Nonprofits, campaign finance and more blows to democracy

                                                        Photo by Jason Dent on Unsplash 

I changed my job in response to the Citizens United decision by the Supreme Court of the United States (SCOTUS). I was convinced at the time (2010) that the Court's decision would lead to the transformation of many nonprofits from advocacy organizations to money laundering tools for political donors. I was right.

It's been hard to prove the scope of this for the very reason it's happening. Nonprofit law allows for donor anonymity; campaign finance law does not. By using nonprofits to "wash" their names from political donations, it makes it very hard to track money back to its source. The amazing web of connections that Jane Mayer drew out in her book Dark Money and ProPublica documented here shows how hard this can be. These concerns were part of what led Rob Reich, Chiara Cordelli and I to write Good Fences: The Importance of Institutional Boundaries in the New Social Economy (2013).

                                                    https://projects.propublica.org/graphics/koch

The rules on donor anonymity that come from the nonprofit sector have proven to be remarkably adaptable tools for "washing" donors' names from political contributions. This can be done by moving money from a c3 to a c4. It can be done by opening and closing a c3 or c4 in-between the required reporting periods. It can be done by creating layers of relationships between c3s and c4s and crowdfunding platforms. It can be done - and is being done - because the laws about nonprofits (and the regulators of them - state attorneys general, the Internal Revenue Service (IRS), and, in the case of Florida, the state Department of Agriculture & Consumer Services) intersect somewhat orthogonally with the laws about elections and political donations (and with the FEC and state level oversight bodies).

What's worse, is that Citizens United was only a point on a path. There are trend lines that can be spotted and forces identified working very hard to further dilute any distinctions between charitable anonymity and political anonymity. Today, in an article by Rick Hasen, an election law expert, I read that we are heading toward:

"..a world in which many of the remaining regulations of money in politics could well be struck down as unconstitutional or rendered wholly ineffective by a Supreme Court increasingly hostile to the goals of campaign finance law and extremely solicitous of religious freedom."(fn)

I can't quote more of the article - and shouldn't have quoted that much - as the article is in draft form and was discussed at a conference celebrating Professor Ellen Aprill. (Grateful to the blog post by Gene Takagi that led me to the event). You can download the draft paper here. 

In a nutshell, Professor Hasen uses Professor Aprill's work to show the intellectual and legal history that will likely use religious freedom to deregulate political donations. How? Via the deregulation of political activity in churches and houses of worship. There's much more to it (read the paper) but that gets us started. 

What does this mean for nonprofits? More politics. More money laundering. Less trust. 

What does it mean for democracy? More blurring of boundaries between nonprofit and commercial corporations. More anonymous money in politics. Less trust. More plutocratic control. 

It's not a positive tale. But thanks to Professors Aprill and Hasen, we've been warned. So, what are we going to do about it?

(fn)Richard L. Hasen, Nonprofit Law as the Tool to Kill What Remains of Campaign Finance Law: Reluctant Lessons from Ellen Aprill,"Forthcoming, 56 LOYOLA OF LOS ANGELES LAW REVIEW (2023) (special festschrift symposium honoring Ellen Aprill)