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Editorial The Best Things In Life
"Are Free? . . .Good or Evil, The 501c(3) non-profits are
here to stay and they are accountable to few"

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   Let me tell you a story. It's a story about the charitable nature of humans, governments, and organizations. A story that in a perfect world should be a source of inspiration and warm/fuzzy to all. As prologue, there is an organization many you are probably familiar with. ASH.ORG or to be less acronymic, Action on Smoking and Health. Now these folks claim to be interested in your health but many people, including we at RYO Magazine (as well as a large number of our readers), suspect that the true agenda of ASH and many other anti-smoking groups, likely as not, may not be so altruistic. Their website comes close to being a hate site with all the extremely negative, vindictive and inaccurate ranting of those obsessed with smoking in general, and smokers in particular. It is a fact that first impressions can be devastating. Little inaccuracies can grow into larger suspicions. For instance, there is a little blurb on the site that states ASH is a .org organization and insists frequently and vehemently that their .org designation "proves" they are an organization dedicated to the public good. Specifically, here is their little paragraph: COMmercial web site, primarily designed  . . . to make money = a nonprofit ORGanization, primarily designed  . . . to serve the public

  Of course it is common knowledge, or should be at least to most, that ANYONE can get a .org domain name and sell or distribute, for profit or not, whatever they damn well please on it. So right from the start, one might become suspicious about the accuracy of the rest of the information on this rather tasteless little site. ASH is anti-smoking zealotry taken to the extreme with prolific pandering for donations far worse than any PBS membership drive. TheyGimmee Money Yeah Yeah I want Money constantly remind (and I mean RE-MIND) visitors to their site of all the wonderful things ASH has accomplished in their war against tobacco usage, to the point that one must feel that there might be a little insecurity there as to their future viability. Kinda like the punch drunk fighter reminiscing, "I could've been a contender." This 501c(3) organization, formed many years ago by a lawyer (no surprise as many activist non-profits are headed by members of that once noble profession) named John F. Banzhaf III, while quite generous with quotes about ASH's victories in the anti-smoking wars, mostly basks in the glory of past events, and as portrayed in their timeline, predate the mid 90's. One gets the distinct impression that ASH's effectiveness and high visibility seems to be in wane. They even have a rather macabre pitch allowing their would be supporters the honor of writing ASH directly into their Last Will & Testament and will gladly provide those interested with the necessary codicils for insertion into said donor's document. It is clear that ASH's power and presence is being eclipsed to a great degree by other larger, though no less subtle organizations, like The American Legacy Foundation, who is the fiscal punch behind all of those ( anti-smoking commercials and was formed by an initial grant from the Master Settlement Agreement (MSA) of $300 Million. More than 100 times the revenues of organizations like ASH. In the following The 501c(3) tax-exempt organizationeditorial, we will take a look at both of these organizations and try to be as unbiased as possible so that you can draw your own conclusions as to the true degree of philanthropy in their nature, and more importantly, as to the necessity of remaining vigilant of their operations.

  Let's first however take a look at how the Internal Revenue Service defines a 501c(3) organization including some additionally broader strokes that include tax exempt non-profits in general. It is important that the reader understand the intentions and limitations imposed by the government and their tax code specifically on organizations claiming exemptions under these statutes. So, at least, skim over the sections and print out the document if possible to refer to, both while reading the balance of this piece and for further reference, should you have reasons to question other tax-exempts in the future. Click here to view the regs. When you are done, use your browser's back button or simply click the "Back to editorials" link at either page top or bottom to return to this location.

   Welcome back. Now that you have read the IRS's regulatory intentions as they relate to these particular tax exempt organizations, another important piece of business for you (after you read the rest of this editorial, of course) is to begin the process of comparing the behavior of the plethora of tax exempt groups that make up the anti-smoking forces. Of course not all tax-exempts are anti-smoking in mission, nor are all anti-smoking groups tax-exempt, but the distinction made in the regulations concerning protecting tax-exempt status are vital for the public to make sure these groups are in compliance with the law. There are few watchdogs overseeing the daily operations of for-the-public-good groups. The small number of agencies or legislative bodies with oversight, including the IRS, routinely ignore the behavior of these groups unless a formal complaint is filed, the complaints almost exclusively coming from private citizens. There are little or no regular inspections of these groups, and except for the token filing of a few forms, they exist in a rather nebulous state unless challenged, again most often by the citizenry.

