New Report Criticizes Role of 501(c) Organizations in Public Policy Process
The Campaign Finance Institute (CFI) released a working paper yesterday on "the major role played by 501(c)(4) social welfare, (c)(5) labor union and (c)(6) trade association organizations in elections, and the different ways in which they and related 527 organizations are used by Republican and Democratic-oriented groups" to influence federal elections and public policy. The report highlights what it calls “major weaknesses in the IRS’s public disclosure system for 501(c) groups’ ‘political expenditures,’ including inadequate guidance and monitoring of reports.”
Alliance for Justice President Nan Aron responded to the report, saying “Not only is it strategic for nonprofits to use a multi-faceted approach in influencing public policy, it is also legal for them to do so.” She added, “The fact is, tax law requires separate and multiple entities in order to provide charitable services, educate the public about a cause, motivate Americans to participate in government decision-making, support candidates that champion certain issues, and then lobby for laws that benefit the public interest.”
The CFI paper comes as lawmakers are poised to revisit the issue of 527 reform. Specifically, House-passed legislation (H.R. 4975) would apply Federal Election Campaign Act (FECA) restrictions to 527 organizations so that they can no longer raise unlimited amounts of money. However, the companion bill in the Senate does not include any similar language. A conference on these two bills is pending.
Senate Finance Committee Chairman Chuck Grassley has also expressed concern on "politically active" 501(c) organizations. He recently sent letters to IRS officials seeking comment and in some cases stepped-up enforcement" in several tax-exempt areas. One of Chairman Grassley's main concerns: "nonprofits that may be used for political purposes.”
Alliance for Justice President Nan Aron responded to the report, saying “Not only is it strategic for nonprofits to use a multi-faceted approach in influencing public policy, it is also legal for them to do so.” She added, “The fact is, tax law requires separate and multiple entities in order to provide charitable services, educate the public about a cause, motivate Americans to participate in government decision-making, support candidates that champion certain issues, and then lobby for laws that benefit the public interest.”
The CFI paper comes as lawmakers are poised to revisit the issue of 527 reform. Specifically, House-passed legislation (H.R. 4975) would apply Federal Election Campaign Act (FECA) restrictions to 527 organizations so that they can no longer raise unlimited amounts of money. However, the companion bill in the Senate does not include any similar language. A conference on these two bills is pending.
Senate Finance Committee Chairman Chuck Grassley has also expressed concern on "politically active" 501(c) organizations. He recently sent letters to IRS officials seeking comment and in some cases stepped-up enforcement" in several tax-exempt areas. One of Chairman Grassley's main concerns: "nonprofits that may be used for political purposes.”
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