Interview by Jaime Ortega.
Craig Holman, Ph.D.Government Affairs Lobbyist Public Citizen’s Congress Watch
1) What is exactly a 501- (c) -4 and whats is the goal of these organizations?
501(c)(4)s are tax exempt social welfare organizations, whose “exclusive” purpose by law is supposed to be to promote social welfare. This is defined as advancing a social or political cause, but not electioneering activity for or against candidates. Some court cases moderated the statutory “exclusive” definition to “insubstantial,” but the IRS on its own initiative redefined exclusive and insubstantial to mean “not its primary purpose,” which the IRS has never defined primary purpose. With this ambiguity, and the IRS’s lack of willingness to properly enforce the tax code, groups like Americans for Job Security and Crossroads GPS have used 501(c) tax status as a haven to wage massive electioneering campaigns and keep the sources of the money secret from the public. Nonprofit groups do not disclose their donors. When used by electioneering front groups, as we have seen to an unprecedented degree in 2010 and 2012, these are known as “dark money” groups.
2) How does exactly issue adds differ from campaign ads?
The distinction between “campaign ads” and “issue ads” has evolved over time. Following the 1976 Buckley decision, the Supreme Court wrestled with this distinction, since “campaign ads” are subject to campaign finance and disclosure laws while “issue ads” are not. The Court offered a cursory answer in infamous footnote 52, saying that only if an ad uses one of eight magic words, such as “vote for” or “elect”, then it is a campaign ad. If not, it is an issue ad. This distinction was drawn on a whim, with no research or documentation behind it.
3) Mostly all 501-C-4s that run advertisements during elections seem very negative. But the major issue for some advocacy groups is that some of these organizations do not disclose the donors information or identity. Would it be legal for a senator to donate to an Issue Adds commercial, to help his campaign win?
I completed a study entitled Buying Time 2000, which was the first academic effort to measure the magic words standard. We found that nearly all genuine campaign ads do not use the magic words, not even candidate ads. That meant most campaign ads were disguised as “sham issue ads” designed to influence election yet evade the campaign finance and disclosure laws. http://www.brennancenter.org/publication/buying-time-2000-chapter
The Buying Time 2000 study helped usher through the McCain-Feingold law in 20002 that redefined campaign ads to include both express advocacy (magic words) and any ad that mentions a candidate, targets that candidate’s constituency and airs within 30 days of a primary election or 60 days of a general election (“electioneering communications”). The McCain-Feingold law was originally upheld in full by the Rehnquist Court.
When the Court majority changed with two new Bush appointees, the Roberts Court reversed most of the McCain-Feingold law in the 2010 Citizens United v. FEC decision. However, the Roberts Court did continue to hold that “electioneering communications” are subject to disclosure (though not the other campaign finance laws). But in another reversal of policy, the Federal Election Commission approved a rule radically narrowing the disclosure requirement to apply only to donors who “earmarked” their campaign donations for a specific campaign ad – which no one does. The result is that any electioneering front group may now avoid disclosure of donors financing campaign ads – both express advocacy and electioneering communications – if they mask themselves as a 501(c) nonprofit group.
4) In your experience. Have major banks, investment firms or other large corporations ever been caught donating money to these 501-C-4s organizations to promote an ‘ad against’ a candidate that opposes a threat to their institutions ( for example: Intending to regulate bank practices)?
The dark money groups are outside groups. The campaign finance law places candidates in a strictly different situation, defining all of their activities as campaign activities subject to campaign finance laws and disclosure. A candidate could make a donation to an outside group, but it would have to be reported and disclosed by the candidate.
Since dark money groups do not disclose, these are the favorite avenues for corporate money. Many corporations want to bankroll campaigns targeted candidates and lawmakers, but they do not want their customers to know they supported a specific candidate. So they give to dark money groups. This means we do not know who they are. We do know that outside spending has increased four-fold in 2010 over the last nonpresidential election of 2006, and then increased again four-fold in 2012 over 2010. All this happened after the Citizens United decision allowing corporate political spending, so it is obvious the money is coming from corporate treasuries, we just cannot prove it.
5) In times of campaign, issue ads seem a powerful tool to influence voters by providing personal information that ‘is not’ necessarily part of the candidates campaign. In fact, issue ads look as an invasion of privacy destined to attack candidates with ruthless determination no matter where this may lead. Are the organizations promoting such ads focusing only in the political aspect of the campaign or simply invading the privacy and moral behavior of the candidate which is completely unrelated with the campaign itself?
Since even candidates prefer to use electioneering communications (“sham issue ads”) that do not use the magic words of “vote for” or “elect,” these types of campaign ads are more powerful than express advocacy ads. It is more influential, for example, to run an ad declaring that a candidate is a pedophile and beats his wife, than to say “don’t vote for” the candidate.
6) Should 501-C-4s be regulated? And what is the biggest pro and cons, these organizations offer for the public?
Nonprofit groups should be required to obey the law and not spend any more than an insubstantial sum on political intervention. If a nonprofit wants to spend a significant amount of money campaigning for or against candidates, that is fine so long as they forfeit their nonprofit status and register as a section 527 political organization, subject to the campaign finance and disclosure laws.
