Changes to Nonprofit Advocacy Rules Not Expected Before Election Day

After two days of hearings this month, the Federal Election Commission appears unlikely to take any action before Election Day on a proposal that would restrict nonprofit groups’ ability to comment on public-policy issues during an election campaign.

The proposal under consideration would require nonprofit organizations that spend money to “promote, support, attack, or oppose” any candidate for federal office to follow strict spending limits. Many of the routine things that nonprofit groups do could cause them to be covered by the limits. For example, if a group were to send prospective donors fund-raising appeals that described how successful it had been in garnering funds from a federal program and thanked a specific member of Congress for securing them, that could be construed as promoting the representative’s re-election campaign and force the group to be covered by the campaign-finance rules. Or a group that runs food shelters could be covered by the restrictions if it paid for a newspaper advertisement criticizing the president for not providing enough money for the homeless and urging its members to contact the White House, because that might be seen as opposing the president’s re-election.

Under the proposal, any group covered by the campaign restrictions would be prevented from taking more than $5,000 from any one source to pay for election-related communications. Because nonprofit groups frequently depend on large gifts, the practical effect of the rule would be to prevent them from making any such comments on public-policy issues, charity officials say.

Lobbying Against Proposal

Nonprofit groups, led by the Alliance for Justice, a coalition of advocacy organizations that focus on the environment, civil rights, health care, and other areas, rallied charities nationwide to fight the proposal. The alliance and others relied heavily on e-mail messages and Web sites to ask members of thousands of organizations to contact the commission to oppose the plan. They were joined by some conservative nonprofit organizations, like Focus on the Family and the National Right to Life Committee.

The results were astounding: The election commission received more than 150,000 written comments on the proposal — which Ellen L. Weintraub, the vice chairman of the commission, said was 100 times the highest number of comments the panel had ever previously received when it was weighing a proposal.

Ms. Weintraub, Bradley A. Smith, who chairs the commission, and Danny Lee McDonald, a commission member, all cited the overwhelming response in explaining why they are leaning toward putting off a decision on the proposal, which the commission was expected to vote on next month. The six-person commission only enacts rules that have received approval from at least four members.

Responding to Concerns

The commission didn’t set out to regulate the political activities of charities in crafting the proposal it is now considering.

At the request of the Republican National Committee and conservative groups, the commission has been mulling whether to expand campaign-spending restrictions beyond groups run by the political parties. Republicans are particularly concerned about organizations set up under Section 527 of the Internal Revenue Code, which allows the creation of nonprofit groups whose main purpose is to affect political campaigns. Several Democratic 527 organizations have raised millions of dollars to spend this fall — including funds from the billionaire financier and philanthropist George Soros, who has pledged to spend millions in an effort to defeat President Bush in November.

Republicans also wanted the commission to put limits on the political spending of Democratic-leaning labor unions, which also have pledged to spend generous sums to try to defeat the president. Unions are granted tax-exempt status under Section 501(c) of the Internal Revenue Code — the same section under which charities, universities, and other nonprofit groups receive their tax exemption. In drafting the proposed restriction, the commission’s staff included an option to cover all 501(c) groups among five choices of wording that could be adopted.

The notion that all nonprofit groups could be covered created some highly unusual alliances. For example, both the AFL-CIO and the National Right to Work Committee — whose purpose is to promote laws that block employees from being forced to join unions — testified against the proposal. Planned Parenthood and the National Right to Life Committee were among the groups whose representatives presented written comments opposing it.

Not all the comments the commission received were critical of the proposal. William Greene, director of Rightmarch.com — which he described as a conservative grass-roots activism Web site — said the 527 organizations were “trying to scare” nonprofit groups into opposing the rule. Through its Web site, Mr. Greene said, his organization passed about 20,000 messages to the commission urging it to enact the rule.

The Republican National Committee, which pushed for the new rule, said in comments to the election panel that the commissioners could enact restrictions on 527 committees without subjecting other nonprofit groups to the new rule. Charles R. Spies, a lawyer for the Republicans, said groups that were claiming the new rule would take away charities’ ability to pursue advocacy campaigns were “using this issue as a red herring.”

But as Mr. Smith, the commission chairman, and others noted during the hearings, a rule that covered only groups established as political committees under Section 527 of the tax code would probably prompt the same people who established those committees to instead set up nonprofit organizations under Section 501(c)(4), which many nonprofit groups now use to establish their lobbying and advocacy arms. Rather than settling the question of what nonprofit groups could do during an election, he added, limiting any restrictions to 527 groups would simply force the commission to revisit the issue eventually.