A federal judge recently decided that Californians do not have the right to know who is funding the Americans for Prosperity Foundation, a nonprofit connected to the larger Americans for Prosperity organization that, according to the Center for Responsive Politics, spent several million influencing the 2014 midterm elections and is on track to do so again in 2016.
Donor secrecy is in this year. Another organization called Conservative Solutions Project created to support Marco Rubio’s presidential quest has walled off its records so that nobody will know how it spent over $10 million or who provided its money in the first place.
These are not the super PACs that have attracted so much negative attention, but something far more disturbing. Super PACs can spend unlimited amounts of money promoting campaigns because the Supreme Court says this is First Amendment-protected free speech.
But even they must disclose their contributors, even if it is after the end of campaign season when few people care. Super PACs’ speech may be far louder than most people can yell with their wallets, but at least their megaphoned speech can be traced to a source.
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We can’t do that with dark-money political organizations masquerading as tax-exempt 501(c) nonprofits, and the over $16 million they have spent so far this year, according to CRP.
The Internal Revenue Code has a whole list of tax-exemption designations, but the trend today is for political organizations to apply for the 501(c)(4) exemption as social-welfare nonprofits. This does not carry the same strict prohibition against political activity as charities, but it does shield donors from public disclosure.
This might not be a big concern as long as the social welfare group is doing something socially useful like funding civic speakers or supporting neighborhood associations. It is a lot more problematic when the nonprofit’s social welfare cause is the kind of education that gets somebody elected president or to Congress.
Individuals contribute essentially unlimited amounts of money to these nonprofits. We can at least be thankful that contributors do not get to write off these donations on their taxes, at least not with contributions to (c)(4) nonprofits.
The nonprofits then put the contributions toward their purported social-welfare program. Usually this means creating advertising in television, radio, the Internet and even making documentaries.
But there are also voter turnout guides and mass mailings, all of which just happen to promote one individual for political office, without directly saying so, while suggesting that all opponents are unfit for the office.
Ultimately, the nonprofit will have to tell the IRS how it spent its money. Never must it disclose to the public who contributed the money in the first place.
The IRS is too afraid to say the obvious about these tax exemptions. Remember the so-called scandal about the IRS questioning and holding up the applications of dark-money organizations for (c)(4) status because they might be right-leaning? Congressional Republicans roared and the IRS found a rock to hide under.
Of course, the real tragedy is that the IRS was not trying to come down equally hard on left-leaning dark-money nonprofits. American Bridge 21st Century Foundation and Patriot Majority, USA also deserve a close look. But perhaps the most disturbing new development is that dark money laundering is spreading to the 501(c)(3) charity designation.
The now-shielded Americans for Prosperity Foundation mentioned above is a tax-exempt charity, not a social-welfare nonprofit.
Why should we care? After all, some of the biggest beneficiaries of nonprofit dark money in the 2016 election like Jeb Bush and Marco Rubio didn’t make it very far. The concern, though, is about accountability, not whether politically minded social welfare nonprofits succeeded with their “education.”
The cornerstone of republican government is one-person, one-vote, where everyone has equal power in the political process. Unlimited campaign contributions violate that principle because it gives individuals with deep pockets far greater political voice, and therefore power, than anyone else. Yet the Supreme Court says this is fine because contributing money is really free speech, and some people are just more gifted in oratory than others. Inequality in financial voice is unavoidable and therefore permissible.
But if contributing money is speech rather than political power, then we at least must have the right to know who is speaking. We have the right to confront our accuser in court, so why not the right to confront an offensive speaker?
Speech is fundamentally a public act. It occurs in the public sphere. When we hear, and thus behold, a speaker, we can listen, argue, agree and even ignore that speaker. More importantly, we can respond to that speaker and call him or her out when we believe they are wrong. That is called accountability. We should try it sometime with dark-money donors.