Nonprofits and the Revolving Door

According to an article in Tuesday's New York Times, nonprofits are seeking an exception to the Obama administration's rule that lobbyists cannot serve in areas where they have lobbied. This raises the issue of the purpose of revolving-door provisions, which are common in local government ethics codes.

One purpose of revolving-door provisions is to prevent government officials from profiting, or appearing to profit, from their government positions by creating the appearance of, or actually, promising to help a firm or lobbyist with its government business in return for a future job. This purpose would apply to both for-profit and not-for-profit entities, both of which can offer jobs in return for preferential treatment, although not-for-profit entities cannot usually offer as much pay.

Another purpose of revolving-door provisions  is to prevent the appearance that government is giving preferential treatment to certain interests by hiring people from companies that do business with or lobby the government. For example, hiring employees of contractors for a city's procurement office (especially letting them write contract specifications and oversee bidding) sends a message that the local government might be in cahoots with contractors and that, most likely, contracts are being handed out preferentially rather than competitively.

This is the purpose of the Obama administration's rule. There are two possibilities here, one financial, one policy-oriented. Hiring an inside person for a procurement office is not about policy, it's about profit. Hiring someone for a policy position might be about profit -- easing regulations on an industry or selecting an area of town to be developed -- but it is may have nothing to do with profit, such as hiring someone to create a prisoner re-entry program who has been a lobbyist for an organization seeking to have such a program created.

In the latter, nonprofit example, there are two further possibilities. One is that the nonprofit would be in a position to run the program. If this were true, the desire to grow the nonprofit may not create profit, but it involves a clear financial benefit. There is no important difference here from the for-profit situation above.

But if the nonprofit is just an advocacy group, with no operational wing, then there is no financial benefit. What is preferred by the government is not a firm or a person, but a point of view, a policy approach. The only people with a legitimate complaint are people who disagree with this policy approach, but they lost the election and are free to advocate against the policy. This is not about ethics, but about politics.

The difference between these two possibilities has been ignored by the Obama administration, and nonprofits appear to be ignoring it, as well. The example they are pointing to is the fact that the advocacy director of Human Rights Watch was turned down for a position due to the fact that he has lobbied for human rights laws. Were he to enter government and help write such laws, he and his firm would not benefit at all, except by achieving some of their policy goals. Nonprofits are right to say that this lobbyist should not have been treated like someone who lobbied for a military contractor.

But there many instances where a nonprofit lobbyist is in the same position as a military contractor lobbyist, and should be treated the same way.

These problems arise less often at the local level, but they do occur, and rules like the Obama administration rule, which are far too few at the local level, should take cognizance of the inherent differences between these two kinds of situations, only one of which involves a conflict of interest and the appearance of collusion or favoritism.

In short, there is nothing wrong with favoring a particular policy approach. In fact, that is what officials are elected to do.

Robert Wechsler
Director of Research-Retired, City Ethics

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