  Interpretation of the recommended regulations we referred you to above should make it clear that 501c(3) organizations are severely limited in their ability to affect the political process. Lobbying is greatly restricted and electioneering involvement in any way can spell immediate disqualification and loss of tax-exempt status. In plain terms, these organizations can spend only a small portion of their resources and efforts in lobbying practices, but must never promote or attack specific political candidates or legislation particularly during the immediate election process.

   Not surprisingly, as is the case in most legislation and tax code regulation, there is always a degree (often a large amount) of wiggle room for clever attorneys to slither through. In a most contentious and well publicized issue, Senator John McCain along with fellow US Senators Feingold and Libermann fought for and finally won the right for the American people to know more about organizations known (by their tax code status again) as 527 organizations. While these groups are not precisely the same as 501's, some of their methods and goals are quite similar. McCain/Feingold specifically sought to require that 527 organizations make public their list of contributors. 527 organizations, at least up until the passage of the McCain bill, were allowed to raise unlimited amounts of money through donations (backers if you will) to produce advertising, both positive and negative, that was directed at candidates for office as well as pending legislation, without ever saying who they were backed by. They could not give money directly to candidates or political parties but could support them in very effective ways like funding media ads and telephone campaigns. On the other hand, the more commonly understood PACs (Political Action Committees), which are what these organizations really should be classified as, are formed solely for political purposes and must be open as to the identity of their membership and those who fund them. The problem of 527s, when compared with PACs, is that through various loopholes conveniently left in the 527 legislative code, the 527 supporter can remain anonymous. It doesn't take much imagination to conceive of situations, if taken to the extreme (which they frequently are), where secretive organizations like these could do a lot of damage and spread a lot of misinformation while hiding behind generically mainstream and misleading names like Americans for Truth, Citizens for a Free America, etc.

   So what McCain/Feingold accomplished is what needs to be done with "charities" like  501c(3) organizations - only taken one step further. 501s routinely publicize the names of the backers they choose to reveal or are proud of, but what they don't provide (or at least is not available as public knowledge) is the specifics of how they spend the money they get from donations or government grants. The fact is anyone can request a copy from the IRS of each tax-exempt organization's Form 990 (and we did - for both ASH and The American Legacy Foundation) which all non-profits are required by law to submit and make available to the public on a annual basis. These tax forms show the gross income, through donations and other sources, of the 501c(3) but do not specify the particulars of who gave what. The form also requires a listing of expenditures and salaries of staff and management, but again, there are few specifics. For instance, while the salaries of the CEO, President, or other such positions are listed as well as the staff of these "charities", their other expenditures often are lumped anonymously in categories like consulting with no "breakdown" as to who was paid the consulting fees, or what particular service was rendered. While the CEO's of these groups are often paid very high salaries in comparison to the money they take in and distribute for the public good (which is disclosed on the form), funds distributed in the more nebulous categories like consulting (we're told by others in the legal and accounting professions) could very possibly be distributed to the very same officials of the organization without specific declaration. For example, a non-profit CEO making $200,000 per year in salary could also be paid a substantial portion of, say, the $1,000,000 additional dollars spent for consulting, especially if said officer is also an attorney and the consulting was in the form of legal services provided by this lawyer. Now, I assume that this CEO would have to pay taxes on the "consultation" gratuity as well, but it doesn't show up on the 990 form. I think you get my drift, for the point cannot be overstated that increased oversight into the specific business practices of charities, non-profits, and tax exempt organizations, of which 501's are one segment, is sorely needed, especially when their actions affect the political process in any way, whether electoral or legislative. And not just for the benefit of the opponents of the given organization's point of view but for the benefit of the prospective donor as well.

