Nonprofit Newswire | Some Nonprofits Weary of Donor Disclosure

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May 24, 2010; Source: Texas Insider | As an antidote to the Supreme Court’s Citizens United decision that unleashed corporate financing of political “issue” advertising, a bill is pending that would require 501(c)(4) to disclose the names of their top donors. The purpose of the bill is pretty clear—to prevent corporate and special interests from hiding their identities behind “shell groups.”

Among the various provisions, the bill would require (c)(4)s that spend more than $10,000 on political communications in a calendar year to report all donors who have given them some minimum amount of money, either $600 or $1,000 depending on the type of communications. The head of the organization that sponsors the ad and the top financial backer of the ad would have to make politician-like disclosure statements that they approved the message, and ads and mailings would have to list the top five donors to the organization.

No surprise, nonprofits are split as always when it comes to proposals for increased disclosure. Common Cause for example supports the bill. Others like the Sierra Club and the Alliance for Justice are watching closely but not endorsing the specific legislation. The American Society of Association Executives (ASEA) whose membership includes many corporate special interest groups is clear in its opposition, contending that the bill would discourage political spending that is First Amendment-protected free speech.

Some nonprofits worry that the law would potentially scare away donors supporting controversial causes, the bedrock argument long used in favor of donor confidentiality. Maybe that still applies to donors to 501(c)(3) organizations for whom partisan political campaign activity is prohibited. But the Citizens United decision opens a window to a lot more political activity by corporate backers of 501(c)(4)s—for some the 501(c) corporate status merely an artifice meant to camouflage the special interests lurking in the shadows.

Sometimes the nonprofit sector has to be willing to give something up in order to achieve a greater good. It may be that 501(c)(4) donor disclosure will help mitigate the possibility of multitudes of political donors masquerading as though they are simply providing information to educate the public.—Rick Cohen

  • RyanA

    You do mean ‘Wary’ Right?