Fixing C4s Won't Fix the Problem


Finding solutions depend on how you define the problem. If the current mess at the IRS is truly a case of civil servants or elected politicians infringing on the free speech of specific political groups, that’s a problem for law enforcement and the courts. So far, what appears to have been demonstrated is incompetence and mismanagement, not crimes.


If you define the problem as the blurry line about these organizations engaging “primarily" in social welfare activities, you can be fix it with a definition -  a simple declaration of percentages, a cap, or a flat rate. That no Congressional committee is holding hearings to do this shows their actual lack of interest in fixing any real problems. These elected officials are the beneficiaries of the line’s blurriness.

If the problem is that the IRS can’t manage oversight of these organizations in a timely, impartial, and fair manner, there are two possible solutions – expand and train the IRS staff or hand oversight of C4s over to the FEC. The first is highly unlikely in this political climate. The second solution could improve oversight - at least campaign funding is the FEC's specialty. Doing so won’t stop secret money from flowing into campaigns, it will just improve reporting on it. So will the DISCLOSE Act or some version of it - and both actions should be considered. 

If the problem is 501 c 4s funneling money to political campaigns without revealing their donors, that’s a campaign finance problem. One solution would be requiring C4s to reveal all of their donors. This this will return C4s to the less-attractive entities they were before 2010. Requiring C4s to disclose their donors is also slippery slope to requiring all nonprofits to reveal their donors - which is synonymous with the end of anonymous charitable giving. That's a high price to pay for a fix that won't have any effect on the larger question of secret campaign funding - those campaign funds will just flow somewhere else (such as think tanks) or back to PACS and SUPER PACS.

The problem with all of the ideas above is they address the wrong issue. The real problem is not with C4s; it’s with campaign finance. At the root of it all is anonymous money flowing into political campaigns. For this there are two proposed solutions – first, fund candidates and parties directly and require full disclosure of all such gifts. This is was what campaign finance looked like before Watergate revealed the cracks in the system and we responded by taking the first steps to today’s broken system.  The second solution is to provide public money for campaigns and not allow private gifts above a certain percentage. This is what Larry Lessig has been promoting with Rootstrikers. It's appealing but even Lessig recognizes it's very slim chances of happening under current conditions (which is why he’s also calling for a Constitutional convention).

There is a third way that has nothing to do with stopping the flow of money in but instead focuses on the flow of money out. Most of the dollars raised go to broadcasting candidates’ messages. If we made air time (television and radio) free to candidates and campaigns, limited the length of campaigns to a certain period of time and gave everyone the same amount of airtime (on those publicly owned, privately leased airwaves of ours) we’d kill the beast of demand and supply would wither in response. At least until the industries of campaign consultants and media buyers figure out some way to save their skins and reroute the funds to the Internet, mobile phones or Google Glass ads. In which case we go back to the FCC about public broadband.

We should close the gaping hole in the current oversight system that allows campaign donors to funnel money anonymously through C4s. Unless we do so, the rest of the campaign finance system will continue to leak into C4s and the charitable element of the 501C section will continue to be tarnished by the "dark money" tone of the C4s. But let's be real, fixing C4s won't fix campaign finance or any of the problems with the larger nonprofit sector. The C4s as political money launderers are a symptom of larger problems with both campaign finance and the independent sector - fixing them is like the proverbial bandaid.

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