There’s no mystery about why a business or industry group might be shy about how it spends money on election campaigns. Just ask department store chain Target. In 2010, Target, which had been known for its progressive employment policies, faced a customer and shareholder backlash after it donated $150,000 to a pro-business PAC in Minnesota that was backing a gubernatorial candidate who opposed gay rights. Target eventually quelled the furor with a policy change prohibiting trade groups from using its contributions to intervene in elections, but it stopped short of disclosing all its political donations. Yet had it made its Minnesota donation through a nonprofit organization known as a 501(c)4, it might have avoided all that hassle. That’s because such organizations don’t have to disclose who their donors are.
These so-called C4s are becoming the most fashionable dodge allowing businesses, industries, and well-heeled figures to involve themselves in politics behind the scenes. By law, 501(c)4s — so designated after a section of the tax code governing nonprofits — are supposed to be devoted exclusively to “social welfare purposes,” which the IRS defines broadly as education, fundraising, even lobbying on issues related to the common good and civic betterment.
But although C4s aren’t supposed to get directly involved with election campaigns or electioneer for specific candidates, they’re becoming a major conduit of political contributions by business and industry. That’s because the law allows C4s to keep the names of their donors secret. The consequence is that business interests and the wealthy not only get a free pass to pour millions into the electoral process, but have a way to keep their fingerprints off the bucket — or at least to significantly delay disclosure.