NAACP case also used by ‘dark money’ groups
Citations of the NAACP case have gone beyond groups like the Americans for Prosperity Foundation. So-called “dark money” groups — made possible by the landmark 2010 Citizens United v. Federal Election Commission decision — have been using the NAACP v. Alabama case in arguments designed to keep their donors hidden from view as well.
The differences between the Americans for Prosperity Foundation and these “dark money” organizations are critical, especially to the Internal Revenue Service. As such, the use by “dark money” groups of the NAACP case as an argument for continued secrecy has been of far greater interest to campaign finance reformers and donors alike.
The Americans for Prosperity foundation, as a 501(c)(3) organization, is prohibited from paying for advertising that attacks or supports a candidate. In addition, donations to the organization are tax deductible. A “dark money” group, which is organized as a 501(c)(4) “social welfare” organization, can pay for such advertisements, and thanks to the Citizens United decision, can use corporate and labor union money to do it — meaning more and more cash is flowing in this direction. Donations to social welfare groups are not tax deductible.
In 2006, less than $5.2 million was spent by groups that spent money supporting or opposing candidates but did not release the names of their donors, according to the Center for Responsive Politics. That amount grew to well over $300 million in the 2012 presidential cycle.
As the presidential race has narrowed to two candidates, a flood of “dark money” spending is expected in the 2016 race as well.
Americans for Prosperity Foundation actually has a sister organization, Americans for Prosperity, that is indeed a “dark money” nonprofit. Legally, they are separate organizations, but they share the same address, phone number, receptionist and spokesman.
The connections go even deeper. In the foundation’s 2014 tax return, it reported that the sister group is more than 35 percent controlled by the foundation and the “dark money” group pays the foundation millions of dollars for unspecified “services.”
The NAACP case is now being used as justification — in court, in press releases and in the media — for these social welfare, “dark money” nonprofits to continue to keep their donors secret.
For example, the Koch-backed “dark money” group American Commitment, which has spent more than $2 million on political expenditures supporting or opposing candidates since 2012, was adamant that the Center for Public Integrity use this quote when asked in 2014 about its donors:
"We agree with the Warren Court's landmark 1958 ruling in NAACP v. Alabama that protecting the privacy of our members is critical to their core First Amendment rights of free speech and free association.”
The quote was emailed by Phil Kerpen, a veteran of Koch-backed groups Americans for Prosperity and the Cato Institute.
Among the biggest and most active of the “dark money” groups is Crossroads GPS, a 501(c)(4) social welfare nonprofit, co-founded by Karl Rove, once an adviser to former President George W. Bush. In the 2012 election alone, the group made $71 million worth of independent political expenditures that promoted or slammed candidates. More than $15 million directly targeted President Barack Obama, who was seeking re-election.
Rove, in an interview on Fox News in April 2012, signaled how conservatives had seized on the NAACP case in framing their arguments against increasing pressure to disclose donors.
"They want to intimidate people into not giving to these conservative efforts," he said of disclosure advocates.
"I think it's shameful," Rove continued. "I think it's a sign of their fear of democracy. And it's interesting that they have antecedents, and those antecedents are a bunch of segregationist attorney generals trying to shut down the NAACP."
The U.S. Chamber of Commerce, a 501(c)(6) trade organization, pays for ads but does not reveal its donors and has used the NAACP case argument to block attempts at disclosure — like the DISCLOSE Act, which would have required increased disclosure for corporations and labor unions.
The bill, which has never made it through Congress, was the subject of intense lobbying by the business league. Of the 2012 version the chamber wrote, it is “designed unconstitutionally to encourage retaliation against certain speakers who have unpopular or unfavorable political views by requiring groups to disclose the names and addresses of their donors.”
The NAACP decision has now been referenced in numerous lawsuits. It’s been used to bolster cases before the Federal Election Commission, such as in 2013, when the Tea Party Leadership Fund asked the agency whether it could avoid disclosing its donors because of “a reasonable probability of threats, harassment, or reprisals from government officials or private parties.” (The FEC, as it often does, deadlocked on the question — twice.).
Clearly the memo has gone out.
In Arizona, for example, Republican Gov. Doug Ducey signed a bill in late March that would actually provide less disclosure for nonprofits. The legislation’s chief proponent, Republican state Rep. J.D. Mesnard, cited the NAACP case in an interview with a reporter for the Arizona Capitol Times.
“Transparency is a good principle,” he said. “But it is not the overarching principle.”