   The United Way, for instance, which many of us give money to every year, releases annual statements to sponsors that show broad categories of expenditures only. Few specifics. Want to look at their books? You'd need an IRS audit for that, and it seems the IRS is preoccupied more with money making (tax paying) businesses these days than they are with tax-exempts. It is important to qualify here that many charities and other non-profits do important and wonderful work. However, it is also true that those that lead non-profits are often paid extremely well (they pay personal income tax on their salaries, of course) but for small organizations like ASH, who appear to have only a couple of paid employees (Banzhaf, a secretary, and a well paid CPA firm), they have a huge amount of money available to them for expenses. In other words, they (CEOs of such groups) COULD (and we emphasize COULD as we have NO knowledge of the specific ways in which ASH distributes its ill-defined operating expenses and have no reason to believe, based on the facts at hand, that there is anything unethical at work here) live very comfortably, spending little of their salary on the things most people have to spend their own money on in the daily business of living and working. The practice of writing off potentially personal expenditures as business expenses or using organization capital in ways that benefit the organization's executives personally, needs to be scrutinized most carefully and most especially for the tax-exempt. Owners of corporations and even smaller businesses have been guilty of abusing these same advantages (percs if you will). For instance, a CEO driving a new car every year that the company pays for is pretty standard procedure, but having the company's maintenance staff make "free" repairs to the boss's personal residence is another matter entirely. Now at least these businesses pay taxes on all of their business-related income (sans shelters and loopholes that favor most really wealthy corporations, of course) and have bottom-lines, P&L statements, stockholders, or boards of directors to oversee and measure the ramifications of their practices and to whom they are accountable. On the other hand, with non-profits, it is always a little unclear, (to those too few of us who are interested), what precisely happens to undistributed funds, funds held over to the next year that would be considered profit by a for-profit company. It is clear from the Form 990's of both of these organizations (ASH and American Legacy) that these firms have healthy investments in various market vehicles that, especially in the case of The American Legacy Foundation (having started with a whopping nearly $300 million grant), provides huge dividends.

   It is not our intention to go into the specifics of each of these organization's business filing as we are ill-equipped to do more than a cursory analysis, have not the space or time to do so, and frankly, are more interested in having our legislative bodies do the dog work that we pay their salaries to do. It is fair to say, however, that when we looked at the Form 990's of these organizations, given the rather non-specific nature of this form, everything appeared to be kosher. (We urge all of you, especially those who are more expert at tax issues and perhaps legal issues as well to spend the very few dollars necessary to acquire these forms from the IRS for every non-profit that affects your life.) However, we did make some simple observations that we found enlightening.

   The American Legacy Foundation is fairly new and their 1999 form showed mostly the acquisition of the large MSA grant mentioned above and little else other than a salaried CEO making a reasonable, if not small, salary. Next year's 990 should be far more revealing. In the case of ASH, the CEO's salary was far higher (four times higher than the head of American Legacy) while the secretary (staff) position was either part time or near minimum wage. Tax-exempts often flesh out their staffs with volunteers who believe in the goals of the organization. As time goes by, the American Legacy Foundation should provide some pretty interesting accounting exercises for those interested in such things, given the amount of money they have to spend. And looking into the 990 records of ASH for a number of years past, should provide considerable entertainment to bean counters as well. Now there are quite a number of these kinds of organizations out there doing battle against smokers and tobacco, like,, etc., many with CEOs who may likely be making a small fortune. You can find most of them quite easily by going to your favorite search engine and typing in smoking or anti-smoking. And then you can get their Form 990s and see what their salaries are. Simply telephone the IRS and ask for the non-profit division.

  It is only fair to reiterate that many tax exempt groups do noble work and frankly, though I personally abhor ASH's style, am curious about some of their poorly defined expenditures, and disagree with nearly all of their arguably unfounded propaganda, which has been gleaned from poor research interpretations based on even poorer research techniques, we must give credit where credit is due. John Banzhaf almost single handedly fought the cigarette industry early on. Admittedly, in round about ways that were concerned more with non-smoker's rights and smoking in public places than with the deceptive practices of the cigarette industry directly, nonetheless ASH was to some degree responsible for creating a more open and accessible environment that could ultimately confront big cigarette companies. In this way, they played a somewhat fundamental role in creating the environment (public sentiment) that would be required to force the cigarette makers to eventually admit being responsible for some very seedy and dangerous practices, some allegedly bordering on the criminal.

