Blog Posts in Nonprofit Speech Rights

Citizens United and Impacts on Nonprofits' Political Spending

 

Since the Citizens United ruling, attention has largely focused on concerns around how much money will be spent on elections. However, groups are already spending heavily, particularly since the Wisconsin Right to Life decision when the Supreme Court decided that the electioneering communications ban is unconstitutional when applied to genuine issue ads. Subsequently, groups have been allowed to run issue ads that may come quite close to arguably resembling a campaign message, without having to disclose donors. POLITICO reports on the rise of such groups that are "pumping cash into the airwaves."

"Along with traditional industry groups, these new actors — their sources of funding and precise agenda often unclear — are emerging as powerful voices in the fights over health care and regulatory reform, and they plan only to get louder."

The decision raises legal issues that may affect tax exempt organizations, with particular implications for 501(c)(4) social welfare organizations, 501(c)(5) labor unions, and 501(c)(6) trade associations. These nonprofit corporations remain subject to federal tax law, and political activities cannot be the primary purpose of an organization. The ruling does not directly affect the laws governing 501(c)(3) charities, but such groups may remain somewhat perplexed as to what campaign-related activity is permissible.

Eliza Newlin Carney's latest column in the National Journal touches upon how 501(c)(3) groups may be impacted; "the ruling -- by equating corporate and individual First Amendment rights -- could trigger sweeping changes in IRS law as it applies to political activity, some tax experts say. All this could thrust 501(c)3 charities, which are now barred from engaging in partisan political activities, into an uncomfortable spot."

"For social welfare groups and trade associations, the big question is how to weigh in on elections without running afoul of the IRS." Lawrence H. Norton, with Womble Carlyle Sandridge & Rice, was quoted in the article as stating that guidance on how to define primary purpose has been, "to put it charitably, less than a model of clarity."

Reportedly, the measure yet to be introduced by Rep. Chris Van Hollen (D-MD) and Senator Charles Schumer (D-NY) would force tax exempt groups to reveal the identities of the groups funding their political ads. However, tax exempt organizations may oppose this proposal because of donor confidentiality concerns. Or instead be supportive, as Rick Cohen at the Nonprofit Quarterly suggests; "unmonitored flows of corporate and special interest funds into partisan 'issue ad' electioneering may have changed things so significantly that the public good will be better served by disclosure than confidentiality of the sources of donations for these election purpose."

A recent Congressional Research Service (CRS) report commented on proposals to have additional disclosure requirements for nonprofits, specifically in regards to the disclosure of large donors in group's political ads. The reports states, "it might be argued that the relationship between (1) the compelled disclosure of donors who gave money for reasons not necessarily related to campaign activity and (2) the government's interest to provide information to the electorate or avoid corruption or the appearance of corruption is insufficient to withstand judicial scrutiny."

(Amanda Adams 03/16/10; 0 comments)

More Congressional Hearings to Address Citizens United

 

The Senate Judiciary committee held a hearing tilted, "We the People? Corporate Spending in American Elections after Citizens United." During the hearing opponents of the ruling argued that the case exemplified that the Roberts Court has abandoned judicial restraint. Conversely, witness Bradley Smith, described the responses to the Citizens United decision as "hysteria." Smith also caused hysteria during the hearing when he referenced Vermont legislators as "freaking out" about the decision. This incited a heated exchange between Smith and Chairman Patrick Leahy (D-VT). Leahy interrupted Smith, disagreeing with the characterization of Vermont legislators.

Substantially, the panelists somewhat agreed that it will be very difficult to pass any major legislative changes. Any new campaign finance law is likely to face a legal challenge.

According to BNA Money and Politics ($$), Democratic senators maintained that the decision "represents a major boost to corporate influence in American politics, which is deeply unpopular with their constituents."

In addition, the House Financial Services subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises held a hearing which primarily focused on the issue of whether corporations should have to report their expenditures to shareholders. A member of the committee, Rep. Mike Capuano (D-MA), has introduced the Shareholder Protection Act of 2010, (H.R. 4790) requiring shareholder approval of corporate expenditures and boards of directors would have to vote on political spending over $50,000.

