Well, How About That

The New York Times finally got around to noticing that groups organized as "non-profits" have been donating to political causes, a real no-no if they want to keep their tax-free status.

Two years after the Supreme Court’s Citizens United decision opened the door for corporate spending on elections, relatively little money has flowed from company treasuries into “super PACs,” which can accept unlimited contributions but must also disclose donors. Instead, there is growing evidence that large corporations are trying to influence campaigns by donating money to tax-exempt organizations that can spend millions of dollars without being subject to the disclosure requirements that apply to candidates, parties and PACs.

The secrecy shrouding these groups makes a full accounting of corporate influence on the electoral process impossible. But glimpses of their donors emerged in a New York Times review of corporate governance reports, tax returns of nonprofit organizations and regulatory filings by insurers and labor unions. ...

Some of the biggest recipients of corporate money are organized under Section 501(c)(4) of the tax code, the federal designation for “social welfare” groups dedicated to advancing broad community interests. Because they are not technically political organizations, they do not have to register with or disclose their donors to the Federal Election Commission, potentially shielding corporate contributors from shareholders or others unhappy with their political positions. ...

Because social welfare groups are prohibited from devoting themselves primarily to political activity, many spend the bulk of their money on issue advertisements that purport to be educational, not political, in nature. In May, for example, Crossroads Grassroots Policy Strategies, a group co-founded by the Republican strategist Karl Rove, began a $25 million advertising campaign, carefully shaped with focus groups of undecided voters, that attacks Mr. Obama for increasing the federal deficit and urges him to cut spending.

The Internal Revenue Service has no clear test for determining what constitutes excessive political activity by a social welfare group. And tax-exempt groups are permitted to begin raising and spending money even before the I.R.S. formally recognizes them. Two years after helping Republicans win control of the House with millions of dollars in issue advertising, Crossroads GPS’s application for tax-exempt status is still pending. [Emphasis added]

The Center for Responsive Politics has been following this trend since the end of February, and has done a remarkable job in compiling a list of such groups. It even has a chart which indicates how much money is involved, the political persuasion of the group, and its disclosure policy.

While the NYT is a little late to the dance, it has at least done a pretty good job in digging out even more information about these groups. For that it deserves some praise. The trick will be for the paper to keep at it, if only to light a fire under the IRS to do some investigating of its own.