   Zealots like Banzhaf, Ralph Nader, etc., distasteful as they may be to many, play an important (though often costly) role in a free society like ours where large corporations often have as much or more power than our own government. It is no secret that petitioning one's own government for information is far easier than petitioning a large corporation for facts. It is likewise important to also remember that there were no "big bucks" in the early days of Banzhaf's campaign against tobacco usage and he developed, and still enjoys, a somewhat heroic reputation among certain smoker's (who now see somewhat fewer unnecessary chemicals in their cigarettes) and even more so with non-smokers who REALLY don't like breathing the smoke of others. However, as with most movements, after a time, zealot inspired non-profit organizations can take on a life of their own, far exceeding the scope of their original mission, ultimately reaching the point where they can become as deceptive, destructive, and yes, greedy, as those culprits the group originally addressed (redressed?).

Before we continue on the subject of GREED, a brief but informative digression

   It is important to note here that CIGARETTE MANUFACTURERS were partially the culprits that ASH, and to a much greater degree, the culprits many of the anti-smoking groups that followed were initially after. NOT tobacco growers or those companies involved in the production and selling of tobacco products like bulk tobacco, pouched rolling tobacco, cigars and pipe tobacco, as well as the whole array of accessories that go along with it. The cigarette manufacturers were the ones who allegedly tampered with nicotine levels and delivery and promoted public advertising campaigns to entice younger smokers, and to further increase usage by all age groups. Their actions were plainly stupid, as short-sighted as Nixon recording conversations of illegal activities, President Clinton fooling around with a mouthy little girl, or Firestone thinking they could hide the fact that their tires were killing people. Cigarette manufacturers would have been wiser to reduce the nicotine in cigarettes so that customers needed to smoke MORE to get the satisfaction they were after, and in fact they did see this increase when low tar and nicotine brands were introduced. If only large cigarette companies would have played it straight, tobacco usage by the general populace would very likely have never faced the problems faced today. Unfortunately, all aspects of the tobacco world now suffer from the practices of the few, those few including both the cigarette industry and those smokers who feel obligated to fill enclosed spaces with their smoke, regardless of the feelings of others. Now, we are faced with the crazed hysteria of the non-smoker who is so afraid of smoke that they are resorting to acts that are every bit as noxious as the smoke itself. And we feel strongly that it is blatantly unfair that the rest of the tobacco industry, tobacco producers, and manufacturers of accessories alike, must sign on to the Master Settlement Agreement in order to do business in this country.

   Please keep in mind we are not smoking proponents here. We personally truly enjoy tobacco and are ADAMANT about all peoples right to use tobacco, but do not defend blowing it in someone else's face anymore than we feel the need to tolerate ear pollution from some clown's boom-box, or the reeking perfume some folks seem destined to drown themselves in just before they step into the elevator in which we are riding. But more important to this discussion is the fact that research on smoking (involving tobacco that is of high quality, that has little or no additives, coupled with usage in amounts that show intelligent moderation) would likely produce far different results than the highly deceptive, all-inclusive, and perhaps, even downright fraudulent health risk assessments that are now attributed to all forms and degrees of tobacco usage. People who smoke eighty cigarettes a day, just like people who drink too much or drive too fast, engage in behavior that has exponentially increasing risk potential. The sad fact is that we all pay for these types of excessive behavior, whether it be in medical costs, insurance costs, or the very personal cost of human suffering. To make matters worse, risk assessment studies that set out from the beginning to blame tobacco for everything, endanger science's ability to find the true causes of many afflictions. Lung cancer, for instance, seems to have increased rather logically with the industrial revolution. This disease has been shown to be higher among certain occupations and those exposured to certain environmental elements of which tobacco smoke is only one of many.

   Let's face it, you can sit in a room with a hundred smokers puffing their brains out for quite a while and still manage to walk out under your own power. Try that with a gasoline engine running in the same room, and in a very short time no one will leave . .  ever . . . at least not in vertical mode. The internal combustion engine probably does far more damage to lungs and other body systems than tobacco smoke ever will. But on every doctor's new patient questionnaire they want to know if you smoke. Not if you live next to a freeway or spend a lot of time in close proximity to running automobile engines, or even what kind of car you drive or how much and where you drive it. Nope, they just want to know if you smoke. Now, smoke of ANY kind can be shown to be toxic. Many of the same chemicals, radioactives (radon), and carcinogens, attributed as deadly in tobacco smoke, are found in wood burning campfires and fireplaces not to mention pressed log fires, natural gas-fueled combustion, and even cow's milk.

