In this age of high-dollar political campaigning, the dividing line between “social welfare” and “political action” has become increasingly important. Unlike political organizations, 501(c)(4) social welfare organizations can raise and spend unlimited amounts of funds while granting their donors anonymity. All they need to do is to keep their political activities to less than 50 percent of their annual effort.
A newly formed nonprofit, A New Missouri, is raising eyebrows and providing another example of the need for greater clarity. ANM was formed after a heated campaign in which the issues of campaign finance and honesty were used by now-governor Eric Greitens. His campaign, echoing the strains of Donald Trump’s national campaign, based some attacks on the premise that Missouri’s government teems with “corrupt career politicians,” “well-paid lobbyists,” and “special-interest insiders.” He called for the passage of new statutes to create more honesty in government.
According to a recent story in the Kansas City Star, A New Missouri was “founded by [Missouri] Gov. Eric Greitens’ campaign treasurer and housed in a building linked to one of Missouri’s most prolific political donors. […] The group’s stated purpose is to ‘promote ideas, policies and/or legislation to create more jobs, higher pay, safer streets, better schools, and more, for all Missourians.’”
Sounds like an organization not much different from other nonprofits formed to advocate for better communities. But, according to a story in the Columbia Daily Tribune, the governor’s senior advisor, Austin Chambers, said that though he would not “be directly involved in A New Missouri’s daily operations…there will be coordination between the nonprofit, the governor’s campaign, and the governor’s official state office. Chambers will work for all three. Meredith Gibbons, the Greitens campaign’s finance director, will work out of the office of A New Missouri, as will Greitens’ sister-in-law, Catherine Chestnut.” That appears pretty political.
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Does the difference really matter? It does if it’s important to know who is giving how much to which candidate. Jordan Libowitz of Citizens for Responsibility and Ethics in Washington summarized this concern in comments to the Daily Tribune: “If you want to take a massive check and you don’t want people knowing who’s behind it, this is what you do. They call it dark money for a reason.”
As a further indication of how the anonymity of a nonprofit can change the nature of a democratic government, funds raised by other Greitens-related nonprofits have begun to replace state funds for ongoing government operations.
Since taking office Jan. 9, the governor has eschewed use of the state plane for official business. Instead, he relies on private planes and has said he’ll pay for them with campaign or private money. When the nonprofit picks up the tab, Missourians may never know which individuals or corporations are actually paying for the governor’s travel, or what kind of business they may have before the state, including regulatory matters or legislation that the governor will either sign or veto.
John Messmer, a political science professor at St. Louis Community College at Meramec, sees this use of nonprofit status to hide political activity very problematic. “What I find most troubling is that everyone knows that these forces are political organizations that deserve scrutiny and regulation. But since they’re masquerading as a ‘social welfare’ group, they get away with doing things in secret.”
Such nonprofits are becoming more popular with elected officials. As NPQ has reported, Donald Trump, Barack Obama, and Bill de Blasio provide three recent examples of public officials who established nonprofit organizations to support their policy agendas while serving in office.
The nonprofit sector has an interest in public policy and the work of government at all levels. Individual organizations have the need and right to speak in support of those they serve and on issues that they believe affect their mission. The Supreme Court ruled in NAACP v. Alabama that donor anonymity was essential to free speech. It said that regulations or laws that “compelled disclosure of affiliation with groups engaged in advocacy may constitute [an] effective a restraint on freedom of association.” The IRS has traditionally respected the decision of the Socialist Workers Party not to disclose its donors on its Form 990. But when nonprofit status becomes a wall preventing citizens’ access to a truly open government, it has become distorted. Is the problem big enough to warrant giving up donor anonymity?—Martin Levine