Transparency in donations

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Once upon a time, liberals and conservatives, Democrats and Republicans, incumbents and challengers disagreed over the value of limits on campaign funding and spending, but they agreed (publicly, at least) on the need for attribution and accountability.

There was broad-based agreement that the names of individuals and, later, corporations and unions should be clearly stated and open to the public -- whether they had made contributions directly to candidates or were making “independent expenditures” linked to “electioneering communication.”

The erosion of that consensus was accelerated by a 2010 U.S. Supreme Court decision, Citizens United vs. Federal Election Commission. The ruling found that the First Amendment prevents the government from restricting independent expenditures by nonprofit and for-profit corporations, labor unions and associations.

The Citizens United case has had many impacts, one of the most significant of which is a dramatic expansion of nonprofit organizations seeking tax-exempt status under Section 501(c)(4) of the U.S. tax code.

So-called 501(c)(4) organizations are, according to the tax codes, supposed to be “primarily engaged” in promoting “the common good and general welfare of the community.” Involvement in political campaigns is not banned, but it is not supposed to be the “primary purpose” of a tax-exempt group.

Yet, many 501(c)(4) groups, including some of the largest and richest, have been overtly political or closely tied to so-called super Political Action Committees that raise funds to directly influence elections.

Although contributions to the organizations are not tax deductible, they are appealing to many donors and those groups for a simple reason: Disclosure of the contributors’ identities is not required.

There are problems, then. It is virtually impossible for the Internal Revenue Service to thoroughly, accurately and fairly assess whether 501(c)(4) organizations are meeting the requirements for their nonprofit status.

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