Again, any legislation is sure to face an uphill battle and possible future litigation. The expected measure from Sen. Chuck Schumer (D-NY) and Rep. Chris Van Hollen (D-MD) after the release last month of a summary of their proposals has yet to be introduced. CQ ($$) reports that the lawmakers are "sorting through the concerns of labor unions, nonprofit organizations and lawmakers as they try to write legislative language and line up cosponsors from both parties."

(Amanda Adams 03/11/10; 0 comments)

Advisory Council Provides Recommendations on Faith-Based and Community Organizations

 

The Chronicle of Philanthropy ($$) details the President's Advisory Council on Faith-Based and Neighborhood Partnerships' new report offering suggestions for the government in its work with charities. The panel provided a 164-page document which included recommendations to ensure that religious charities use government money only for secular activities.

The panel was split on whether houses of worship should be required to set up separate organizations to receive federal money. The report also suggests the federal government "clarify how the constitutional separation of church and state applies to charities that receive government grants and contracts." Charities are not allowed to use direct government money for "inherently religious activities" but, the council proposed that wording be changed to "explicitly" religious activities.

One of the report's recommendations dealt with the proposed Partner Vetting System (PVS), a program that OMB Watch has opposed. PVS would require grant applicants to submit detailed personal information on "key individuals" to be shared with intelligence agencies and screened against terrorist watch lists. The panel rightfully advises that the government work with nonprofits to create an alternative to PVS. "PVS as currently designed would significantly harm partnerships with local communities and compromises the safety of U.S. PVO [private voluntary organizations] personnel."

(Amanda Adams 03/11/10; 0 comments)

Reactions to Citizens United Persist

 

The American Constitution Society (ACS) hosted an event to discuss the Supreme Court decision in Citizens United v. Federal Election Commission. Five panelists assessed the prospects for congressional legislation. Not surprisingly, their opinions diverged on the ruling's long-term impact. There are numerous practical and constitutional issues involved in passing any of the bills introduced and it is doubtful whether or not legislators would even be able to agree on any of the proposals.

According to BNA Money and Politics ($$), Jan Baran, an attorney who represents the U.S. Chamber of Commerce said that "legislative proposals now being discussed come from congressional leaders who are clear in their intent to simply limit the scope of campaign spending that the Supreme Court has now said is constitutionally protected." James Portnoy, an attorney for Kraft Foods, said that he had "great skepticism" that any campaign finance reform legislation would be passed.

Meanwhile, Senator Chris Dodd (D-CT) has introduced a constitutional amendment to reverse the ruling, with Senator Tom Udall (D-NM) joining as a cosponsor. This is the third proposed constitutional amendment in response to Citizens United. According to Dodd's press release, the amendment "would authorize Congress to regulate the raising and spending of money for federal political campaigns, including independent expenditures, and allow states to regulate such spending at their level." Any constitutional amendment is a long shot, requiring a two-thirds vote in both the House and the Senate followed by ratification of three-fourths of the states.

On the state level, the National Conference of State Legislatures details that there are at least 23 states that currently prohibit or restrict corporate and union spending on candidate elections. Many states will now move forward to change these laws, and if not, there will likely be legal challenges. For example, in Minnesota it is illegal for corporations to try to influence elections by funding campaigns to defeat or endorse candidates. The Minnesota Chamber of Commerce is suing to make Minnesota's laws in sync with the Court decision.

USA Today reports that states nationwide "are rushing to rewrite campaign-finance laws." Bills offered in Iowa and Maryland are moving forward to require shareholder approval of political spending and to force public disclosure of corporate spending in state elections.

For more information on legislation in response to Citizens United, read this article from the latest Watcher.

(Amanda Adams 02/25/10; 1 comment)

Charities Challenge Anti-Terrorism Law

 

The Supreme Court heard arguments today (Feb. 23) in Holder v. Humanitarian Law Project, a case challenging the constitutionality of the definition of material support. Human rights and humanitarian aid charities say the law is so broad that it squelches their speech and advocacy work. The definition of material support includes services, training, expert advice, and could criminalize their work even when they have peaceful goals.

The justices agreed to take up the case after the Ninth Court of Appeals ruled in favor of the Humanitarian Law Project. The group wants to provide training in conflict resolution to the Kurdistan Workers Party and the Liberation Tigers of Tamil Eelam, both classified as terrorist organizations by the U.S.

