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Campaign Finance and Charities

September 06, 2012

(Mark Rosenman, a Washington-based scholar-activist and director of Caring to Change, a D.C.-based effort to promote foundation grantmaking for the common good, is a frequent contributor to PhilanTopic. In his last post, he looked at the potential impact of the Romney/Ryan platform on nonprofits.)

Rosenman_headshotCharities depend on people's trust and on the public's support for their existence. Unfortunately, much of that goodwill is being eroded by the behavior of some nonprofit organizations in the 2012 presidential race.

First, it's important to understand that there are lots of different kinds of organizations that are granted tax-exempt status by the IRS. They range from industry associations and what are called "social welfare organizations" to the charitable and faith-based groups we usually think of when we hear the term "nonprofit." Only donors to the latter, however, receive a tax deduction for their charitable donations.

For years, most social welfare organizations operated in service to a particular charitable concern and the broader community. The main difference between these organizations and charities is that the former are granted extensive powers to lobby government -- although those activities may not include "direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office." As my grandmother used to say, that's all gone to hell in a handbasket since the Supreme Court handed down its landmark Citizens United decision in 2010 -- and that hurts charities.

A lot has been written about the partisan political abuses perpetrated by what are known as (c)4 groups (that's the IRS designation for social welfare groups; charities are classified as [c]3s). Indeed, in this election cycle, (c)4s are using the secrecy afforded them by law -- (c)4s do not need to make public the names of those who fund them -- as never before to pour millions of dollars into vitriolic presidential ad campaigns intended to influence voters.

A side effect of the decidedly nasty and often deceitful ads run by these groups -- and the press attention paid to these abusive practices -- is that real nonprofits are being tarred with the same brush. Most people don't distinguish between (c)4s and charities. As a result, the good work of the latter, work that is dependent on public support, is being tarnished by cynical political operatives and agendas.

Of course, the corrupting influence of money in politics has long been a problem for charities. Among other things, they are at a grievous disadvantage when it comes to advocating for the common good with legislators and chief executives who too often are beholden to private interests. Sadly, instead of honoring "one person, one vote," our democratic system now rewards big bucks with outsized influence.

Charities and legitimate social welfare organizations should be able to advocate and lobby for their clients, their communities, and their causes. And we need to accept that sometimes it may be difficult to distinguish between nonprofits working for the public interest and those serving pecuniary and partisan purposes. Yet, charities cannot allow the ongoing corruption of social welfare nonprofit status to go unchallenged.

To help protect themselves against such corruption while continuing to push for a more democratic society, charities of all types need to work together to moderate the influence of money in politics. They can do this by calling for timely, energetic investigations of (c)4 groups that violate strictures on partisan political activity, as the IRS seems belatedly to be doing with Crossroads GPS, a (c)4 group established by Republican political operative Karl Rove.

Charities also should join in calling for much greater transparency with respect to political contributions, regardless of the tax status of the organizational vehicles used to encourage and bundle those contributions. And they must work to support legislation and other policies that help restore the voice of ordinary people in our political process while curbing the influence of billionaire donors.

Nothing less than the continued health of the charitable sector -- and our democracy -- is at stake.

-- Mark Rosenman

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