Tuesday, July 31, 2012


by Harry Kresky

An important dialogue is taking place around the issue of disclosure by certain non-profit organizations that support or oppose candidates for federal office.  While the issues may seem technical, they impact on how our electoral process works and how we participate in it.

The American Bar Association (ABA) is considering a resolution that would require Section 501(c)(4) organizations that spend money supporting or opposing a candidate for federal office to disclose the names of their contributors.  A 501(c)(4) is a tax exempt advocacy organization such as the League of Women Voters, the National Rifle Association and IndependentVoting.org.  The last-named is my client.

Under present law, such organizations are allowed to spend funds from their general treasury to support or oppose candidates, so long as those expenditures do not constitute a significant portion of their budget.  The ABA resolution recommends that an organization which does so be required to disclose the identity of anyone who has contributed $200 or more to it.  The proposal is similar to H.R. 4010 (pending legislation in Congress regarding these issues), which mandates that a 501(c)(4) that uses funds from its general treasury to support or oppose a candidate for federal office must disclose the identity of all persons who gave more than $10,000 to the organization from the beginning of the calendar year prior to the date of the disclosure in question.  The ABA threshold for disclosure is significantly lower. 

I am wary of the presumption in the press and in the heat of the current presidential campaign that 501(c)(4) organizations exist only for purpose of evading campaign finance regulations.  The proposed disclosure and reporting requirements would impose a significant burden on such an organization should it choose to participate in the federal election process. 

Now, should a 501(c)(4) allow itself to become a conduit for wealthy people seeking to use it as a “pass through” for money spent to elect candidates, then this activity and the source of its funding should be disclosed.  It might happen, however, that in the course of a campaign, a candidate for Congress makes a statement on an issue related to the 501(c)(4)’s mission that prompts the organization to speak out against the candidate, even though the organization had not planned to do so, and had not and did not contemplate participating in the electoral arena. 

Under the ABA’s proposal, such expenditure would trigger disclosure of the identity of all contributors of $200 or more, including those who did not intend and had no knowledge that their money would be used for such expenditure.  This might discourage persons form contributing to the organization at all.  Consider a person living in a small, conservative, rural community who is strongly pro-choice.  Such a person might not contribute to a pro-choice 501(c)(4) for fear that her support would be disclosed and make her a target of hostility in the community where she lives and works. 

In First Amendment legal parlance, this is called "a chilling effect."  A person is less likely to exercise her right to free speech and free association for fear that doing so would cause her harm. 

Isn’t it enough to require that the organization making the expenditure disclose its identity?  That might cause a past contributor who did not agree with the expenditure to not give again.  But it would not discourage contributions for fear of possible disclosure and retaliation against the contributor. 

Sometimes, too much transparency can be a bad thing.

Harry Kresky blogs at Legal Briefs


Calmoderate said...

When it comes to "campaign finance", there is no such thing as too much transparency. Large sums of money is there to buy votes. Period. The "chilling effect" argument is a red herring. Rich people just want to buy politicians in anonymity. If the concern is that the little guy would draw back, then make the limit above what the little guy would donate in a given election cycle or in a single contribution, e.g., $500, $800 or whatever works.

This argument smells like an ACLU extremist thing with no connection to reality, i.e., the corruption of politics by special interest money.

That is self-evident from the lengths that the wealthy go to to hide. They want their opinions to have effect on public policy but they want no personal repercussion from it. Why hide your opinions if you want to commit free speech? Isn't the point of free speech speaking publicly?

It is one thing to win votes on the merits of the arguments made publicly to get an intended policy. It is entirely another to pay political parties and politicians for backroom "access" and secret conversations using professional lobbyists backed by piles of cash and the very real threat of giving that cash to the politician's opponent in the next election.

Transparency cannot be and is not a bad thing. I cannot disagree more with Mr. Kresky's argument.

jbo said...

I agree with Kresky. Matt Bai makes a convincing case in last week's NY Times that McCain Feingold, not Citizen's United, "unleashed" the current torrent of dollars into our political process.

Furthermore, disclosure is an ineffective weapon against wealthy interests influencing politics. Campaign finance advocates need to become much more creative and develop proposals that are not so easily evaded and/or distorted.

richardwinger said...

I also agree with Kresky. Thanks for running his article here.

DavidPSummers said...

I was initially all for as much transparency as possible. The, on the GOP blogs, I started seeing posts like this...

Now the examples are, as one might expect from a partisan site, anecdotal. However, I have begun to have doubts about this.

In the end, I find myself asking the questions, given that people have a right to spend their money on political ads, what are we trying to achieve. If it is for people to understand why the message might be biased, then I favor transparency. When I see people talk about "doing something" about donors or "holding them responsible" that is where my doubts come in.

DavidPSummers said...

"That is self-evident from the lengths that the wealthy go to to hide. They want their opinions to have effect on public policy but they want no personal repercussion from it. Why hide your opinions if you want to commit free speech? Isn't the point of free speech speaking publicly?"

This is what is what giving me doubts about transparency. Free speech is an inherent right and IMO nobody should be expected to "pay a price" or "endure repercussions" for engaging in it.

Nancy Hanks said...

I agree with DavidPSummers here. Muzzling the wealthy will not empower the people. Ordinary people need more ways of participating fully in our political process. Restricting free speech of anyone, rich or poor, is antithetical to democracy.