The effort to end secret political spending by nonprofits received a major boost last week. Wednesday, New York State Attorney General Eric Schneiderman adopted new disclosure requirements for charities. These groundbreaking regulations require charities operating in New York to disclose information about their political spending and are a major advancement in bringing transparency to our elections. In the wake of the IRS targeting scandal, which has in some ways gotten the disclosure discussion onto the wrong track, this development is welcome news for reform advocates.
Since the Supreme Court decided Citizens United, spending by 501(c)(4) “social welfare” nonprofit organizations has skyrocketed. In 2010, 501(c)(4) organizations spent over $92 million on political ads — a stunning increase from the just over $1 million spent by 501(c)(4)s in 2006. Similarly, 501(c)(4) organizations’ federal election spending ballooned to over $256 million in 2012 — an amount more than triple the $82 million they spent in 2008. And 501(c)(4)s are beginning to spend big in state races as well.
But as the Brennan Center explained in our testimony to the Attorney General and two op-eds, nonprofit political spenders are essentially exempt from having to disclose their underlying donors because of inadequate election laws and enforcement. In federal elections, outdated laws and regulatory loopholes have allowed 501(c)(4) organizations to hide their donors with impunity. So long as donors don’t earmark their contributions as being for specific political purposes, the donors do not have to be disclosed. Moreover, many states (including New York) have left some 501(c)(4) political spending entirely unregulated, particularly if the spending does not expressly advocate for or against the election of a candidate by using words such as “vote for,” “oppose,” and so on. Consequently, these groups in recent years have became the favored vehicles for anonymous political spending.
This is why Schneiderman’s regulations are such a significant step toward bringing dark money into the light. Under the first-of-their-kind regulations, charities operating in New York State — including 501(c)(4) organizations — must disclose the percentage of their total spending used for political ads. Furthermore, charities that spend more than $10,000 on New York state and local elections must disclose their individual donors who gave at least $1,000 since the last reporting period. As the Attorney General explained, “There is only one reason to funnel political spending through a 501(c)(4), and that is to hide the identity of the donor.”
Because of these new regulations, big political spenders in New York will no longer be able to shield their identities by passing money through charities. Additionally, the integrity of the relationship between donors and charities will be strengthened. Donors will know whether their money is being used to support political candidates while charities will be able to prove that they are not involved in politics, if that is the case.
Continuing the fight for full disclosure of political spending, last week the Brennan Center submitted letters to the attorneys general of Minnesota and New Hampshire encouraging them to adopt regulations in their own states similar to those adopted by New York State Attorney General Schneiderman. Between an obstinate Congress, a deadlocked Federal Election Commission, and an IRS mired in scandal, state officials must take the initiative to implement reform in their own states. In doing so they will help make elections in their own states more transparent and will send a strong signal to the federal government that this important issue demands action.
(Photo of Eric Schneiderman by texasforeclosuredefensenetwork)