Corruption For Sale / Democracy Chronicles

November 18, 2015; Wall Street Journal, “Washington Wire”

In 2014, according to the Wall Street Journal’s review of recent IRS filings, two organizations heavily supported by Charles and David Koch—the 501(c)(4) Americans for Prosperity and the 501(c)(6) Freedom Partners—spent $220 million in 2014, up from $57 million in 2013.

The increased spending in 2014 marks a pattern for the groups. In 2012, Americans for Prosperity spent $122 million, up from $17.7 million the previous year. Freedom Partners, which is a relatively newer group, spent $237 million in the year leading up to the 2012 election, compared to $50.3 million in the year after.

For those of us who may not be keeping score, the years of high spending are years in which federal elections are held. Is that just a coincidence, or a sign of these being political organizations masquerading as nonprofits?

The Koch-backed network of groups plans to spend roughly $750 million influencing 2016 races, but faces few disclosure requirements. […] The groups are barred from explicitly advocating for or against candidates, but are free to run “issue ads”—ads that highlight candidates’ stances on certain issues.

Americans for Prosperity says its mission is to “mobilize citizens to advocate for policies that cut red tape and increase opportunity, put the brakes on government overspending, and get the economy working for hard workers– not special interests.” And according to its website, Freedom Partners, “a nonprofit, non-partisan, 501(c)(6) chamber of commerce…awards grants to like-minded organizations to conduct nonpartisan issue advocacy and bring these important societal and economic issues to the public’s attention.”

As a 501(c)(4), according to the IRS, Americans for Prosperity must “exclusively promote social welfare [and] may further its exempt purposes through lobbying [but may] not include intervention in political campaigns.” As a 501(c)(6) Chamber of Commerce, the IRS sees the purpose of Freedom Partners as “promoting the common economic interest” of its members. There appears to be enough “wiggle room” in these rules to easily allow both types of organizations to play the key roles they are playing in our nation’s electoral politics and still, because they have no need to publically identify the source of their fund, avoid the requirement that political organizations reveal their donors:

Unlike super PACs and campaigns, which have to file information about their donors and how they spend their money with the Federal Election Commission on a regular basis, nonprofits only file once a year with the Internal Revenue Service and are not required to disclose a breakdown of their contributions or their spending.

Using nonprofit organizations to end run around the public reporting requirements of our election laws does not benefit the nonprofit sector or our democracy. Independent Sector expressed its concerns that “the growing sums of money flowing into the political arena from some social welfare organizations [and the] reports of abuses [make] it essential that all stakeholders engage in a lively debate over what constitutes permissible partisan political activity by tax exempt organizations and how those activities should be regulated.”

Anyone see signs that debate has begun?—Martin Levine