FEC says it will enforce nonprofit disclosure rules

July 27, 2012

The Federal Election Commission told political advocacy groups Friday that it would enforce new disclosure rules for some nonprofits under a recent court ruling, but many key groups have taken steps to evade the requirements.

Legal experts said the FEC guidance makes it clear that nonprofit groups will have to reveal some of their major donors if they pay for electioneering communications — also known as “issue ads” — that name political candidates but stop short of urging viewers to vote for or against them.

But advocacy groups such as the conservative Crossroads GPS still have many ways of evading disclosure, often simply by changing the tenor or language of their advertising, experts said. The rules also only apply to ads that run close to an election.

Major advocacy groups had already stopped running issue ads close to primary elections this summer in anticipation of the FEC’s guidance. The U.S. Chamber of Commerce has said it will simply alter the language of its ads to avoid reporting contributors to the FEC.

The issue is part of a broader debate over the outsized role that secret money is playing in the 2012 elections, particularly in funding attack ads targeting President Obama and other Democrats. Tax-exempt “social welfare” groups do not have to reveal their donors to the public as long as their “primary purpose” is not politics, a requirement that critics say is being flouted.

U.S. District Judge Amy Berman Jackson ruled in March that the FEC had overstepped its authority in 2007 when it issued rules allowing groups that produce issue ads to withhold the names of those funding the ads. Rep. Chris Van Hollen (D-Md.) had challenged the regulations.

Democrats and watchdog groups cheered the ruling as an important step forward in forcing disclosure. But questions remained about how quickly the FEC, which is often deadlocked along partisan lines, would move to enforce the requirements.

The FEC said groups running more than $10,000 in issue ads in the weeks before an election will be required to divulge contributors who give more than $1,000 toward the effort. The requirement is retroactive to March 30.

“Until such time as the Van Hollen case is resolved on appeal or the Commission adopts a new regulation or explanation of its rules, the Commission intends to comply with the district court and D.C. Circuit’s interpretation” of the decision, the FEC said.

“It’s about time the commission published some guidance making clear that the district court’s decision in March is the law of the land,” said Paul S. Ryan of the nonpartisan Campaign Legal Center, which is helping represent Van Hollen in the case.

Ryan added that nonprofit groups can no longer “hide behind flawed FEC rules to deprive voters of vital information about who’s bankrolling their candidate election ad campaigns.”

But relatively few ads that fit the legal definition of issue ads have run since Jackson’s ruling, according to FEC records. One of the biggest spenders, Crossroads GPS, which was founded with the help of GOP strategist Karl Rove, has run millions of dollars in ads but none qualifying as “electioneering communications” since March.

The U.S. Chamber of Commerce, which has vowed to spend a record amount of money on this year’s elections, said in May that it would evade disclosure by running a different kind of ad, known as an independent expenditure, which advocates for or against a particular candidate. These ads are not covered by the Jackson ruling.

Other groups could follow the chamber’s lead after Saturday, when the FEC clock starts ticking for ads related to the presidential contest. Even if they run afoul of the law — either by not disclosing donors or spending too much on politics — any enforcement from the FEC or the Internal Revenue Service would probably come well after the election, experts said.

In 2004, for example, a constellation of newly formed liberal groups spent hundreds of millions of dollars on the presidential race by collecting unlimited donations. Several were eventually fined by the FEC, but not until years after George W. Bush’s reelection.

“There’s a choice for these groups, and the choices come with risks,” said Richard L. Hasen, an election law expert at the University of California-Irvine. “But the risks in the short term are pretty minimal. . . . For this election, all bets are still off — anonymous funding, unlimited funding.”

Deputy editor, National politics
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