FEC Seeking Info On Donors

The Federal Election Commission (FEC) announced that it would enforce donor disclosure rules for some nonprofits based upon a recent court ruling, forcing organizations that spend a specific amount of money on “issue ads” to reveal their contributors.

U.S. District Judge Amy Berman ruled in favor of Rep. Chris Van Hollen (D-Md.) on March 30 on the issue of donor disclosure. Van Hollen had charged that the FEC was in the wrong when it issued a ruling in 2007 that allowed groups producing issue ads — which name specific candidates but stop short of telling viewers to vote for or against them — to withhold the names of the donors who funded them.

Nearly four months after that ruling, the FEC released public guidance explaining how it would enforce it. The release said that, retroactive to March 30, groups spending more than $10,000 in issue ads weeks before an election will be required to disclose donors who gave more than $1,000 toward the communications.

The FEC also stated it would comply with the court’s interpretation of the words “contributor,” “donor,” and “donation” in the following ways:

• “[‘Contributor’] applies to all contributors regardless of their subjective purpose in contributing.”
• A “contributor” is “a person who gives money without expectation of service or property or legal right in return.”
• “Dues paid in return for the benefits of membership” are not “donations.”
• “[I]nvestors who pay for shares of stock” are not “donors.”
• “[C]ustomers who pay for goods and services” are not “donors.”

Washington, D.C.-based Alliance for Justice (AFJ) is pleased that the FEC released guidance clarifying disclosure for electioneering communications, but does not agree with the District Court’s initial ruling. “We think that applying the statutory reporting rules to permissible electioneering communications by nonprofit corporations raises policy and administrative questions for which the Commission has received no legislative guidance,” said Shannon Billings, AFJ’s Director of Advocacy Programs.

There is a possibility that groups that violate the FEC’s guidelines will not face punishment until after the election. This was the case in 2004, when newly formed groups advocating against then-President George W. Bush collected unlimited donations. They were not fined until years after Bush was re-elected.

Certain groups are already planning to work around the new regulations by changing the wording in their advertisements. For example, the conservative leaning Crossroads GPS, founded by GOP strategist Karl Rove, has run millions of dollars in ads since March, but none have fallen under what the FEC considers “electioneering communications.” In addition, the U.S. Chamber of Commerce plans to evade disclosing their donors by releasing their ads as independent expenditures. These communications were not covered under the March 30 ruling, and advocate for or against a specific candidate.

Billings acknowledged this is an option for nonprofits that can make political communications, but that it “won’t be an option for 501(c)(3)s”, which will probably stay away from issue advertisements because of the new guidelines. You can read the full FEC guidance at http://www.fec.gov/press/press2012/20120727_VanHollen_v_FEC.shtml