A good-government group has won its case against the Federal Election Commission for negligence in enforcing campaign finance laws against two conservative political groups that have ties to billionaire industrialists and conservative juggernauts Charles and David Koch and that were active in several Southern states. Citizens for Responsibility and Ethics in Washington (CREW) filed a complaint with the FEC in 2012 against Americans for Job Security and the American Action Network for failing to register as political committees while financing $27.6 million worth of political ads during the 2010 elections. AJS is an anti-union 501(c)6 nonprofit trade association based in Virginia, while AAN is a 501(c)4 “social welfare” nonprofit based in Washington, D.C. After the FEC dismissed the suit, CREW sued the regulatory body itself.
This week a federal judge ruled that the FEC was “arbitrary and capricious” when it dismissed CREW’s complaint against the groups and will need to reconsider it. The ruling could dramatically change how the FEC investigates nonprofits that spend on politics and consequently increase election-spending transparency.
“The case sees through the problematic tactic of using bogus ‘issue ads’ that are clearly political in an attempt to evade transparency and accountability,” CREW Communications Director Jordan Libowitz told Facing South.
To avoid violating their nonprofit status, the primary purpose of trade organizations and social welfare groups must not be political activity. Unlike the 527 political committees known as super PACs that have strict political disclosure requirements, trade organizations and social welfare groups are not required to disclose their donors except when reporting political expenditures that explicitly support or oppose a candidate for office and, in some cases, expenditures on so-called “electioneering” ads that run close to an election and criticize or support candidates without asking citizens to vote for or against them.