According to SCOTUSblog, during arguments the justices raised questions about whether a distinction can be drawn among different types of support that individuals provide to terrorist organizations. For more information and background, visit the Charity and Security Network.

(Amanda Adams 02/23/10; 0 comments)

The Problem Remains Money in Politics

 

Global Integrity, an international nonprofit organization that tracks global corruption trends, released the Global Integrity Index: 2009. The report analyzed 35 countries' ability to counter corruption, and the tools available to citizens to hold the government accountable.

"Rather than examine the 'cancer' of corruption, the Index investigates the 'medicine' being used against it — in the form of government accountability, transparency, and citizen oversight." Overall, the U.S. scored 85 out of 100, and was the second least corrupt country in the study.

According to the findings, "The Obama administration's early anti-corruption efforts focused significantly on tighter restrictions around lobbying. While certainly not harmful, there are few data to suggest that increasing the transparency around lobbying activities at the federal level is the solution to corruption challenges in the United States. Rather than lobbying, Global Integrity data point to the corrupting influence of massive amounts of money in the federal elections process as one of the core drivers of corruption in the American system."

Further, the Citizens United decision, "will likely pour fuel on the fire of political corruption in the U.S. While free speech concerns loomed large in the court's decision to overturn longstanding campaign finance controls, the practical reality is that by allowing significant new inflows of private money into the U.S. political process, the court's decision may simply overwhelm an already dysfunctional Federal Elections Commission and undermine prospects for more accountable governance."

Nevertheless, the administration earned high marks for urging federal agencies to disclose information under Freedom of Information Act requests and for the Open Government Initiative. Gary Bass, executive director of OMB Watch, in a peer review section of the document stated "it will take time for Obama to overcome a longtime pattern of secrecy that has been imbedded in the federal bureaucracy. 'The culture in government is that you typically don't give out information that you don't have to.'"

According to the report, "significant progress has not been achieved in curbing corruption at the national level in the U.S." For more information on the report and how the study was conducted, click here.

(Amanda Adams 02/23/10; 0 comments)

Webcast Thursday: The Administration's Approach to Lobbyists

 

The Washington Post reports that, "President Obama is escalating his war on K Street, proposing a series of tough restrictions a year after he first issued policies aimed at tamping down the influence of lobbyists." On Thursday, Feb. 18 OMB Watch will host a webcast where panelists will discuss a review of the administration's efforts to reform lobbying and ethics during the past year. RSVP here for the webcast.

Obama has issued some of the most stringent restrictions ever seen on employing former lobbyists in executive branch agencies and the White House. Panelists will explore questions such as whether the Obama administration has thus far been successful in reducing the influence of lobbyists in Washington; if the focus on lobbyists is the right way to root out corruption; and what it means to reduce the influence of special interests on policymaking.

Tune in to the OMB Watch webcast, "The Obama Administration's Approach to Lobbyists – A One-Year Review" on Thursday, Feb. 18 at 3 p.m. Eastern Time

Location: 2040 S St., NW, Washington, DC 20009 and live on the web There's still time to RSVP for this event!

(Amanda Adams 02/16/10; 0 comments)

Letter Sent to Congress in Support of Civil Access to Justice Act

 

Over 150 national, state and local groups, including OMB Watch signed on to a letter supporting passage of the Civil Access to Justice Act (S.718 / H.R. 3764). The legislation was introduced last year to reauthorize the Legal Services Corporation (LSC) and expand access to civil legal aid.

The letter was sent to every Member of Congress and hopefully such clear support will help motivate lawmakers to prioritize the measure and move it quickly through committee. The number of co-sponsors continues to increase with twenty in the Senate and twenty-three in the House.

The most problematic restrictions on LSC grantees remain those that prevent the use of non-federal funds to advocate on behalf of the neediest of our communities. The Civil Access to Justice Act would expand access to justice to low-income populations by lifting those restrictions and helping to ensure that federally funded legal services providers are able to assist their clients in the most effective way possible.

The letter states; "Severely underfunded, LSC reports that more than half of all eligible clients who seek legal help from LSC-funded programs are turned away due to insufficient resources. Additionally, LSC-funded programs’ ability to help their clients is hampered by outdated restrictions, imposed in the mid-1990s."

