Once upon a time, liberals and conservatives, Democrats and Republicans, incumbents and challengers disagreed over the value of limits on campaign funding and spending, but they agreed (publicly, at least) on the need for attribution and accountability.
There was broad-based agreement that the names of individuals and, later, corporations and unions should be clearly stated and open to the public — whether they had made contributions directly to candidates or were making “independent expenditures” linked to “electioneering communication.”
The erosion of that consensus was accelerated by a 2010 U.S. Supreme Court decision, Citizens United vs. Federal Election Commission. The ruling found that the First Amendment prevents the government from restricting independent expenditures by nonprofit and for-profit corporations, labor unions and associations.
The Citizens United case has had many impacts, one of the most significant of which is a dramatic expansion of nonprofit organizations seeking tax-exempt status under Section 501(c)(4) of the U.S. tax code.
So-called 501(c)(4) organizations are, according to the tax codes, supposed to be “primarily engaged” in promoting “the common good and general welfare of the community.” Involvement in political campaigns is not banned, but it is not supposed to be the “primary purpose” of a tax-exempt group.
Yet, as we have written previously, many 501(c)(4) groups, including some of the largest and richest, have been overtly political or closely tied to so-called super Political Action Committees that raise funds to directly influence elections.
Although contributions to the organizations are not tax deductible, they are appealing to many donors and those groups for a simple reason: Disclosure of the contributors’ identities is not required.
There are two problems, then:
• It is virtually impossible for the Internal Revenue Service to thoroughly, accurately and fairly assess whether 501(c)(4) organizations are meeting the requirements for their nonprofit status.
• Disclosure of donors’ identities should be required when the organizations clearly advocate for specific candidates, whether or not there is direct link to the candidates’ campaigns. After all, the organizations enjoy tax-exempt status; reporting should be required in exchange.
We were reminded of the role of 501(c)(4) organizations by a column in the Sarasota Herald-Tribune from Zac Anderson. He described that one such organization, Floridians for a Fair Shake, recently spent $603,718 on an attack ad criticizing U.S. Rep. Vern Buchanan’s support for the GOP tax bill.
That spending, while significant, pales in comparison to the campaign funds that Buchanan — a Republican from Longboat Key — has on hand and his ability to tap his personal wealth.
Right-leaning groups will aid Buchanan if his general election campaign is right: The practice is bipartisan, unfortunately.
Worse, the use of organizations that are exempt from naming donors has spread not only to federal and state races but to local campaigns as well — further eroding the belief that openness and disclosure are key components of elections in a representative democracy.