The controversial Tea Party Nation Convention in Tennessee has found itself in controversy over its media policy and its prices. Now the controversy has deepened over its financial processes and handling of money — and it has lost one of its co-sponsors as a result. The grassroots organization American Liberty Alliance withdrew from the event, citing concerns over transparency in the handling of donations, as AC Kleinheider reports for the Nashville Post:

The former webmaster of Tea Party Nation, the group sponsoring next month’s National Tea Party convention at Opryland, has written a “whistleblower’s” account of his experience working with the group while it was in its embryonic stages. And what he reveals apparently has led a key tea party leader to remove his group from the sponsor list.

In a post on his personal blog, In Media Res, Kevin Smith, an owner of the web design company HearSAY, writes that Tea Party Nation founder Judson Phillips took advantage of his volunteer computer experience in the creation of Tea Party Nation’s web architecture and profited from the enterprise.

Smith writes that his “zeal for the movement” meant he delivered Phillips’ web services at a heavily discounted rate at the expense of his own business. He believed that he was working for an nonprofit effort that would only supply founder Phillips with a little extra income to replace income he was losing while working for the movement instead of practicing law, he writes.

Smith reports being shocked when Phillips filed to create Tea Party Nation as a for-profit corporation. Disgusted with Phillips’ decision to continue taking donations for the for-profit company, Smith ultimately resigned.

Others appear to be taking umbrage as well. Eric Odom, the leader of key tea party group American Liberty Alliance, has posted a letter on his site announcing that his group will not be participating in the event as announced based on how the Tea Party Nation group operates.

Well, I’m not sure that a for-profit model is inappropriate for a movement that seeks to endorse free-market principles. After all, plenty of people have profited on the margins at least, with T-shirt and bumper-sticker sales. In order to get big names to appear at conventions, money has to get raised — and the profit motive would encourage more of such organizing efforts. However, regardless of whether one uses a profit or non-profit model, donations cannot be commingled with personal funds, and some independent oversight has to exist to make sure that the effort doesn’t exploit the attendees or contributors for hidden purposes.

These problems could just be part of a painful learning curve, and not any nefarious behavior, as Eric Odom and I discuss in an exclusive interview on the subject of ALA’s withdrawal. Odom wanted to emphasize that ALA’s decision was based on member input about concerns regarding the process, and not any conclusion about motivations of the organizers themselves:

Obviously, there seems to be a lot of room for improvement here, including how the organizers have handled the media access to the event. (Full disclosure: I received a very kind and professional invitation to cover the event, but my schedule wouldn’t allow it.) I’m with Eric in noting that conservatives need this kind of organizing impulse from the grassroots, and that profit models should be encouraged (as well as non-profit). I doubt that TPN was going to make a windfall in any case, and they’d be fortunate to break even. But they need to make sure that they have full transparency on all financial transactions, full separation from personal finances of its organizers, and more independent oversight.

Hopefully, this will be a learning experience for everyone.

Update: I should have hat-tipped Dave Weigel, who first let me know about the withdrawal.

Update II: In an e-mail to me, Judson Phillips says the assumptions of the Kleinheider article are false; he will have a statement later. He also makes the fair point that I should have asked him for his side of the story — and he’s right.

Update III: Judson says he will have a full statement later tonight, which I will immediately add to the post. In the meantime, though, AC Kleinheider sent me this response:

I contacted Mr. Phillips shortly after Kevin Smith’s post went live for comment. He told me repeatedly via email he would call. He never did. When other media outlets started picking up on the story I went with what I had. He had his opportunity to tell his side and still does. Mr. Phillips has both my email and cell phone number.

Sounds like AC did the due diligence. But I should have afforded Judson at least that opportunity as well, so Judson’s point regarding my post is still well taken.

Update IV: Judson released the following statement late on Wednesday evening, and I’m publishing it in full:

January 14, 2010

Tea Party Nation would like to announce the following efforts and status of the Nationwide TEA Party Convention:

Media

First, we are pleased to announce that the convention has sold out and we now have a waiting list which we will continue to try to clear as opportunity presents.

In this light, we have had numerous requests for press passes and the resulting expected coverage. However, as we have set expectations that this is a working convention, we have tried not to make it a media event.

In fact, Tea Party Nation has received hundreds of requests for press credentials to cover this convention. Everyone from a small town newspaper in Iowa to Fox News has asked for press credentials. We have had requests from Canada, England, France, Germany, Switzerland, Spain, Norway, Croatia and Japan. We have been hard pressed to accommodate all of these requests and do not have the space or resources to support the entirety of the press corp. Indeed, we have asked the hotel if they would be willing to provide a press room during the convention.

However, given these practical limitations, we have approved the following press organizations:

Fox News
Breitbart.com
Townhall.com
The Wall Street Journal
World Net Daily

About Tea Party Nation:

Tea Party Nation is a C-Corp. We do not focus on donations, and provide a service and network for like-minded conservatives and TEA Party leadership. TEA Party Nation is operated entirely by volunteers. Tea Party Nation has an Advisory Board made up of nine (9) individuals who have been with Tea Party Nation since its formation. This Advisory Board is instrumental in greeting new members, moderating the site, putting out our newsletter and making the policies and decisions for Tea Party Nation.

Between last February and the present, Tea Party Nation has seen members come and go. We have tried to deal fairly with our present and former relationships, however, not without some criticism. This criticism has been unfortunate and we believe, unwarranted. However, it is the policy of Tea Party Nation not to focus on past challenges, but to stay focused on the task of advancing the conservative cause and defeating liberalism.

With that in mind, we will not be making any comments regarding former members.

The National Tea Party Convention

Last summer, our founder, Judson Phillips, approached the Advisory Board about a need for the Tea Party movement to move beyond holding rallies. At this time, the Tea Party Nation Advisory Board discussed the need for a Tea Party Convention. We envisioned a convention where delegates from the various Tea Party groups could gather, network, gain training and discuss the advancement of the movement. In this light, we began development of the plan resulting in the current incarnation of the event.

Certainly, we are not professional event planners. We have been most appreciative of the many members, volunteers and professionals who have helped us bring this vision to fruition. These people have managed a tremendous task and put a convention together in a matter of weeks that normally takes a year to plan.

As stated, the convention is now sold out. There is an extensive waiting list. We have delegates coming from Maine to California and as far away as Hawaii. And as of this morning, we invited RNC Chairman Michael Steele and DNC Chairman, Tim Kaine to come and have a dialogue with the attendees. We are awaiting a response and are looking forward to an excellent event with the excitement of the attendees, leadership and speakers. We are grateful for the overwhelming response and appreciate the positive results expected from this convention.

In the end, we appreciate the fact that differences of opinion exist, but our leadership and our volunteers are committed to the successful conclusion of this convention. We appreciate the interest of all those associated with this event.

Tea Party Nation
www.teapartynation.com