(Amanda Adams 02/16/10; 0 comments)

Groups Call on Obama to Reform Faith-Based Office

 

OMB Watch, along with religious and public policy organizations, sent President Barack Obama a letter on the anniversary of the Executive Order establishing the White House Office of Faith-Based and Neighborhood Partnerships. The groups asked Obama to, "take additional actions to prevent government-funded religious discrimination and protect social service beneficiaries from unwelcome proselytizing."

The letter details specific proposals to protect civil rights in federally funded social services, including banning employment discrimination based on religion in tax-funded projects. The letter reminds Obama that as a candidate, he promised to reform the faith-based initiative, but has kept in place various rules and executive orders put in place during the Bush administration.

However, Obama's speech at the National Prayer Breakfast claimed otherwise, saying that the administration has, "turned the faith-based initiative around." As the Washington Post also reports, "faith leaders across the ideological spectrum -- including some Obama allies -- say the operation may be more about window dressing than results."

The joint letter states; "We urge you to act now to restore the constitutionally-required safeguards and civil rights protections governing partnerships between government and religiously-affiliated institutions standard operating procedures that had been largely in place for decades prior to the creation of the Faith-Based Initiative."

(Amanda Adams 02/04/10; 0 comments)

Citizens United, What's Going On?

 

In 2002, while working a polling site in Selma, Alabama, during a state senate race, I remember vividly how proud I felt to be participating in our democratic process. Being in the very city where the value of voting and the right to vote was literally beaten into the consciousness of the American people, had a profound and lasting impact on me.

 The right of citizens to vote is not to be taken lightly; it is an essential right and is the highest form of exercising civic responsibility. It is what we are supposed to do as citizens of this country, and being in Selma reinforced that view for me. In spite of or because of the many people that engaged in invaluable efforts – and sometimes paid with their lives – to ensure that all Americans could vote, it is our responsibility to participate in this process.

For much of the first decade of the 21st century, however, those lessons were lost as state governments and even the federal government actively sought to suppress the vote and disenfranchise millions of Americans. In late January, the situation for our democracy got even worse.

On Jan. 21, the U.S. Supreme Court ruled that corporations can spend unlimited amounts of money on political campaigns as long as they don't formally "coordinate" with candidates or political parties. American politics is already dominated by money. The amount of money that will now be available will be astronomical and could easily drown out the voice of the average American voter. The potential to unbalance the scales and infringe on the right of all Americans to have their voices heard through the principle of "one person, one vote" presents a clear and present danger to our democracy.

Corporations and their allies may even outspend political parties in seeking to influence policy and the whole of the political discourse. The most recent example: according to the Center for Responsive Politics, the U.S. Chamber of Commerce and its national subsidiaries spent $144.5 million in 2009, far more than the Republican National Committee and more than double the expenditures of the Democratic National Committee.

In 1971, Marvin Gaye wrote and released one of the most powerful albums ever made – What’s Going On. It was a simple question about the events of the time, and his expression about those events transcended time. Thus, I use it now. What's going on?

The Citizens United decision, written by Justice Anthony Kennedy, removes limits on so-called "independent expenditures" that are not coordinated with candidates' campaigns. It leaves in place a ban on direct contributions to candidates from corporations and unions, but it allows for unlimited donations to flow to some nonprofit corporations – 501(c)(4)s, 527s, and PACs – to use to influence elections in a partisan manner. Justice Anthony Kennedy, using what some call "aggressive intervention" or "judicial activism," said that political speech is "indispensable to decision making in a democracy, and this is no less true because the speech comes from a corporation rather than an individual." So now corporations are to be treated the same as individual American citizens? What's going on?

The five-justice majority also struck down part of the landmark McCain-Feingold campaign finance bill that served to regulate union- and corporate-paid issue ads in the closing days of election campaigns. Advocates of responsible government, campaign finance reform, and those organizations that promote civic engagement are rightfully concerned and dismayed that the ruling against the limits will be tantamount to selling our elections to the highest bidder. What's going on?

This Supreme Court ruling has the potential to drown out the voice of "We the People." A strong response to the Court's ruling is necessary and puts 501(c)(3) nonprofit organizations in a critical position to ensure that their constituents’ needs and concerns aren't lost in a deluge of corporate dollars. Otherwise, I fear all we are left with is the question, "What's going on?"

 

(Lee Mason 02/04/10; 0 comments)