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Monday, June 11, 2012

Electioneering and 501(c)(4) Groups

A recent court ruling requiring disclosure regarding electioneering communications will have two unanticipated consequences:  changing the timing of ads, and encouraging more express advocacy.

At The Huffington Post, Dan Froomkin and Paul Blumenthal write about the complex rules involving 501(c)(4) groups:
A recent federal court ruling has actually accelerated the pace of spending by politically active non-profits in the early months of the campaign.
The ruling in Van Hollen v. FEC invalidated a regulation those groups had used to justify keeping secret the names of donors buying broadcast ads that refer to a federal candidates in a prescribed period before an election -- called “electioneering communications.”
Good-government advocates rejoiced. But non-disclosing groups have simply pushed up their spending to the summer -- before that prescribed period begins. (They have also said they intend to run explicitly political ads once the period begins.)
Campaign finance watchdogs said the lack of disclosure makes it harder to police one of the few rules governing the unlimited spending of outside groups: coordination between independent groups and candidates and party committees is forbidden.
"They're not supposed to coordinate, but if they're sharing a consultant with a candidate that they're looking to advance, how do we know they aren't coordinating?" asked Sunlight Foundation managing editor Kathy Kiely. "If you don't reveal who's working for you, there's no way that the public or the FEC can tell if you're coordinating."

The only clear view the public gets of how these groups spend their money comes more than a year after that money is spent, when nonprofits file their annual IRS Form 990 returns with the IRS. Tax-exempt groups are required to list their top five outside contractors.
For most of these groups, the most recent 990 reports available cover 2010 -- ancient history in a 24/7 news cycle. The reports do reveal, however, how some of these groups rely on steady support from a network of consultants.
For Crossroads GPS, the Karl Rove-linked nonprofit, top consultants all have roots back through Rove and the Bush administration.
At Reuters, Alison Frankel explains an oddity of the law:
On its most basic level, the ruling means that groups like the U.S. Chamber of Commerce, Crossroads GPS, Americans for Prosperity and other non-profits that run a particular kind of election-related advocacy ad must reveal who is giving them money. (The case doesn’t affect political action committees, which have their own set of rules.) “This is a very important victory in the battle to end secret contributions being funneled into federal elections,” said Democracy 21President Fred Wertheimer, who was co-counsel for the plaintiff in the underlying case, Representative Chris Van Hollen, a Maryland Democrat. “This case represents the first major breakthrough in the effort to restore for the public the disclosure of contributors who are secretly providing massive amounts to influence federal elections,” Wertheimer said in a statement. (Here’s an excellent overview of the case from the L.A. Times.)
But here’s the thing: The D.C. Circuit’s ruling may have the entirely unintended effect of pushing more money from politically active non-profits into television and radio ads that directly call on voters to support (or vote against) particular candidates. According to both election law professor (and blogger) Rick Hasen of the University of California at Irvine and Hispanic Leadership Fund counsel Jason Torchinsky of Holtzman Vogel Josefiak, there’s now a peculiar distinction between the ads at issue in the Van Hollen case – so-called electioneering communications that talk about particular candidates but stop short of recommending a vote for or against them – and “indirect expenditures,” in which groups run ads specifically urging you to vote for or against a candidate. The Van Hollen suit didn’t address indirect expenditures, so, according to Hasen, if non-profit groups want to keep their donor lists secret, they may switch their spending to ads that contain express advocacy.
Hasen said the groups risk losing their tax-exempt status if they do, but since none have apparently suffered that fate, “I think [the D.C. appellate ruling] is going to cause a shift.”