Abby Levine

Responding to The New York Times on IRS Rules

The New York Times editorial published on February 18 is correct about at least one thing: Alliance for Justice opposes the draft regulations that would redefine what counts as political activity for 501(c)(4) organizations.

But the editorial is wrong about the nature of the problem and wrong about the effect of the solution it endorses.

If these rules are implemented, the big money will simply move elsewhere, into new organizations that allow for donor anonymity. As AFJ President Nan Aron wrote recently in The Nation:

“The big ‘dark money’ groups everyone is worried about are like opportunistic parasites seeking a vulnerable host. Once the (c)(4) category is exposed to ‘reforms’ and no longer of use, they’ll just jump to new categories, like trade associations or limited liability corporations. In fact, they’re already on the way out the door. Unfortunately, the new rules, designed to deal with the now-notorious troublemakers, will still be there long after they’ve gone, hurting no one but the smaller, law-abiding groups left behind.”

For more than 25 years, AFJ has provided many types of nonprofits with the resources to help them navigate complex advocacy rules as they work to elevate community voices and issues often overlooked in the American political processWe know what it takes for organizations to get involved in public policy issues—and how easy it is for them to decide to stay silent, afraid of not being able to master the legal rules.

The proposed regulations are far from the “modest crackdown” on 501(c)(4) organizations the Times describes. In an attempt to define what kinds of activity are “political”—and therefore cannot be counted toward a 501(c)(4)’s primary social welfare purpose—the rules expand the definition of what is considered political beyond any reasonable plain language interpretation. Contrary to its name, the newly created term, “candidate-related political activity,” encompasses much more than activity aimed at influencing candidate elections.

The proposed rules would define as “candidate-related political activity” a host of activities commonly conducted by 501(c)(4)s to encourage the public to vote and educate voters about issues at stake in an election. These include:

  • All voter registration and get-out-the-vote drives—even those that make no mention or reference to any candidate for office. Contrary to what the editorial claims, there is no exception for “[activity that meets a] strict nonpartisan test.” Thus, the proposed regulations would limit the ability of social welfare organizations to encourage eligible citizens to participate in the democratic process by registering to vote and then voting in elections.
  • Activities seeking to influence nominations and appointments to executive and judicial branch positions.
  • Any event within 30 days of a primary or 60 days of a general election if one or more candidates in such election appear as part of the program—even in a non-candidate capacity. The result will be to restrict the ability of 501(c)(4) organizations to sponsor candidate debates and forums which seek to educate the public concerning the candidates’ views, and will also narrow the opportunities available for public officials to meet with their constituents.
  • Any public communication disseminated within 30 days of a primary or 60 days of a general election that refers to one or more clearly identified candidates in that election or, in the case of a general election, refers to one or more political parties represented in that election will be treated as CRPA. This is true even if the candidate is referenced in an exclusively nonpartisan manner.  The new regulations would consider it “political” for a 501(c)(4) organization to publicly ask their Member of Congress to pass federal comprehensive immigration reform, raise  the minimum wage, or oppose new restrictions on women’s access to health care if it happens to take place in proximity to an election, even if there is legislation pending on the subject.  This will limit the ability of 501(c)(4)s to communicate on important policy-related issues at moments when the public is most paying attention.

Organizing a 527 is not so “easily” done for mid-sized and smaller groups that wish to engage in nonpartisan election work activity.

The Times is wrong when it claims “[a]ny group that wants to engage in political activity or issue scorecards can easily continue doing so by organizing a group under the tax code’s Section 527.”

The cost of creating a new entity—or entities—will discourage many small, grassroots organizations from doing so.  The more complex the rules, the greater the deterrent for organizations with limited funding. Creating an entirely distinct political organization to promote their policy agendas – new clean water laws or “no smoking” ordinances, for example — would be too costly and burdensome.

The big organizations can hire the lawyers and accountants required to organize a 527. Small players can’t afford this kind of assistance. As a result, much smaller groups may well be frozen out of legitimate citizen engagement.

If the issue is disclosure, then let’s deal with disclosure. The IRS proposal does not—and cannot—do that.

The IRS proposal is a back-door approach that does not address the issue of donor disclosure. Only Congress can do this. As Nan Aron wrote in The Nation:

“The sooner we acknowledge the real motivation behind the IRS proposal, the sooner we can create meaningful solutions that actually address the real issue and don’t inadvertently take down small nonprofits and groups with a strong civic-engagement mission whose role is central to our democratic system.”

More from AFJ: 

The New IRS Proposal: What Impact Would It Have on Nonprofits?

Act Now: Tell the IRS to Withdraw Proposed Rules for 501(c)(4)s