The dark-money nonprofit

31 Jul

You hear a lot about the so-called Super PACs these days and the money they throw around buying attack ads in the presidential campaign.

This might come as a surprise – but they aren’t the real money in politics.

Far worse are so-called “dark-money nonprofits”.

The US Supreme Court decision that allowed corporations to spend unlimited amounts of money on politics gave the same right to nonprofits.

Here’s the important thing to understand:
Nonprofits are supposedly not allowed to be primarily political in purpose or they can lose their IRS status.

The tax law requires that the primary work of a nonprofit must be to benefit the community at large, not a single candidate or party.

That hasn’t stopped nonprofits like Karl Rove’s Crossroads GPS, or David Koch’s Americans for Prosperity from becoming the new political cash cows.

Donors like them because nonprofits can keep a person’s identity secret.

Some historical perspective:
In 2010, dark-money nonprofits spent 50% more than Super PACs.

Through the spring of 2012 it just got worse with 91% of political advertising coming from these nonprofits, including nonprofit trade groups like the US Chamber of Commerce.

But as of a couple of days ago, the rules are changing.

Previously, these organizations could run unlimited “issues” ads.

That’s politically oriented advertising that doesn’t endorse or oppose a specific political candidate.

And they could do it without disclosing who is paying for the ad.

But a recent court case closed this loophole and now these nonprofits have a Catch-22 situation.

If they run “issues” advertising, they now have to make public the names of those who paid for that ad.

They can still run explicitly political ads which endorse or oppose a specific candidate without disclosing their donors, but if they run too many of those they risk losing their tax exempt status.

It’s important to understand donor secrecy is the primary reason these dark-money nonprofits exist.

The US Chamber of Commerce has already gone on record saying it will refuse to name their donors.

And Americans for Prosperity has also made it clear that any change forcing them to name names is off the table.

Isn’t that illegal?
Yes, it is.

But it probably won’t matter.

Let’s suppose that in response to the court decision, a group like Crossroads GPS just stops running issues ads (so they don’t have to disclose their donors) and instead just runs explicitly political ads (like endorsing Romney or telling you to vote against Obama) until the upcoming election.

What could happen to them?

They could be slapped with a fine.
They could even be shut down.

But we all know the wheels of justice grind slowly, so nothing will probably happen until after the election and by then it’ll be too late.

Even if a nonprofit becomes blatantly political and gets shut down, another one would just spring up to replace it, probably with the same people running it.

And with all due respect to Mitt Romney, that is why corporations (including nonprofits) are not people.

You can’t throw them in jail.

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