California: Ballot measure money not political under IRS loophole | news10
It’s considered the equalizer for the most-talked about organizations in politics: an IRS requirement that 501(c)(4) ‘social welfare’ groups spent less than half their cash on politics. But experts say the IRS left a big loophole that could play out big time in California: ballot measure spending isn’t considered political. “You could have a nonprofit doing virtually no traditional charitable work at all and really just being a funnel for campaign funds,” says Gary Winuk, the chief enforcement officer of the state’s Fair Political Practices Commission. The existence of the loophole is understandable; few states have an initiative system that allows voters to write their own laws. And even fewer have a system that’s used as often, and costs as much, as the one in California. Even so, it’s a loophole not widely publicized and likely to gain more attention as 501(c)(4) groups turn more of their attention — and money — to the Golden State.