FEC Seen as Unlikely to Demand Donor Transparency This Year

June 20, 2012; Source: U.S. News & World Report

Why has the Obama reelection campaign asked the Federal Election Commission (FEC) to get the 501(c)(4) organization Crossroads GPS (founded by George W. Bush’s political Rasputin, Karl Rove) to reveal its donors?

The impetus is the U.S. District Court decision in Van Hollen v. FEC, in which U.S. District Court Judge Amy Berman Jackson ruled that the Commission had gone beyond its authority in exempting some (c)(4)s from political donor disclosure. The Obama argument is that Crossroads GPS is really a political committee, not a social welfare organization, and should be required to disclose, just like its sister PAC—notwithstanding its official corporate status as a 501(c). In other words, if the bulk of the organization’s activity is political, the FEC’s requirements on disclosure trump the IRS’s allowance of 501(c) donor secrecy.

It seems obvious that the Obama campaign filed the request to target the largest secret funding mechanism working on the Republican side of the national elections, but there are dozens and dozens of other purported social welfare organizations that should also disclose by virtue of the Van Hollen decision. That was essentially the Crossroads argument in suggesting that the Obama campaign ought to ask for liberal (c)(4)s such as Priorities USA to disclose their donors, too. It was the classic schoolyard dare: I’ll show mine if you show yours—though neither side is likely to do it.

If the FEC were functional and prepared to implement the Van Hollen decision, the FEC would act in place of the Obama request. It would review the list of all (c)(4)s and first begin targeting those that are paired with PACs—like Crossroads and Priorities—for disclosure. It’s kind of hard to imagine that these brother-and-sister acts aren’t coordinated structures for funneling secret political donations. If functional and prepared, the FEC would even go further and start working down the (c)(4) list to dig into their purported social welfare program functions. But all of this would require a functional Commission as opposed to the one that is split down the middle on partisan lines and, without too many qualms, decided to gut the McCain-Feingold campaign finance reform legislation. Don’t bet on it.

Our guess is that the Obama and Romney campaigns might lodge these complaints with the FEC, but the FEC will do little or nothing. Even though the U.S. District Court changed the rules—or rather, reverted them to what the law called for—you can expect an appeal of the decision and a probable FEC decision to stay any action on Van Hollen until after November. The FEC, we think, won’t change the rules mid-cycle during an election season. What a shame.—Rick Cohen

About

Rick Cohen

Rick joined NPQ in 2006, after almost eight years as the executive director of the National Committee for Responsive Philanthropy (NCRP). Before that he played various roles as a community worker and advisor to others doing community work. He has also worked in government. Cohen pursues investigative and analytical articles, advocates for increased philanthropic giving and access for disenfranchised constituencies, and promotes increased philanthropic and nonprofit accountability.