Friday, July 27, 2012
Perhaps nonprofit "social welfare" groups might have a rare need for political action and lobbying of lawmakers to advance their causes. But if there is an occasion to play politics, the same rules on public disclosure that apply to political action groups should apply to these nonprofits.
Yet, they don't. And, as a result, the Internal Revenue Service rules for nonprofits are being used -- abused -- to provide those with a political agenda a way to keep their donor lists secret. These groups are buying millions of dollars in television ads to try to influence the presidential election and other races.
IRS rules say nonprofit "social welfare" groups can keep their donor lists private -- as well as maintain their tax-exempt status -- if their political activity is less than 50 percent of overall expenses.
Some of the nonprofits most active in politics include Crossroads Grassroots Policy Strategies, which started with the help of former President George W. Bush's chief political strategist, Karl Rove, and Americans for Prosperity, co-founded by energy billionaire David Koch. Helping Democratic causes are offshoots of groups such MoveOn.org and Priorities USA, a companion to a super-political action committee of the same name, according to Bloomberg News.
This is outrageous. The IRS must change the rules to stop this clear effort to skirt campaign disclosure laws.
We expect it would be rare for a true nonprofit "social welfare" groups to venture into the political arena. That, frankly, should be left to political-action groups with a "social welfare" agenda. The goal of "social welfare" groups is generally to provide services to people -- counseling, food, clothing. This is why they are awarded tax-exempt status.
Bloomberg reports the Campaign Legal Center and Democracy 21, both Washington-based, nonpartisan nonprofits that back efforts to increase campaign finance disclosures, have asked the IRS to revisit the regulations associated with the "social welfare" groups, known by their tax code section as 501(c)(4)s.
"The inaction of the IRS is only serving to inspire further abuses of the tax code as 501(c)(4)s are misused by special interests and individuals seeking to buy influence," said Gerald Hebert, executive director of the Campaign Legal Center in a press release. "... The IRS needs to establish a bright-line standard on eligibility for this privileged tax status or the already flagrant abuses will become even more widespread and the damage to our democracy will be made infinitely worse."
Again, the need for political action by nonprofits should be rare. It would be best to stay out of the political arena.
But if they must venture there, we would urge the IRS to adopt strict regulations -- no more than 5 percent of their expenses for political purposes to keep their tax-exempt status.
And if any lobbying or campaigning occurs, the donor lists must be made public.