J Street’s disclosure

J Street, a liberal public policy organization focused on Arab-Israeli issues, faces a firestorm of criticism after The Washington Times reported that George Soros contributed to the group.

The issue with J Street is somewhat unique, as the organization flat-out lied that Soros had donated to the group, but this controversy raises an interesting issue about disclosure to nonprofit groups that engage in political activity.

As The Atlantic’s Chris Good reported, “[a] set of half-truths, non-truths and ambiguities from J Street lead a reasonable person to conclude that the group tried to conceal that George Soros has been one of its largest donors for years, and to falsely claim that it had been ‘open’ about those donations over the past three years.”

Soros and his family donated $750,000 over three years to J Street, the Times reported, but J Street’s website maintained until recently that “J Street’s Executive Director has stated many times that he would in fact be very pleased to have funding from Mr. Soros and the offer remains open to him to be a funder should he wish to support the effort.” [emphasis added] This statement, curiously, remains on the organization’s “Myths and Facts” page. It’s misleading at best.

The “Myths and Facts” statements also detail why the organization endeavored to keep Soros’ support under wraps: “George Soros did not found J Street. In fact, George Soros very publicly stated his decision not to be engaged in J Street when it was launched—precisely out of fear that his involvement would be used against the organization.” [emphasis added]

Indeed, that’s what has occurred, although much of the criticism—especially from the press—is directed at J Street’s deception rather than its association with the controversial philanthropist and hedge fund billionaire.

“I am hopeful this revelation will now cause people to begin to ignore what they say,” said Rep. Eric Cantor, the only Jewish House Republican. “They are not reflecting the mainstream position of the pro-Israel community in America, nor do I think they help benefit the U.S.-Israel relationship.”

Candidates have begun making political hay over their opponents’ association with J Street’s related political action committee (PAC).

The spokesman of Pennsylvania Republican Pat Toomey’s campaign for Senate said, “Congressman Sestak shows a very consistent and disturbing pattern of aligning himself with political organizations that … are funded by individuals who are hostile to Israel … Sestak says he’s pro-Israel, but at some point, his consistent alignment with the likes of George Soros … and J Street makes that claim just flat-out not believable.”

There’s certainly an argument to be made that Americans benefit from knowing that Soros has contributed to the organization. However, it’s undeniable that disclosure of this kind has a deterrent effect, and the debate is coarsened to some extent as commentators focus on ad hominem attacks rather than issues. There’s also another downside: political opponents and, worse, government officials, could use such information for retaliation.

It’s doubtful that many will feel sympathy for J Street’s situation, or that of George Soros, but donors who want to participate in the policy and political process would face a much tougher environment if the government forced 501(c) organizations to disclose their donors, imposing a clear chill on the First Amendment.

As the Senate’s top tax writer pushes the Internal Revenue Service to investigate GOP-leaning nonprofits for potentially abusing their tax status, it’s worth noting that disclosure regulations should be examined through a cost-benefit lense instead of blindly accepted as positive.

The Center for Competitive Politics is now the Institute for Free Speech.