Nonprofit Advocacy Not Necessarily a Loser in Supreme Court Election Ruling

Last month’s U.S. Supreme Court decision in Citizens United v. Federal Election Commission has raised concerns in the nonprofit world about the weakening of its ability to influence public policy. The ruling lifted restrictions on corporate contributions to election campaigns. Corporations will no longer be limited to setting up separate political-action committees but will also be able to use their own resources to bankroll efforts to assist people seeking elected office.

Not surprisingly, supporters of a campaign-finance overhaul, including President Obama, have denounced this decision as opening the door to a deluge of money that will give corporations an unfair political advantage. Nonprofit leaders have also worried that the Supreme Court’s action will make elected officials more sensitive to business interests rather than to the social causes they try to represent.

Yet, while last week’s ruling has changed the ground rules for financing campaigns, the likelihood that nonprofit advocacy will suffer is not so clear. To the contrary, the Supreme Court has opened the door for more extensive political activity by nonprofit groups, which may be a mixed blessing.

This has generally been obscured because the Supreme Court’s decision refers to election spending by “corporations,” which many understand as “businesses.” In fact, the opinion is using “corporations” in a legal sense, referring not just to businesses but also to labor unions and many other types of incorporated organizations, including nonprofit ones.

Citizens United, which pursued the court case, is a nonprofit organization (a 501(c)(4) “social welfare” group.) It had sought a ruling on whether it could spend money donated to it, mostly by individuals, on a film critical of Hillary Clinton, then a candidate for president.

For more than a century, seeking to reduce vote-buying and other types of corruption, Congress has passed laws to prohibit corporations (in the legal sense) from spending their own money on elections.

Campaign-finance laws, including, most recently, the Bipartisan Campaign Finance Reform Act of 2002 (often called the McCain-Feingold bill after the names of its Senate sponsors), have allowed companies to set up political-action committees, which must raise money from the public (which could be employees and stockholders in for-profit companies or members and donors in nonprofit ones). They must also operate independently from candidates and are not permitted to issue “electioneering communications” supporting or opposing politicians within 30 days of a primary election.

By a vote of five to four, the Supreme Court concluded that those restrictions violated the First Amendment’s protection for freedom of speech. In essence, the majority reasoned, the campaign-finance laws impermissibly favored individuals over corporations, since individuals were allowed to contribute their own money to political-action committees or other kinds of electoral activities but corporations were not.

The justices rejected the argument that corporations posed a greater danger to the integrity of the democratic process than individuals did but agreed that corporate-financed political efforts had to remain separate from a candidate’s to avoid seeming to seek improper influence. (The decision did not overturn limits on contributions to candidate-oriented political-action committees, which are currently $2,400 per year for each individual.) The majority also upheld the legitimacy of disclosure requirements, so that the public could know who was supporting whom.

In a sometimes sarcastic dissent, the minority of the Supreme Court justices disagreed, saying that the Supreme Court’s ruling overturned many years of agreement, in the federal government and in many states, on the necessity for limits on corporate spending in elections. Corporations, they argued, could amass large amounts of wealth and do other things that made their political activities potentially different—and more capable of corrupting democracy—than those of individuals.

Moreover, although money had to come from individuals, campaign-finance laws gave corporations a constitutionally acceptable alternative for expressing their views in the political process by allowing them to sponsor political-action committees.

Nonetheless, as long as the majority’s opinion stands (campaign-finance law supporters have vowed to press for legislation to counteract it), corporations are now free to spend as much of their own money as they want on elections. This includes not only businesses, unions, and a variety of other nonprofit organizations but potentially also organizations that have charity status under Section 501(c)(3) of the Internal Revenue Code.

Charities are currently prohibited from using any money for partisan electoral politics or even sponsoring a political-action committee. Yet under the logic of the Citizens United decision, such special treatment may violate the Constitution, though the deductibility of contributions to charities could allow the courts to differentiate them from other types of nonprofit groups that do not receive this special tax subsidy.

Yet 501(c)(3) groups are permitted to establish affiliated 501(c)(4) organizations, which the Supreme Court’s decision gives even more encouragement to do. According to a report last year from the Campaign Finance Institute, political expenditures by social-welfare groups (along with unions and business associations) grew rapidly in the 2008 election; the estimated $200-million they committed that year just about equaled the amount political-action committees did.

If business money now starts flowing into elections, it has to go a long way to catch up with what organizations representing a wide range of perspectives are already spending, and the Supreme Court’s ruling gives them more leeway to use corporate funds, too.

In any case, the connection between dollars used for helping to elect candidates and political success can be tenuous. Besides mustering large numbers of votes, a host of other factors—including the legislative or administrative tactics organizations use and the goals they embrace—have important roles. While the Supreme Court’s decision has changed the rules regarding money for elections, it has not overhauled the American system of government, in which elections are an important part, but only a part.

What Citizens United has done, however, is take away whatever remaining protection corporations—including nonprofit ones—had against becoming more involved in politics than they wished to. More businesses and other organizations may be asked to “pay to play,” and more may wind up becoming embroiled in partisan controversies they would have rather avoided. If that happens, those who think that both for-profit and nonprofit organizations should focus more on what they were set up to do, rather than on politics, may regret the Supreme Court’s ruling.