News: CJ Exclusives

Price bill would force nonprofits to disclose donors, contrary to Supreme Court precedent

U.S. Rep. David Price, D-4th District (Photo from C-Span)
U.S. Rep. David Price, D-4th District (Photo from C-Span)

U.S. Rep. David Price, D-4th District, has filed legislation seeking to force private, nonprofit organizations that engage in political activity to identify their donors.

Price, who with the exception of one term has served in Congress since 1987, filed a companion bill to legislation introduced by Sen. John Tester, D-Montana, called the Spotlight Act. It has 28 Democratic cosponsors. Price’s bill has 11 Democratic cosponsors.

In a news release Wednesday, Sept. 26, Price, vice chairman of the House Democracy Reform Task Force, said the Spotlight Act would boost accountability and transparency in elections.

Price’s legislation comes on the heels of a decision by the 9th U.S. Circuit Court of Appeals to allow the state of California to collect information about major donors to 501(c)4 charitable organizations, including political action committees. The state claims it needs this information prevent electoral fraud, but the Supreme Court has said forcing charitable groups, even ones involved in politics, to disclose the names of their donors, can chill free speech.

The bill also would reverse a Treasury Department decision allowing politically active 501(c)4 charitable organizations to shield some donor information from the Internal Revenue Service.

Treasury’s decision, announced July 16, still requires 501(c)3 charitable organizations to disclose information to the IRS about donors, who can claim tax deductions from their contributions. But donors to 501(c)4 groups generally can’t claim tax deductions.

“Americans shouldn’t be required to send the IRS information that it doesn’t need to effectively enforce our tax laws, and the IRS simply does not need tax returns with donor names and addresses to do its job in this area,” U.S. Treasury Secretary Steven Mnuchin said at the time.  

“It is important to emphasize that this change will in no way limit transparency. The same information about tax-exempt organizations that was previously available to the public will continue to be available, while private taxpayer information will be better protected,” Mnuchin said. “The IRS’s new policy for certain tax-exempt organizations will make our tax system simpler and less susceptible to abuse.”

Price’s bill not only requires 501(c)4, (c)5, and (c)6 organizations to disclose to the IRS the names of donors contributing $5,000 or more, but also to reveal them to the public. The public disclosure provisions would apply to filings for the 2018 tax year.

“The Trump administration’s decision to allow politically active organizations to obscure millions in dark campaign money further weakens our already failing campaign finance system,” Price said in his release.

“At a time when our elections are plagued by unlimited corporate spending, anonymous donors, and illegal foreign meddling, this action provides a mask to special interests and bad actors while diminishing the power of voters,” Price said.

“It’s clear what the purpose of this is,” said Roy Cordato, resident scholar at the John Locke Foundation. “It’s a way of scaring people into not giving money to certain kinds of organizations.”

Cordato, who takes issue with the term dark money, said publicizing the names of donors plays into the hands of the left in its campaign to intimidate those with whom they disagree.

“The fact of the matter is this is the kind of thing that was used against Martin Luther King and civil rights organizations” by racists seeking the names of their contributors, Cordato said. “Now it is [by] the Left, and everyone knows now they are all about intimidation.”

Cordato has defended anonymous speech and anonymous donations as essential to avoiding harassment and retaliation, and preserving free speech and political dialogue.

The John Locke Foundation, which publishes Carolina Journal, was targeted in 2015 by Democratic U.S. senators with a demand letter for funding information and other documentation related to climate change. Constitutional scholars said the Democratic senators’ coercive tactics threatened the First Amendment. JLF refused to comply with the request.