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Posted on 3/1/2013
On the eve of groundbreaking reforms to strengthen political disclosure in New York State, the Coalition for Accountability in Political Spending (CAPS) and New York City Public Advocate Bill de Blasio released a new report today highlighting a dramatic rise in secret spending by out-of-state political groups.
According to the report, “From Social Welfare to Political Warfare,” political spending by tax-exempt 501(c)(4) organizations increased by more than 1,500% between the 2008 and 2012 elections, with 98.7% of those funds coming from out-of-state groups. The growth of these organizations has enabled anonymous donors to flood the airwaves with political ads, using shadowy front groups to shield their identity.
501(c)(4) organizations have become significant players in elections following the Supreme Court’s decision on Citizens United v. Federal Election Commission. The report profiles the ten organizations with the highest election spending in New York State. Only one of these organizations disclosed on its website that it engaged in political spending and provided details on the races where it was actively engaged.
“It is past time to shine a public spotlight on political committees that masquerade as tax-exempt nonprofits,” said New York City Public Advocate Bill de Blasio. “These sham nonprofits are not only a threat to our democracy but also to the integrity of our nonprofit sector. New state regulations are essential to protecting New Yorkers and bringing much needed transparency to our elections.”
“I applaud the Coalition for Accountability in Political Spending for highlighting the flood of money from anonymous donors who abuse charitable organizations and threaten the integrity of our elections,” said Attorney General Eric Schneiderman, who has announced new rules that require nonprofits to disclose their political spending and identify their donors. “Last year, we saw more than $400 million dollars in undisclosed funding flood into the American political system, and millions more are expected to flood our airwaves in this year’s local elections. That is precisely why I have proposed statewide disclosure rules which will shine a light on anonymous donors and provide New Yorkers with the transparency and accountability they expect and deserve in the political process.”
Read the full report: http://politicalspending.org/501c4-Report.pdf
According to the report:
- Political spending by 501(c)(4) groups has skyrocketed. During the 2012 election, 32 organizations spent nearly $7.2 million on federal elections in New York State – an increase of 1,579% over 2008.
- Virtually all of the spending—98.7%—came from out-of-state groups.
- Although the number of charities in the U.S. has fallen in recent years, there has been a significant rise in the number of newly registered 501(c)(4) organizations.
- The groups target competitive races. In the four New York Congressional races where 501(c)(4) organizations spent the most money in 2012, the average margin of victory was less than 7 percent. 501(c)(4) organizations accounted for 11 percent of all election expenditures in these races.
“Secret spending by political 501(c)(4) organizations that are abusing the tax code is one of the most disturbing problems in our politics today. The groups claim non-profit status to exploit gaping loopholes in disclosure rules and the IRS’s failure to address these abuses — but voters deserve to know who is trying to influence their votes and who is trying to influence elected officials through big political spending. This report clearly lays out why immediate reform is needed not only in New York, but across the country,” said J. Adam Skaggs of the Brennan Center for Justice at NYU School of Law.
“Because of current loopholes, social welfare organizations have become a favorite vehicle for dark money – but they need to be driven into the light of transparency and accountability if they choose to spend money in politics,” said Liz Kennedy, Counsel at Demos. “Voters, and donors, need this information to know how their money is being used, and who is trying to influence our elections.”
“This report provides important insight into the dark money problem, as corporations increasingly turn to nonprofits and trade associations to spend their money and keep it secret,” said Lisa Gilbert, Director of Public Citizen's Congress Watch. “We need a window into this dark room, and remedies like a stricter requirements in-state for 501(c) organizations are critical mechanisms for getting us there.”
The Coalition for Accountability in Political Spending (CAPS) is a national network of elected officials and pension trustees fighting for greater disclosure and accountability in corporate political spending. Learn more at http://www.politicalspending.org/.