America was founded, in large part, on the principle of free speech. At election time (a season which seems to have greatly expanded), there’s been more and more political speech. That comes thanks to the loosening of the campaign spending restrictions enabled by the U.S. Supreme Court’s landmark Citizens United ruling.
Along with unrestricted spending through corporate and organizational PACs, the noise in the political arena has grown louder through the participation of nonprofit entities known by the section of the tax code that authorized them: 501(c)4.
Now, at last the Obama administration has moved to constrain these groups. New rules proposed by the Treasury Department and the Internal Revenue Service would rein in the political activities of these nonprofits, categorized as "social welfare organizations," in an effort to ensure that their work is primarily social welfare and not politics. The rule should be fully vetted, but it suggests a viable first step toward bringing one sector of campaign funding under control.
This issue became a pointed concern locally in the 2012 elections. To cite the most prominent example: A 501(c)4 called Pacific Resource Partnership conducted a high-profile campaign for Honolulu’s rail project and against its leading opponent in the mayoral race, former Gov. Ben Cayetano.
The "social welfare" component of its mission is encapsulated in its website "About PRP" section, in which it’s self-described "as an advocate for unionized construction and an influential resource for management."
That role allows PRP "to bridge these traditional divides to successfully lead efforts that sustain the health of the building industry."
Even if one accepts that as a form of social welfare, in practical terms the organization was far more political during the 2012 election cycle.
On the national level, nonprofits such as Crossroads GPS and the League of Conservation Voters are just two of many groups that would be curbed if the administration puts these rules into effect, as it should.
The money spent on political campaigns by these groups is called "dark money" because its source doesn’t have to be disclosed. Paired with the skyrocketing spending levels by PACs, the lack of transparency about the sources of political money has dealt a death blow to good-government controls in campaign finance.
The new rules would classify a broad range of work as "candidate-related political activity" and explicitly exclude it from the agency’s definition of social welfare. Treasury and the IRS will be hearing recommendations on how much political activity is allowed.
Experts have observed that the nonprofits’ legal teams probably will find a way to keep donors undisclosed, regardless of the rules. While that is the likely eventual outcome, tighter definitions at least should place a needed roadblock in front of the groups.
No regulatory scheme is perfect, but it’s critical that the administration move on this problem. The purpose of the law, providing a tax incentive to encourage social-welfare work by nonprofits, is being subverted by organizations bent on pumping money into U.S. elections in ways that serve their political agendas but little legitimate public purpose.
