By Nino Mtchedlishvili
Boston University Statehouse Program
Over the last 15 years, nonprofit groups dramatically increased their power in channeling dark money into political campaigns. The roots of this practice are in Citizens United v. Federal Election Commission, the Supreme Court’s ruling that reversed decades-old finance restrictions on campaigns and allowed corporations and outside groups, including nonprofit organizations, to spend unlimited funds on elections.
External financial influence on political and election campaigns has long been a part of American politics. However, the impact has drastically expanded since the Citizens United decision, which critics say has challenged American democracy and encouraged political corruption.
The issue of donor and contributor-related transparency also creates a campaign financing maze. Regulated by the Internal Revenue Service, a 501 (c)(4), nonprofits may have unlimited expenditures on political activities without ever disclosing donors if their primary purpose is “social welfare.” However, a clear definition of a primary purpose or the rule of calculations is not provided.
Supreme Court Justice Anthony Kennedy explained in the majority opinion of the Citizens case that disclosed information “enables the electorate to make informed decisions and give proper weight to different speakers and messages.” He said that technological developments would make the disclosure process more efficient.
“With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters,” wrote Kennedy in the majority opinion.
However, according to OpenSecrets, a nonpartisan and nonprofit research group tracking money in the U.S. politics and its effect on elections and public policy, “generally accepted test is that less than half of 501(c)(4) nonprofits’ activities may be political, and in order to stay under 50% threshold, some dark money groups funnel anonymous cash to each other in complex networks.”
Maurice Cunningham, UMass-Boston professor and author of “Dark Money and the Politics of School Privatization,” examined the campaign finances-related scheme behind the 2016 Massachusetts charter school referendum.
He described how wealthy white donors supported charter school expansions through so-called “social welfare” organizations like Families for Excellent Schools, using women and children of color in advertising and covering up actual funding sources while impacting public policy votes. Cunningham said that FES spent almost $22 million, but only $317,000 went directly to women and minority-owned firms.
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