FEC v. Beaumont Goes to Supreme Court - November 25, 2002 Vol. 3 No. 24

November 25, 2002 Vol. 3 No. 24:

Published: 11/25/2002

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FEC v. Beaumont Goes to Supreme Court

The Supreme Court has granted a request by the Justice Department to review a ruling that allows direct campaign contributions from nonprofit organizations, based on a legal theory that nonprofits are inherently different from for-profit corporations, and do not pose the same threat of corruption. Arguments are expected to be heard in March 2003.

Earlier this year, in Beaumont v. FEC (No. 01-1348), the U.S. Court of Appeals for the 4th Circuit upheld a Federal District Court ruling finding the ban on corporate contributions to federal candidates in the Federal Election Campaign Act unconstitutional as applied to nonprofit organizations. The court distinguished between nonprofits, which serve as vehicles for citizen participation in the political process, and for-profit corporations, which are concerned with "aggregation of capital or the issuance of equity shares." The court pointed out that "nonprofit advocacy organizations play a distinctive role in the political scheme," and "through their expressive activities, groups such as NCFL and NCRL help empower citizens to make informed political choices…. That the functioning of these groups is vital to our democratic political process is abundantly clear from looking at the types of activities in which they engage." Activities cited by the court include public education activities, conferences and debates, grassroots fundraising, membership participation, legislative lobbying and media programs.

The case arose from a challenge by North Carolina Right to Life, a 501(c)(4) organization. It does not affect the IRS ban on partisan electioneering by public charities, exempt under Section 501(c)(3).