September 19, 2019; Bloomberg Government
As campaign season approaches and the whole country is riveted on one kind of election interference, this recent decision about nonprofits and electioneering holds some lessons about boundaries for the rest of us, though few are likely to go anywhere near this level of egregious behavior.
In 2010, the nonprofit (now defunct) Americans for Job Security (AJS) incorporated as a nonprofit. It now admits in a settlement with the Federal Election Commission that this was wrong. Knowing that it was going to use most of its funds (in this case more than $20 million) to elect Republican congressional candidates, it should have registered as a PAC, a political action committee. That appears more than evident.
AJS’s funding came from groups associated with the conservative Koch brothers’ network of grantmaking organizations. These donations weren’t small; AJS received nearly $2.3 million to work against Democratic candidates who had supported the Affordable Care Act. The watchdog group Citizens for Responsibility and Ethics in Washington (CREW) brought the case against AJS to the Federal Election Commission, and their rulings on their actions in the 2010 and 2012 election cycles were settled just before the Commission itself became defunct.
As of the end of August, with the resignation of Republican Commissioner Matthew Peterson, the FEC is left without a needed quorum of four, due to a lack of commissioners duly appointed by the president and approved by the Senate. It has been operating with two vacancies for the last two years, and while President Trump has made one nomination, no action has been taken on it in the Senate. Precedent has usually seen the nomination of pairs of Democratic and Republican Commissioners at the same time, but precedent has not carried much weight of late. This case against the Americans for Job Security may be the last one for a while.
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With or without the Federal Election Commission, the rules and guidelines for nonprofits and PACs will be front and center in the coming months. Watchdog groups on all sides will be on the lookout for those who overstep what they are entitled to do.
“Unfortunately, our work is far from over as other bad actors are bending over backwards to skirt campaign finance laws,” said CREW’s executive director, Noah Bookbinder.
Since this particular case was brought to the FEC, much remains unsettled. Nonprofits should take note, for instance, that the courts held that spending for “electioneering communications” that refer to candidates in the weeks before an election “presumptively [has] an election-related purpose.” (So, beware that issue ad that even mentions a candidate!) There’s also a struggle over what kinds of disclosures must be made and attached to digital ads, akin to the ones now required on TV.
Since there is no quorum, there will be no FEC decision, and the internet could become a playground for testing how far one can go with (or without) disclosure. But remember, adding members to the FEC could happen at any time, and their hearings can cover cases from years before—just ask the Americans for Job Security. This may not be the best time to test how far one’s nonprofit status reaches.—Carole Levine