Nonprofit Newswire | Nonprofits and (Anonymous) Money in Politics

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September 21, 2010; Source: New York Times | Nonprofit advocacy group—mostly on the Republican side, so far—have become “some of the biggest players in this year’s midterm elections,” according to the New York Times on page one yesterday.

But wait, you must be thinking, nonprofits, by definition, are supposed to be non- political in terms of electoral campaigns.  And you would largely be correct in your thinking. While 501(c)(3) public charities are absolutely prohibited from political campaign activities [PDF], 501(c)(4) “social welfare organizations” (as well as 501(c)(5) labor organizations and 501(c)(6) business leagues) can engage in campaign activities “so long as it does not constitute the organization’s primary activity,” according to the IRS.

But this hasn’t stopped many groups from exercising outsized influence on the recent midterms “in part because the anonymity they provide donors,” the Times says. And those concerned with the role of money in politics are not happy.

Unlike 527 political organizations, which can also accept donations of unlimited size, 501(c) groups permitted to engage in political campaign activities have the advantage of usually not having to disclose their donors’ identity.

The issue has become more important than ever since the Supreme Court decision in the Citizens United case earlier this year that eased restrictions on corporate spending on campaigns. Since the Court’s decision, more and more money is pouring into these nonprofit groups to influence elections across the country.

“These groups are popping up like mushrooms after a rain right now, and many of them will be out of business by late November,” Marcus S. Owens said. Owens used to lead the tax exempt division at the IRS. “Technically, they would have until January 2012 at the earliest to file anything with the IRS. It’s a farce.”

It’s a farce because the IRS. doesn’t feel like it’s in the regulation game, nor do they have an interest in overseeing clean elections. They’re in it for the money, and these groups would yield little tax revenue for the effort. What’s more, newly formed nonprofits aren’t required to seek approval from the IRS. until they file their first tax returns, which may be months after an election.

The Supreme Court, with the cascading affect of Citizens United, has left our election system worse than they found it. And the nonprofits whose aim it is to elect a candidate and obscure otherwise regulated money in politics have left the nonprofit sector worse than they found it.—Aaron Lester