In an election that until lately has been dominated by super PACs, politically active nonprofits are the new bad guys, drawing ethics complaints, letters to the IRS and legislative action. That is bad news for the nation’s 1.6 million nonprofits, which have much to lose as their sector gets dragged into political money controversies. For reform advocates, the problem with big-spending, secretive nonprofits is that they answer to no one and keep voters in the dark. But the worst damage inflicted by unrestricted, undisclosed campaign money could be on nonprofits themselves. “Charitable organizations depend on the confidence and trust of the public for support,” said Diana Aviv, president and CEO of Independent Sector, which represents the nonprofit and philanthropic community. Campaign spending by nonprofits, she added, could pose “a serious reputational risk” to the sector.
Overtly partisan groups such as the Karl Rove-founded nonprofit Crossroads GPS and the White House-friendly nonprofit Priorities USA Action have drawn fire for blurring the line between legitimate social welfare advocacy and blatant politicking. Independent Sector has put together a task force to respond to the explosion in political spending by tax-exempt organizations, particularly 501(c)(4) social welfare groups.
The Supreme Court’s Citizens United v. Federal Election Commission ruling lifted campaign spending limits not just on corporations but on all incorporated groups, including unions, trade associations and 501(c)(4) nonprofits. Such tax exempt groups have drawn as much or more controversy lately than the hundreds of unrestricted super PACs ushered in by Citizens United. That’s because unlike super PACs, which at least in theory must disclose their activities to the FEC, nonprofits face no disclosure requirements whatsoever. Yet some 501(c)(4) social welfare groups are making direct transfers to super PACs, and others are spending tens of millions of dollars on TV ads that look a lot more like campaign commercials than educational messages. In 2010, the first election after Citizens United, non-disclosing tax-exempt groups spent $133.3 million on candidate-oriented expenditures, according to the Center for Responsive Politics.