secured the Affordable Housing Trust from his seat as chairman of the House Financial Services Committee. “We have a lot of restrictions in the bill” banning using the housing money for lobbying or political purposes, he said.

He added that housing-advocacy groups aren’t unique in having an affinity for government officials who can steer money their way. “People who build affordable housing tend to support the Democrats…who support affordable housing,” he said. “I am a lot less worried about this relationship than I am about the Pentagon and Lockheed.” …

It’s difficult to track Acorn’s finances because of its group of legally separate offshoots, nearly all of which use an address in New Orleans in their tax filings with the Internal Revenue Service. Project Vote, with which Acorn has a “joint-effort agreement” to do voter registration, also uses the New Orleans address on its IRS forms. Acorn is providing one-quarter of the effort’s budget for this election, and the canvassers are members of Acorn’s staff.

Acorn Housing Corporation, the group’s housing-aid arm, has released a copy of its 2007 tax form, but the main group, National Acorn, won’t release financial statements and isn’t required to. Unlike several Acorn subsidiaries, it doesn’t seek tax-exempt status. “We’re a private organization; it’s our members’ business, basically,” Mr. Jackson said.

Overall, the main national Acorn entities for which tax information is available — including its Housing Corporation — spent $14.7 million in 2006. That information is gathered from IRS filings submitted by a half-dozen separate entities. The filings show that Acorn Housing raised $6.9 million for its activities in 2006, of which $1.7 million, or nearly 25%, came from government grants.

Last year, as the housing crisis worsened, Acorn Housing raised $7.7 million, of which $2.8 million, or 36%, was from the government, according to a return supplied by the housing group. Acorn Housing’s income pays for work including housing construction and renovation, and staff who counsel homeowners on avoiding foreclosures and who work with lenders on behalf of borrowers to restructure loans.

Project Vote says it spent $9.1 million on voter-registration activities in 2006, and $15 million in the presidential election year of 2004…

Acorn has had a number of missteps. This month its founder, Wade Rathke, resigned after news emerged that his brother Dale had embezzled nearly $1 million from Acorn and affiliated groups eight years ago — information the group kept from law-enforcement authorities and most members. Dale Rathke left the organization only last month.

Late last year, a handful of Acorn canvassers in Washington state admitted that they had falsified voter registrations by illegally filling out hundreds of forms with names such as Dennis Hastert, Leon Spinks and Fruito Boy Crispila. In April, eight Acorn workers pleaded guilty to similar charges in Missouri for falsifying forms…

So in the “Paulson Plan” the Democrat were just trying to slip in more of the same.

But they acknowledge the perception of political conflict in giving federal funds to an organization that does political work.

“We are guarding against it,” said Massachusetts Rep. Barney Frank in an interview. He secured the Affordable Housing Trust from his seat as chairman of the House Financial Services Committee. “We have a lot of restrictions in the bill” banning using the housing money for lobbying or political purposes, he said.

Whew, that’s a relief.