Case Study: How Citizens United Maims Democracy, Charities

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October 14, 2012; Source: Bloomberg Businessweek

There are lots of pieces of the tale of the Center to Protect Patient Rights (CPPR) that provide ample evidence of the Citizens United disaster that has inundated the American electoral process. This all but nonexistent Phoenix-based group quickly amassed $62 million from secret donors in the wake of the Supreme Court’s Citizens United vs. Federal Election Commission decision and parceled it out to conservative 501(c)(4) social welfare organizations such as the American Future Fund, the 60 Plus Association, Americans for Job Security, and Americans for Tax Reform before reportedly disappearing prior to the time for required IRS filings.

The shell game of moving secret money back and forth between political organizations is becoming an art form in the hands of Citizens United-enabled maestros like CPPR’s Sean Noble, but it is widespread and proliferating. How anyone could imagine that these secret money flows are good for the American democratic process is beyond us.

Noble cut a distinctly problematic path with his “dark money” 501(c)(4) organization. In becoming executive director of the Center to Protect Patient Rights, Noble took no salary, but had CPPR hire his firm, Noble Associates, to operate and lobby for the organization for $530,000 over two years. The practice of hiding executive salaries behind a management firm is odious. CPPR raised $13.7 million in 2009, but said it did no fundraising. That is another practice that legitimate, honest nonprofits frown upon. CPPR has no website, its mailing address is a financial management consultant named Starlet Eiting who didn’t give reporters any information, and the phone number on its tax filings was that of a woman who says its her personal phone number. For all we know, CPPR no longer exists and may not file anything for this year with the IRS but will escape any sort of sanctions.

But there is another dimension to the CPPR story that is of concern. The article describes Noble’s 501(c)(4) CPPR and his personal enrichment as his “journey to the nonprofit world.” Not only are these organizations perverting the democratic process by making the financing of electoral activity all but unknowable, but they are harming the credibility and trustworthiness of the nonprofit sector by being lumped in—in the public’s mind—with 501(c)(3) public charities.

One person quoted in the article described CPPR and its ilk as engaged in “wholesale money-laundering.” That’s exactly what it is: creating organizations to hide the donors’ political activities from the American public. Eliminating the use of donor secrecy for political money laundering under the cloak of 501(c) confidentiality ought to be a major public policy concern of the nonprofit sector. Using a nonprofit “form” for political money laundering is as bad as it sounds and should be eradicated.—Rick Cohen

  • Mike Smith

    I do believe that the Citizens United does harm democracy and thus will harm the election processd