   It should be pretty clear to most that the historical (some still alleged) deceptions of the large cigarette makers has created an environment that is far more dangerous to all of us than is simply attributable to tobacco smoke alone. The integrity of scientific bio-medical research itself has been clearly damaged, and the search for real answers to human maladies has taken a large step backwards. (For a concise and fascinating look at the subject of research techniques, specifically Meta-Analysis and Epidemiology which, by the way, we have also touched on in past issues, click the link below. Dave Hitt's site is one of the best in coherently exposing the shortcomings in these kinds of research procedures. Take a look at it now if you wish, or at least bookmark the main page of Hitt's site for future reference.  A new window will open and you can simply close it when your are finished and you will be right where you left us.) Here is the link

   Welcome back once again. As we were discussing greed, let's first start with the premise the we firmly believe in each person's right to create a salary structure that is as beneficial as possible, however few of us are in a position to actually do so. Notwithstanding our belief in fiscal freedom, a reasonable argument can be made that the salaries of controlling individuals and the expenses of their companies, be they for profit or not, should be a matter of the public record. Though we stop well short of suggesting disclosure of the salaries of everyone involved in for-profit businesses, especially those lower ranked in the food chains of large corporations and smaller businesses, we do feel that highly paid members of the commercial entities that have a large impact on our society should be open to some scrutiny. Contributions they make to transparent organizations like PACs and political parties, as well as opaque ones like 527s, should be a matter of public record. I'm a free-market kind of person but, when a company is tax-exempt, or pays corporate executives exorbitant salaries, it costs you and I money in higher proportional taxes or increased costs of goods and services, and these additional costs need informed justification. And when these entities, by throwing lots of dollars in the mix, began to lessen the impact of individual voters, it is time for the public to be made aware of it. The world's largest charity (the US Government) has historically and continues to fail miserably at being fiscally transparent and fiscally efficient and there is no reason to expect lesser organizations to be any more immune to the same kinds of temptations and greed that really big bucks engender. And in the case of the non-profit that attempts to affect the personal behavior of a large segment of the population, it is imperative that they play by the rules legislated by our representatives. Moreover, it is apparent that we, as voters, had better be prepared to insist that the rules applied to these holistic tyrants continue to evolve with increasingly tougher requirements for those organizations bent on social engineering. If this sounds a bit like socialism, it is certainly not my intent. Most companies go about their chief business of making a buck without making an effort to control the lives of anyone but their customers. However, when a company is sufficiently large and services a major portion of consumers, a special situation occurs that should place added responsibility for disclosure on the activities of the enterprise.

  No one could have imagined the overwhelmingly greedy behavior of attorneys that represented the states in litigation that led to the Master Settlement Agreement. Whatever happended to pro bono (for the good) services. It would be of no surprise to anyone that organizations like ASH feel somewhat slighted with the relatively "small change" they operate on compared with the billions owed to attorneys and the hundreds of millions granted to a number of "educational" groups like the The American Legacy Foundation. There is a frantic rush for validity by a large number of these "smoking prevention" groups that are cropping up with names like and They all want a piece of that really big MSA pie. On the other hand, the attorneys that, on contingency, represented the states in getting the MSA, are finding that the states are withholding their contingency fees (billions of dollars) leaving these lawyers no choice but to sue the states for their money. (Forgive me if I fall down laughing here momentarily.) There have recently been committee hearings in the US Senate held by John McCain that aired the complaints of states as to these exorbitant legal fees, and ironically, concerned members of state delegations to these hearings accused their own states of spending their ill-gotten gains from the MSA on everything but tobacco-related programs. (I find myself, once again, on the floor.) Some states are building roads with their share of the MSA - some are giving tax rebates to their citizens. It has really turned into the kind of carnival atmosphere one might expect when money of this amount has been looted from a judicially-verified evil industry. If you remember, the whole point of the states suing the tobacco (cigarette) industry was to address the added expense of providing health care to those darn smokers. Well, most of the states have shown no interest in channeling the money in that direction and it won't be long before this huge windfall is simply an entertaining history lesson for school kids of yet another boondoggle reminiscent of Prohibition, Tea Pot Dome, or more recently, the Savings and Loan scandal. In the meantime, many attorneys will grow disgustingly rich and many more 501c(3) organizations, aggressively dedicated to the eradication of tobacco from the face of the earth, will flourish.

