Nonprofit Political Spending Under New Scrutiny

Senate hearings, a watchdog lawsuit, an IRS questionnaire and SEC deliberations are placing nonprofit spending on political campaigns under the microscope, according to a recent Bloomberg news story. Nonprofit 501(c)(4) "social welfare" groups, such as Obama-supporter-founded Priorities USA and conservative Karl Rove-inspired Crossroads GPS, have proliferated and spent more than $300 million on the 2012 election campaign, a 280% bump from the previous presidential election, according to data from the Center for Responsive Politics. Now the Senate Permanent Subcommittee on Investigations is querying Internal Revenue Service (IRS) officials on their failure to check nonprofit spending on partisan politics, reports Bloomberg. At the same time, the Washington-based watchdog group Citizens for Responsibility and Ethics is suing the IRS to force a ban on 501(c)(4) nonprofit political spending. Current federal law requires these nonprofits to be operated exclusively for social welfare activities, but IRS regulations require only that such groups are "primarily engaged" in promoting social welfare and "the common good." Some organizations have interpreted this IRS language to mean they can collect donations and spend on political action as long as the expenditures make up less than 50% of their outlay. The IRS is moving carefully on the issue, according to the Bloomberg story. It recently asked about engagement in political campaigns on a questionnaire sent to 1,300 nonprofits claiming tax-exempt status. Meanwhile, the Securities and Exchange Commission is considering a rule requiring publicly traded companies to disclose donations to nonprofits, including those channeling big dollars into partisan issues. The issue is definitely heating up, so watch for more legal challenges of nonprofit spending on politics and failure to disclose donors, predicted experts cited in the story. For more detail, see http://www.campaignlegalcenter.org/index.php?option=com_content&id=2099:april-16-2013-bloomberg-senate-scrutiny-of-nonprofits-spurring-disclosure-taxes-&Itemid=62

Megabank Philanthropy: More PR Than Reality?

The nation's megabanks spend megabucks on PR to tout their philanthropic initiatives, but their actual social generosity is either unverifiable or lackluster, claims a new report from The National Committee for Responsive Philanthropy (NCRP), an "independent watchdog of philanthropy." Hardly a fan of big banking, the NCRP cites the "crimes" of four megabanks (from furthering the economic meltdown to actual legal convictions, fines and settlements), while questioning claimed philanthropy in the report. Findings note that Bank of America, Wells Fargo, Goldman Sachs and JPMorgan Chase do not disclose "the recipients of purported charitable contributions disbursed from corporate treasuries, making it impossible to independently verify claims of philanthropic largesse," while their corporate foundations have given less than 50% of grant dollars to efforts that "explicitly benefit the poor, elderly and other under-served populations." During the recent recession, only one of the four surpassed the financial industry's median of philanthropic generosity, but all four maintained or increased their already hefty political spending, according to NCRP research. For more, see the NCRP press release at http://www.ncrp.org/news-room/press-releases/893-philanthropy-of-megabanks-mediocre-lacks-transparency