To Disclose, or Not to Disclose; That Is the Question

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August 21, 2013; New York Times


The requirements of nonprofit organizations with 501(c)(4) designation are coming under scrutiny yet again. Although billed as organizations promoting “social welfare,” they have become major political forces in the wake of the Supreme Court’s infamous Citizens United ruling. More recently, readers will recall that the IRS came under fire for being a little heavy-handed in their scrutiny of some applications for the designation, particularly those from organizations that might have had a Tea Party affiliation. In California, there has been an ongoing and raging debate about whether or not organizations that have the designation and invest heavily in advertising for or against a piece of legislation or a candidate need to reveal their donors. There was even the case of one organization from Arizona that invested in California election advertising. All of these stories have been covered by NPQ.

According to a report in the New York Times, there is now some backlash from these organizations against what has been billed as the most progressive disclosure law in the country. Two years ago, in the State of New York, Governor Cuomo signed into law a requirement that any 501(c)(4) organization that devotes a significant portion of its budget to lobbying state government must reveal the names of their donors who have given $5,000 or more. The New York definition of lobbying includes not only speaking directly to legislators, but also television advertising. So far, about 80 of the groups, many of them trade associations, have abided by the law and filed the necessary paperwork. The listing can be found here.

Several groups are asking to take advantage of a loophole in the law, giving them exemption from the need to disclose if their donors would face threats and/or harm if they were revealed. In the case of NARAL, this exemption was granted. Issues like abortion have caused a great deal of argument and violence against supporters and practitioners. The form required by New York State when disclosing the organization’s donors asks for very specific information, including name, address, telephone number, and exact amount and date of donation. The form can be accessed here. If there were a radical person who felt that the only response to the cause was violence, then this would be an open door to finding out who supports it and how to find them.

On the other hand, if the government starts offering exceptions, have they started down a slippery slope that the nonprofit organizations will try to take advantage of? In what would appear to be an odd twist, it is Republican members of the New York legislature who are calling for openness and disclosure. One legislator says that he is worried that tens of millions of dollars of donations will be hidden from view (or “dark money,” as it is called). Normally, this is the argument Democrats have used against overtly conservative organizations receiving the dark money—the voting public deserves to know who is trying to affect their vote (a sentiment echoed by the Brennan Center for Justice at NYU recently). In this case, however, as it is a pro-abortion group that has been offered the exemption, it is the conservative legislator who is worried.

For the most part, it seems, nonprofit organizations are genuinely afraid for the safety of their donors, who could be open to threat and violence if their support were to be known publicly. Kelly Williams, Corporate General Counsel of the Brennan Center, warns however that these exemptions are only viable in the case of harassment or a real threat of physical harm, and should not be granted when the donors are afraid of economic impact in the form of a boycott.

Large amounts of money are being invested by these donors to try to affect the legislative process, either by influencing the legislators themselves to vote a certain way on a bill, or by working to convince voters which candidate to vote for. By giving to a (c)(4) organization, the donation is not tax deductible to the donor. Now, one by one, states and municipalities are deciding if the donors’ names should be disclosed. It is a matter of balancing the rights of voters to know who is influencing legislation against the rights of donors to safety. On the other hand, there are always the (c)(4)s themselves, who will try to push the boundaries so they can get a little more money from their donors and have one less piece of paper to file with the government.—Rob Meiksins