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Editorial

Social-welfare funds aren't political piggy banks

Organizations known as 501(c)(4)s that are supposedly devoted to social-welfare activities are acting more like banks for political money.

April 15, 2011

Under the Supreme Court's wrongheaded Citizens United decision, corporate spending on independent political advertising may not be limited. So it's not surprising that Democrats are organizing two so-called super PACs, similar to ones already created by Republicans, that can raise huge amounts of money from corporations and wealthy individuals. The best that can be said about these new organizations is that they must make some disclosure of the identities of their contributors.

That isn't the case with another sort of organization, known as a 501(c)(4). These are groups set up under the Internal Revenue Code that are supposedly devoted to social-welfare activities. For example, Crossroads GPS, a Republican-oriented 501(c)(4) affiliated with the super PAC American Crossroads, describes itself as "a policy and grass-roots advocacy organization that is committed to educating, equipping and mobilizing millions of American citizens to take action on the critical economic and legislative issues that will shape our nation's future in the years ahead." Nothing about elections in that credo.

Yet 501(c)(4)s are also able to spend money in political races as long as their primary activities are educational and social. Campaign finance reformers have asked the Internal Revenue Service to scrutinize 501(c)(4)s to see whether they're really political committees by another name that allow corporations and other groups to contribute anonymously to political activities.

Better policing by the IRS might reduce the use of 501(c)(4)s as political fundraising engines. But a more reliable remedy would have to come from Congress, which should require that 501(c)(4)s focus exclusively on nonpolitical activities. If corporations and individuals want to subsidize independent political advertisements, that is their right, but even the conservative Supreme Court has said that disclosure has a legitimate public purpose.

Speaking of disclosure, Congress this year is expected once again to consider legislation designed to blunt the effects of the Citizens United decision. The DISCLOSE Act would require that political ads identify the unions and corporations behind them and would require the leaders of corporations and unions to appear in the ads to vouch for their message. To those proposals should be added a reform in the tax laws to prevent organizations supposedly devoted to education and welfare from functioning as banks for political money — and concealing the identities of their "depositors."

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