   In all honesty, I really think that the day is coming when those responsible for the poor research, the greedy litigation based on that poor research, and the judicial and legislative branches of our government that allowed all this to proceed, will be held fiscally accountable. It will probably take a new generation of contingency lawyers (with better contracts) hell-bent on redressing the damage done to an entire industry whose guilt lay with the few, not the many. Tobacco usage is not going to simply cease and hopefully the roll your own industry will take heed from the mistakes of the past made by the big cigarette companies, and continue to produce fine, additive-lean products that the smoker can enjoy at a reasonable price and with reasonable health consequences. Remember, tobacco has never been the problem. Greed and obsessive behavior will always be one.

   Until next year, (January issue) we hope you have enjoyed these issues of RYO Magazine for the year 2000. We have it on good authority that the manufacturers of RYO tobacco products and accessories are working very hard to provide even higher quality, easier to use items in the future. Don't forget to check back frequently, as we update certain sections of this magazine in-between issue dates as new information surfaces and as new products are released. And come back at the end of November for the December Holiday Buyer's Guide supplement. You will findAdvertising Space Available. See our advertising section for details a lot of great products, new and old, that are perfect for the tobacco enthusiast on your gift list.

   Finally, if you are under 21, don't smoke. I didn't when I was 21. (I know the legal age for tobacco use is as low as 18 in many places, and the fact is, your age group should not even be reading all this tobacco stuff anyway.) Your body is still growing, your cells replacing themselves at rates far exceeding older humans. I grew 2 inches (in height) in my last two years of college. Though we feel the health risks attributed to the moderate consumption of high quality, roll your own tobacco, have been greatly exaggerated and lumped together with the noxious brand-named cigarette, we have seen no decent, incontrovertible scientific PROOF either way. Nonetheless, it is highly unlikely that tobacco is actually good for your body. Neither are alcohol or extreme sports. There are plenty of older smokers out there to support the RYO industry. Kids (young people) should be kids (young people) and spend their money on girls, boys, cars, guitars, music and yes, I hope, a few books. Not tobacco. Whatever risk is ultimately (beyond a shadow of a doubt), proven with regards to tobacco usage, your age group already engages in plenty of risky behavior. Why push it? Remember, the Best Things in Life Really are Free.

A good and prosperous 2001 - the ed.  

   We repeat some interesting links so that you can keep abreast of vital issues that affect 50 million voting age citizens in the US.


1.    -  The National Smokers Alliance
2.     -   FORCES  -  A national smoker's rights organization
3.    -  The American Smoker's Alliance
4. - Friends of Tobacco - A Tobacco and Smoking information clearing house
5. - A highly entertaining site exposing fraudulent and expensive scientific extrapolations.
6. - Current, past, and pending legislative actions, bills - a huge resource organized by subject.

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If you have information regarding pending tobacco legislation in your local or state government, please share it with us and we will, in turn, share it with all in these pages. If you want to keep abreast of pending federal legislation, go to for a listing of all bills before Congress. For tobacco-specific legislation, you will have to use their search engine. Look under the Legislation column, click on 106th under the Bill Summary and Status heading. Next, Search using Word/Phrase, and when the new page comes up, type the word "tobacco" in the Word/Phrase box. Here you will find all current tobacco legislation before Congress. Of special note is #25 HR 2579 - To impose restrictions on the sale of cigars.

Hope you'll join us again.
                 -The Editor

Email us with any comments on this and/or any other issues that relate to your free choice.


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EDITOR'S NOTE: These reviews are solely for the convenience of people of legal age who already smoke, are trying to cut down on smoking, wish to spend less money on their smoking, want to roll their own cigarettes from high quality tobacco, and, in general, wish to have a far more satisfying, and economical smoking experience when compared with smoking pre-manufactured cigarettes. We, in no way, encourage people to smoke. Further, we prescribe to a sane, more logical approach to smoking that involves common sense as to quantity coupled with a strong desire to manage the habit until it becomes an occasional, freely chosen, diversion, that can be fully enjoyed with minimal health risks. Finally, we strongly encourage those who do smoke to take it outdoors, or to appropriate environments where tobacco can be enjoyed away from those who do not smoke, most especially children.  We do not sell tobacco or related products from this site; We distribute information about our perceptions of the quality of what is available and where it can be obtained. If you are under 18,  it is illegal to buy tobacco and you should immediately exit this site. If you do not smoke, it would seem illogical to start.


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