More Compliance Seen for Politically Active Nonprofits

Posted June 20, 2012 at 1:18pm

Nonprofit groups that spend big money on campaign-style ads will face growing pressure to comply with tax and campaign finance laws in the wake of a federal court ruling last month, Rep. Chris Van Hollen (D-Md.) said in a speech at the National Press Club today.

“These organizations are doing all sorts of gymnastics to try to prevent voters from knowing the sources of their funding,” Van Hollen said at a conference titled “Shadow Money,” hosted by the Center for Responsive Politics.

A federal appeals court in May upheld Van Hollen’s legal challenge to Federal Election Commission disclosure rules, a decision he said will force 501(c)4 social welfare groups to make some tough choices about the types of ads they run. The court sided with Van Hollen, ruling that groups running so-called electioneering communication ads, which picture or name a candidate on the eve of an election, must say who paid for the spots.

“That will put pressure on some of these groups that are using the guise of charitable, educational organizations as a way to hide their political donations and expenditures,” Van Hollen said.

The author of disclosure legislation in the House, Van Hollen also took Senate Minority Leader Mitch McConnell (R-Ky.) to task for an anti-disclosure speech he delivered at the American Enterprise Institute last week. McConnell said Van Hollen’s bill and disclosure initiatives moving through various federal agencies are an attempt to suppress free speech.

“Nothing could be further from the truth,” Van Hollen said. “Disclosure doesn’t prevent any individual or corporation or union from running a single political advertisement.”

Van Hollen quoted McConnell himself endorsing full disclosure in a TV interview in 2000 during which he told journalist Tim Russert: “We need to have real disclosure.”

Van Hollen also noted that the Supreme Court, both in its Citizens United v. FEC ruling in 2010 and in a long list of previous cases, has found that “disclosure requirements are important to our democracy and do not place an undue burden on free speech.”

Van Hollen said he and other reform advocates are pursuing a two-track legal and legislative strategy to shed more light on political spending. He is considering a second lawsuit challenging FEC regulations on independent campaign expenditures. (The first ruling applied only to electioneering communications.)

He acknowledged challenges facing the disclosure legislation on Capitol Hill, which may come up shortly in the Senate, but noted that polls show broad public support for transparency in campaign financing: “I think the more attention that’s focused on the issue, the greater the chance that we will pass disclosure requirements,” he said.

Van Hollen’s comments come at a time when big spending by tax-exempt groups is facing increasing scrutiny both from regulators and political players. Sen. Orrin Hatch (R-Utah) and several colleagues this week wrote to the IRS commissioner to challenge the agency’s efforts to collect donor information from some tax-exempt groups. President Barack Obama’s campaign yesterday filed a FEC complaint aimed at forcing one of the leading GOP-friendly nonprofits, Crossroads GPS, to disclose its donors.