501c4 Groups: Dark Money or Donor Protection?

Groups under the 501(c)4  designation have come under a lot of scrutiny since the Citizens United v. FEC ruling in 2010. The ruling fundamentally changed the relationship between money and politics — either for the better or for worse depending on one’s political perspective.

Despite the increase in small-donor grassroots fundraising, 501(c)4 groups are not going anywhere. Here’s what you need to know about these groups and how they are viewed across the political spectrum.

The Basics

501(c)4 groups are nonprofit organizations designed to promote civic or social causes. They can be anything from volunteer fire departments to groups like Rotary and Kiwanis. The groups themselves are nothing new, but interest in them grew following the Citizens United ruling.

Two well-known examples of 501(c)4 groups are the conservative Americans for Prosperity and liberal Organizing for America. Both groups say that their mission is to increase civic engagement by providing information to voters and other grassroots activities.

The Citizens United ruling said that corporations and labor unions could register for 501(c)4 status and participate in politics as long as political spending accounts for less than 50 percent of their budget. Over the past decade since Citizens United, the IRS has received thousands of applications for new 501(c)4 groups looking to engage in lobbying and other political activities.

One key difference between a 501(c)4 and a Super PAC is that 501(c)4 groups do not have to disclose their members and contributors. Because politics is not their primary purpose, they are also exempt from oversight by the Federal Election Commission.

This lack of oversight and accountability for political spending is the main contention between liberals and conservatives when it comes to campaign finance.

On the Left

The book “Dark Money,” released in 2016, drew attention to the ways that the Koch brothers and others use tactics like 501(c)4 groups to expand their influence without the public scrutiny that comes from donor transparency. It captures the view of many progressives who feel that a political fight can never be fair when you don’t know who’s playing.

They also argue that, unlike Americans for Prosperity and Organizing for America, corporations do not have an outwardly civic mission that the law should require and thus should not be exempt from public review.

This concern was further amplified last year when Treasury Secretary Steven Mnuchin announced that 501(c)4 groups no longer need to disclose donor names and addresses on federal tax filings.

Expect progressives to continue putting pressure on organizations to disclose donors, and on politicians to not accept money or other political favors from these groups.

On the Right

Conservatives take a different view of 501(c)4 groups, arguing that they protect a donor’s right to support causes without fear of public backlash.

States like Mississippi have enacted laws challenging “right to know” requests for donor information, arguing that political contributions are a form of free speech that needs to be protected under the First Amendment.

Viewing political donations as free speech is part of a larger movement among conservatives to increase the generally-held definition of free speech to include freedom from activities that violate individual liberty.

Another example of this is the legal fight over a baker’s right to refuse making a wedding cake for a same-sex couple because it violates his religious beliefs. In the Masterpiece Cakeshop case heard before the Supreme Court last year, conservatives argued that baking a cake constituted free speech, much like making a donation to a political campaign.

What comes next?

Nearly 10 years after the Citizens United ruling, it seems unlikely that things will change anytime soon.

Individual cases will continue to play out in state courts across the country, and one may eventually make its way to the Supreme Court. In the meantime, the number of registered 501(c)4 groups will likely continue to rise.

On the political side, several of the 2020 Democratic presidential candidates, including Beto O’Rourke and Pete Buttigieg have already pledged to not take money from 501(c4) organizations and other outside groups during the election. This question will continue to be an important one for Democrats moving forward.

Grassroots Pulse covers public policy and political issues aimed at engaging highly-active policy makers, donors, and grassroots leaders at the forefront of the political process in America today.

Image credit: Photo by Natalie Chaney on Unsplash

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