The Detrimental Impacts of Nonprofits in Politics: A Plea for Transparency

By Luis Bravo

​Luis Bravo is a freshman at the University of Pennsylvania

In 2008, California became the first state to deprive citizens of their rights by rewriting its constitution through the passage of the infamous, Proposition 8. [1] Amongst heavy opposition, this amendment limited the recognition of marriage to unions between a man and a woman, dissolving the previously instituted marriage rights of same-sex couples. Its ratification is largely attributed to The Church of Latter-Day Saints which heavily funded a series of successful media campaigns under the guise of the nonprofit, the National Organization For Marriage. [2] This funding was subsequently utilized to produce propaganda in various formats to sway public opinion. Under federal regulations, however, nonprofit organizations are prohibited from participating in political activities or risk losing their tax-exempt status. [3] Nevertheless, due to the Citizens United decision in conjunction with ambiguous tax codes, these practices are deemed permissible, granting nonprofits an unrestrained ability to affect American politics. In order to have a truly just nation, one that embodies the democratic ideals we strive to uphold, it is essential that we reevaluate existing policies and instate stricter provisions to limit the power of nonprofit interest groups.

As their name implies, nonprofit groups are organizations that redistribute any economic revenue for the sole purpose of aiding the lives of others. The United States’ Internal Revenue Services recognizes the merit of such organizations and awards them a tax-exempt status as outlined in section 501(c) of the IRS tax code. [4] In other words, these groups operate as if they had no income. While there are many types of nonprofits, most fall under the category of 501(c)(3) which are groups with charitable, educational, religious, or scientific purposes, among others. Meant to be isolated from political issues, donations to these groups qualify as tax deductions in individual income tax reports for the donors. Similarly, most other nonprofits fall under section 501(c)(4), which are groups meant to operate exclusively for the general welfare, but have become increasingly active in political campaigns. Because these groups are allowed minimal political involvement, donors do not qualify for tax deductions, but nonprofits are still not taxed for any of the money they receive. Several nonprofits have circumvented this by creating two distinct groups, one a 501(c)(3) and the other a 501(c)(4). In this way, money can be easily transferred between both organizations, and can be used for political purposes; in addition, donors will always qualify for tax deduction. This loophole is vital because both types of nonprofits are not subject to disclosure laws. While groups in the 501(c)(4) category are allowed greater political freedoms, it is important to recognize that neither group is legally able to support or endorse any partisan candidate or action. [5]

However, that is exactly what has been occurring. Nonprofit groups such as United Against Nuclear Iran are utilizing nontaxable economic resources to advocate partisan legislative action. Much like the National Organization For Marriage, these groups create and distribute propaganda and even call constituents urging them to take a specific course of action. Moreover, these kinds of nonprofits are expected to increase their influence in the 2016 presidential race. Currently, eight Republican candidates have established nonprofits to support their campaigns. Democratic candidate Hillary Clinton has also expressed interest in raising money through the group, Priorities USA Action. [6] The real danger from nonprofits comes from a lack of transparency. As they are not legally required to comprehensively disclose their funding sources, it is difficult to track donors; even if records are requested, the sources can be completely opaque. In essence, this means that monumentally wealthy individuals and behemoth corporations can indirectly support campaigns or political movements without being exposed (and all while enjoying a hefty tax deduction).

Although in an ideal world the Citizens United decision would be overturned, the current political climate would not allow such a monumental change. Therefore, we must dismantle this judicial error in fragments. Principally, the IRS must develop clear limits on the permissible political activities of nonprofits--the current guidelines are awfully vague. By doing so, the government would be able to hold nonprofits accountable for inappropriate political involvement. Additionally, the IRS must mandate nonprofits, especially those with dubious political affiliations, to provide detailed and periodic expense reports outlining both the sources of their funding and the intended use of those funds. It is time the IRS stops turning a blind eye on these organizations.

The greatest impact of the Citizens United decision was the desertion, without proper justification, of the previously held definition of corruption. Instead, it was replaced by a narrower definition that requires explicitly quid pro quo actions; in other words, there must be a clear evidence of bribery. [7] This definition, however, is not extensive, and allows a range of activities that under other definitions of corruption would be impermissible. Ultimately, we should reinstate the legal definition of corruption that has been used in the past, or better yet, adopt a more comprehensive definition that incorporates issues unique to contemporary society.

In no way am I advocating that individuals, or even corporations, should be prohibited from supporting candidates or legislative action. I do believe, however, that at the very least, individuals should have the ability to know who is behind these massive ad campaigns that most Americans are exposed to. Seemingly innocent nonprofit organizations such as Energy Tomorrow run advertisements that look like they stem from individual interests, and I believe that if more Americans were aware that groups such as the American Petroleum Industry are a major source of their funding, the political opinions of the American people would drastically change. [8] Additionally, if these interest groups under the guise of nonprofits choose to participate in political activities, it is imperative they be taxed accordingly. The sad reality is that money is power. However, taxation allows the economic playing field to be somewhat leveled, if only minimally. While we are a long way from achieving transparency in politics, reducing the political power of nonprofits is integral to the process, and a powerful start.


[1]  Holden, Stephen. "Marching in the War on Gay Marriage." The New York Times. June 17, 2010. Accessed January 21, 2016. http://www.nytimes.com/2010/06/18/movies/18eight.html
[2] Karger, Fred. "Will Mormon Church Keep Funding NOM?" The Huffington Post. December 21, 2013. Accessed January 21, 2016. http://www.huffingtonpost.com/fred-karger/will-mormon-church-keep-f_b_4485852.html
[3]  Vanden, Kathryn. "Mixing Politics with Nonprofits." Mixing Politics with Nonprofits. Accessed January 21, 2016. http://www.alliance1.org/magazine/spring06/nonprofit-law/mixing-politics-with-nonprofits
[4]  Cornell University Law School. "26 U.S. Code § 501 - Exemption from Tax on Corporations, Certain Trusts, Etc." LII / Legal Information Institute. Accessed January 21, 2016. https://www.law.cornell.edu/uscode/text/26/501
[5]  Internal Revenue Service. "Political Activity and Social Welfare." Internal Revenue Service. December 16, 2015. Accessed January 20, 2016. https://www.irs.gov/Charities-&-Non-Profits/Other-Non-Profits/Political-Activity-and-Social-Welfare
[6]  Lichtblau, Eric. "I.R.S. Expected to Stand Aside as Nonprofits Increase Role in 2016 Race." The New York Times. July 05, 2015. Accessed January 21, 2016. http://www.nytimes.com/2015/07/06/us/politics/irs-expected-to-stand-aside-as-nonprofits-increase-role-in-2016-race.html?_r=0
[7]  Wertheimer, Fred. "Citizens United and Its Disastrous Consequences: The Decision." The Huffington Post. January 14, 2016. Accessed January 21, 2016. http://www.huffingtonpost.com/fred-wertheimer/citizens-united-and-its-d_b_8979252.html
[8]  Grass, Alison. "Who Supports Fracking?" Food & Water Watch. November 28, 2015. Accessed January 21, 2016. http://www.foodandwaterwatch.org/insight/who-supports-fracking

Photo Credit: Flickr User Mike Chaput

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