Why the Socialist Workers Get Break on Donor Disclosure

April 26, 2013; The Wall Street Journal, “Washington Wire”

The Federal Election Commission issued a curious ruling last week with huge potential implications. Ever since campaign finance rules were implemented in 1974, the FEC has regularly granted a special exemption to donor disclosure rules to the Socialist Workers Party (SWP). The original basis for the exemption was the assertion by the SWP that it is a controversial fringe party and those supporting their political activities might be singled out for harassment and discrimination. That exemption has now been extended to 2016.

The justification included in last week’s FEC ruling finds a different basis, however. While acknowledging the potential for harassment of donors, Commissioners used the opportunity to point out the lack of recent support for the Socialists. The FEC noted that only 11 individuals would have been subject to having their names disclosed without the exemption being in place. FEC Chair Ellen Weintraub wrote, “SWP received only $1,222 in contributions from 2009 through 2011, and only approximately $16,087 in 2012. Only 118 people contributed to the committee in 2012…. And despite fielding a presidential candidate in every election since 1948 and numerous other candidates for Federal, State and local offices, no SWP candidate has ever been elected to public office in a partisan election.”

This ruling has potential implications for other donor disclosure rules, particularly those which currently protect donors to 501(c)4 nonprofit organizations like Organizing for America on the left, and FreedomWorks, Inc., and Crossroads GPS on the right. Particularly for the conservative-leaning organizations, defenses for keeping donor names secret have included the threat of harassment of, or discrimination against, donors and their business interests. Recent corporate support of political campaigns and political organizations have resulted in negative publicity, boycotts, and even legal action in elections like those involving California’s controversial Proposition 8.

In its exemption ruling, the FEC recognizes the importance of disclosure and transparency in political activity, and then acknowledges there are allowable exceptions to that ideal. What remains to be settled includes whether the criteria for the exceptions can be extended to other groups, including those small in numbers but large in financial backing, and whether corporate donors are entitled to the same protection from harassment that the FEC has afforded to Socialists since 1974. The FEC may also have to document how it identifies “fringe” groups, as many would argue that most or all politically active 501(c)4 organizations would qualify as “fringe.”—Michael Wyland


Michael Wyland

Michael L. Wyland, CSL, has more than thirty years of experience in corporate and government public policy, management, and administration. An expert on nonprofit governance and public policy issues, he has been featured and quoted extensively in media including The Wall Street Journal, The New York Times, CNN, Fox News, Washington Post, The Chronicle of Philanthropy, and The Nonprofit Quarterly. He currently serves as an editorial advisory board member and contributor to The Nonprofit Quarterly, with more than 100 articles published since 2012. Michael is a partner in the consulting firm of Sumption & Wyland. Founded in 1990, the firm provides board governance consulting, public speaking and training, and executive coaching to nonprofit organizations. Sumption & Wyland has assisted more than 200 nonprofits with strategic planning services from pre-retreat research to staff-level implementation assistance and effectiveness monitoring. Speaking topics include board-CEO partnerships, nonprofit executive transition issues, and overviews of the nonprofit sector of the US economy. Michael was born in Washington, DC and raised in the Northern Virginia suburbs. Prior to co-founding Sumption & Wyland, Michael managed the computer operations for an independent oil & gas investor in Dallas, Texas and served as a staff assistant to a U.S. Representative. During his college years, he spent one summer working at the US Department of Labor and one summer working at the US Department of Justice. His past volunteer service includes various leadership positions at the local, state, and national level with the Young Republicans. He has been the secretary and president of a condominium homeowners association and the treasurer of a professional association serving computing professionals. He served as a Trustee and Vice President of Sertoma Foundation, and has been elected president of his local Sertoma club twice. In 2014, Michael was elected Chair of the South Dakota Commission for National and Community Service (Serve SD), on which he has served since its founding in 2011. He is currently working as a senior advisor to establish a national charity dedicated to the elimination of prejudice, expanding the scope and reach of the 120-year old Pi Lamba Phi fraternal organization. Michael's writing for NPQ often addresses healthcare policy and governance, scandals involving nonprofits, and the governance and policy implications of nonprofit stories in the news. He was widely quoted and cited for his work analyzing the governance issues related to the Jerry Sandusky/Penn State/Second Mile scandal in 2011. More recently, he has written more than 30 pieces for NPQ relating to the IRS scandal. In addition, he presented a paper at the national 2014 ARNOVA Conference about the IRS scandal and its implications for regulation of political activity by nonprofit organizations. Michael lives in Sioux Falls, SD with his wife, Margaret Sumption, and their dog. They have one adult son. In his leisure time, he likes to read histories and biographies, play golf, cook, and be a companion to his wife.