Unfounded Fears: the 501(c)(4)/SuperPAC Connection

It would appear that there’s a new worry on the block for campaign finance reformers. A piece in ProPublica gives voice to what is undoubtedly the next big scare as SuperPACs continue to dominate headlines in the run-up to the 2012 Presidential election: will 501(c)(4) organizations be created and used as a way to funnel unlimited amounts of money to candidate-related SuperPACs as an end-run around disclosure legislation? Reporter Marian Wang propses the following scenario:

[Texas Governor Rick] Perry’s allies also just launched a new nonprofit, Citizens for a Greater America, which will also be able to take in unlimited funds while keeping donors secret. iWatch News posted a fact sheet on the new group that it traced to a Perry fundraiser who had received it from Mike Toomey, Perry’s close ally and former chief of staff.

The efforts could be the start of a new trend in campaign finance — nonprofits started by allies of a specific candidate that can be used as conduits for undisclosed donations. Together with those so-called candidate-specific super PACs, the two groups make a powerful pair, allowing supporters to donate to support specific candidates with few restrictions and, if so desired, with no disclosure.  

While the argument is compelling — and there’s nothing outright inaccurate about the allegation — the fear is somewhat unfounded because it again relies on the idea that the public will somehow be misinformed about who is giving money to SuperPACs via (c)(4)s. The Center for Competitive Politics takes the position that this not as big an issue as it will likely become when filtered through reform-leaning media outlets. 

While it is true that 501(c)(4)s are not subject to the same disclosure mandates — donors give to (c)(4)s and the (c)(4) spends independently — they already engage in much of this behavior when they spend money lobbying or attempting to sway public opinion via issue ads or Congressional testimony without having to disclose their donors. 

Furthermore, the name of the (c)(4) will be disclosed as a donor to any SuperPAC to which it gives, usually enough to inform the public of its political agenda or legislative interests. Ultimately, if a donation to a (c)(4) is earmarked as a political expenditure and then sent to a SuperPAC it is subject to disclosure. If it is not specifically earmarked, then added disclosure does little to actually help inform the public as trying to ferret out which companies gave to which candidates via which (c)(4)s — and then assigning some political agenda to that labyrinth of giving if it’s not already obvious — seems to be making much ado about very little. And complicating the process is the anithesis of what the reformers say they want: simplicity and transparency in the election process.





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