Political Irony

Super PACs have garnered a lot of attention lately, but they aren’t the real money in politics. Far worse are so-called “dark-money nonprofits”, which are allowed to keep their donors secret.

The Citizens United decision not only allows corporations to spend unlimited amounts of money on politics, it gives the same right to nonprofits. However, a nonprofits are supposedly not allowed to be primarily political in purpose or they can lose their IRS status. Tax law requires that the primary work of a nonprofit must be to benefit the community at large, not a single candidate or party. But that hasn’t stopped nonprofits like Karl Rove’s Crossroads GPS, or David Koch’s Americans for Prosperity from becoming the new political cash cows, since donors to nonprofits can keep their identities secret.

How bad is it? Back in 2010, dark-money nonprofits already spent 50% more than Super PACs. Through the spring of 2012 it just got worse, with 91% of political advertising coming from these nonprofits, including nonprofit trade groups like the US Chamber of Commerce (which also do not have to disclose their donors).

But as of last Saturday, the rules are changing. Previously, these organizations could run unlimited “issues” ads (politically oriented advertising that doesn’t endorse or oppose a specific political candidate) without disclosing who is paying for the ad. But a recent court case closed this loophole. So these nonprofits have a Catch-22 situation. If they run “issues” advertising, they now have to disclose the donors who paid for that ad. They can still run explicitly political ads (which endorse or oppose a specific candidate) without disclosing their donors, but if they run too many of those they risk losing their tax exempt status.

Of course, donor secrecy is the primary reason these dark-money nonprofits exist. The US Chamber of Commerce has already declared that they will refuse to disclose their donors. And Americans for Prosperity has made it clear that any change forcing them to disclose their donors is off the table.

Of course, none of this may matter. Let’s say that in response to the court decision, a group like Crossroads GPS just stops running issues ads (so they don’t have to disclose their donors) and instead just runs explicitly political ads (e.g., endorsing Romney or telling you to vote against Obama) until the upcoming election. What could happen to them? They could be slapped with a fine. They could even be shut down. But the wheels of justice turn slowly, so it is unlikely anything would happen until after the election. By then it would be too late. Even if a nonprofit becomes blatantly political and gets shut down, another one would just spring up to replace it.

And that my friend, is why corporations (including nonprofits) are not people. You can’t throw them in jail. According to a University of California election law expert, “If a nonprofit has to sacrifice its name and pay a fee, and it helps keep the House, win back the Senate, and take back the White House, that’s a small price to pay.”