By Jonathan D. Salant
Associated Press Writer
Monday, March 30, 1998; 4:13 p.m. EST

WASHINGTON (AP) -- The American Cancer Society, best known for raising millions of dollars to fight the disease, steered $30,000 of this year's proceeds to the Democratic and Republican parties.

The contributions represent a tiny fraction of the society's $378 million annual budget. But they trouble tax experts just the same because charities may not make political donations.

Cancer Society officials contend the contributions to the Democratic and Republican governors' associations are acceptable because they went to nonpolitical accounts held by the organizations. These accounts finance the groups' annual conferences and dinners, not their political activities.

Officials said they donated the money to ensure that their arguments on smoking and other health issues are heard.

``This gets us the same access'' as others seeking to get across their message, said Linda Hay Crawford, the society's national vice president for federal and state government relations. ``We wanted to look like players and be players.''

But the same part of federal tax law that allows the cancer society to receive deductible donations also prohibits the society from making political contributions.

``The bottom line is, campaign intervention will jeopardize a charity's exempt status,'' said Marcus Owens, director of the Internal Revenue Service exempt organizations division.

The National Charities Information Bureau, a New York-based organization that tracks charitable organizations, does not know of any other charity that makes contributions to political parties, spokesman Dan Langan said.

``On the face of this, it is not a good use of charitable money,'' Langan said. But he also said that if the contributions allow the charity to meet with the governors, ``it comes closer to being a valid expenditure.''

The $15,000 contributions allow cancer society representatives to attend forums and dinners, where they can chat with the nation's governors, must like tobacco executives and other special interests do.

Unlike private businesses, however, charitable organizations have strict rules governing their political activities.

The harshest penalty the IRS could levy for any violations of the rules would be to withdraw an organization's tax-exempt status. But the sanction more often applied is a letter of admonishment or fine.

The society raises its entire $378 million budget through contributions -- average donation: $35 -- including some high-profile fund-raising campaigns such as the springtime daffodil sale and May relay races.

Almost one-third of its budget -- $113 million -- goes for research, another $99 million goes for prevention programs and $76 million goes for detection and treatment, such as breast cancer screenings. The cancer society was in the forefront of successful efforts last year to get the National Cancer Institute to endorse regular mammograms for women over 40.

Crawford said the society spends less than $1 million a year on direct lobbying, including the $30,000 in contributions to the two governors' organizations.

Over the last year, she said, the society used 10 of its own employees to lobby. For legal and other help, it hired the heavyweight lobbying firm of Hogan & Hartson, whose roster includes former House Minority Leader Robert H. Michel, R-Ill.

During policy forums, cancer society representatives have the opportunity to discuss issues such as discouraging cigarette smoking and lengthening hospital stays for women who have mastectomies.

Crawford said the cancer society made $5,000 contributions to each governors' association last year, and tripled the ante this year because the $15,000 donations gave the group greater access to governors -- including the privilege of sitting at a governor's table during the annual dinners each group holds.

``Going up to the next level gave us even more leverage to be competitive with the tobacco companies,'' she said. ``We were on their turf. It got more tickets to go to the dinners and more opportunities to get to educational forums.''

Tax experts say the contributions may be legal if they went for educational programs such as forums. But problems arise because these events are sponsored by a political party, not a nonpartisan organization, and the programs may be more political than educational.

Indeed, both the Democratic and Republican groups say their primary goal is to elect governors.

``You've got questions as to whether this is being done for political activity,'' said former IRS official Milton Cerny, who once oversaw tax exemptions at the agency.

University of Miami law professor Frances Hill said the cancer society's decision that it must pay to play was revealing.

``It looks like they really feel they have to buy their way into the legislative or governmental process,'' Hill said. ``Why can't the cancer society participate without paying its way in? Why does anyone have to give money to get access?''