ReCoding Good: Part 3

Are nonprofits people too?

Presidential primary season has put the practical effects of the 2010 Supreme Court decision in Citizens United v. the Federal Election Committee on painful display. By removing contribution limits, the decision has opened the floodgates to unprecedented cash flow for elections. It has also given birth to new organizational forms, as PACs morphed into Super PACs, a new entrant into the already crowded campaign finance landscape of 501(c)(4)s, PACs, 527s, campaign offices, and party coffers. According to data from the Center for Responsive Politics, the early March numbers show a 234 percent increase in spending in the 2012 election compared to the same point in the 2008 cycle. Most surprisingly, it has positioned nonprofit organizations, specifically 501(c)(4) and (c)(6) social welfare organizations, at the center of the money flow between donors and the offices their candidates seek.

There is a great deal of discussion about what the Citizens United decision means for elections, campaign finance, and democracy. But what does it mean for the nonprofit sector? This will be the topic of our second Recoding Good charrette, coming up on March 20, 2012, at Stanford.

We are asking questions about the many possible ways the new rules for political giving might shape the nonprofit, charitable landscape. These include:

• Will the ability to make unlimited contributions to elections change donor behavior? Will more donors seek to achieve certain social outcomes by influencing elections through (c)(4) and (c)(6) nonprofits? Will they draw against their “charitable” budgets to make these contributions?
• How will the constant drumbeat of media attention to these political nonprofits affect public opinion of and trust in other nonprofit organizations?
• How will calls for greater scrutiny of politically engaged nonprofits affect the oversight of others?
• Will the new landscape of donor behavior entice more charitable nonprofits—501(c)(3) organizations—to start or partner with election-engaged, social welfare nonprofits—501 (c)(4) and (c)(6)’s?
• How will demands for donor disclosure in political settings change the age-old practice of charitable anonymity?
• How will we know any of the answers to the above, given the current state of nonprofit and election disclosure rules?

Since January of this year, at least four states—including Montana, Hawaii, New Mexico, and Vermont—have taken steps to counter the effects of the Citizens United decision. In Montana, the State Supreme Court upheld a hundred-year-old statute limiting corporate spending in elections, the Corrupt Practices Act, thereby setting up a potential test case for the Citizens United decision. The legislatures of Hawaii and New Mexico passed calls for a Constitutional Amendment to undo the decision, and states across the country have revisited their existing rules on corporate spending and disclosure since January 2010. In Vermont, citizens in 58 of 60 town meetings held on Town Meeting Day approved non-binding resolutions to undo “corporate personhood.”

While enormous spending gets all the attention, the roles of nonprofits and funders, in sharing the cases that resulted in Citizens United and in responding to the current reality on the ground, has warranted much less discussion. The appellant in the case, Citizens United, is a 501(c)(4) nonprofit with an associated 501(c)(3), the Citizens United Foundation. Nonprofit organizations and their funders have played a role in advancing the legal strategy, as well as the arguments used to counter it. Corporate shareholders can seek disclosure of political expenditures, and they are, but there is no analogous process for nonprofit expenditures, as these organizations have no shareholders.

Participants at the March 20 charrette will include nonprofit lawyers, legal scholars, experts in political transparency, experts on nonprofit policy, and our special guest, Jane Mayer of The New Yorker.

The Stanford Center on Philanthropy and Civil Society is pleased to host Jane Mayer in a public conversation with Rob Reich on March 22. Register to join us on campus at the Stanford Law School, room 290.

All materials from and information about the project can be found at ReCoding Good and through the Stanford Center on Philanthropy and Civil Society’s Digital Civil Society Lab. We invite you to subscribe to our email list, talk with us on Twitter (#ReCodeGood), and join us in person whenever you can. 

Read more stories by Lucy Bernholz & Rob Reich.