New Analysis by the Coalition for Accountability in Political Spending Underscores Need for State Regulatory Reforms

NEW YORK—On the eve of groundbreaking reforms to strengthen political disclosure in New York State, the Coalition for Accountability in Political Spending (CAPS) and New York City Public Advocate Bill de Blasio released a new report today highlighting a dramatic rise of secret spending by out-of-state political groups.

According to the report, “From Social Welfare to Political Warfare,” political spending by tax-exempt 501(c)(4) organizations increased by more than 1,500% between the 2008 and 2012 elections, with 98.7% of those funds coming from out-of-state groups. The growth of these organizations has enabled anonymous donors to flood the airwaves with political ads, using shadowy front groups to shield their identity. 

501(c)(4) organizations have become significant players in elections following the Supreme Court’s decision on Citizens United v. Federal Election Commission.  The report profiles the ten organizations with the highest election spending in New York State. Only one of these organizations disclosed on its website that it engaged in political spending and provided details on the races where it was actively engaged.

“It is past time to shine a public spotlight on political committees that masquerade as tax-exempt nonprofits,” said New York City Public Advocate Bill de Blasio. “These sham nonprofits are not only a threat to our democracy but also to the integrity of our nonprofit sector. New state regulations are essential to protecting New Yorkers and bringing much needed transparency to our elections.”

“I applaud the Coalition for Accountability in Political Spending for highlighting the flood of money from anonymous donors who abuse charitable organizations and threaten the integrity of our elections,” said Attorney General Eric Schneiderman, who has announced new rules that require nonprofits to disclose their political spending and identify their donors. “Last year, we saw more than $400 million dollars in undisclosed funding flood into the American political system, and millions more are expected to flood our airwaves in this year’s local elections. That is precisely why I have proposed statewide disclosure rules which will shine a light on anonymous donors and provide New Yorkers with the transparency and accountability they expect and deserve in the political process.”

Read the full report: http://politicalspending.org/501c4-Report.pdf

According to the report:

• Political spending by 501(c)(4) groups has skyrocketed. During the 2012 election, 32 organizations spent nearly $7.2 million on federal elections in New York State – an increase of 1,579% over 2008.
  
  
• Virtually all of the spending—98.7%—came from out-of-state groups.
  
  
• Although the number of charities in the U.S. has fallen in recent years, there has been a significant rise in the number of newly registered 501(c)(4) organizations.
  
  
• The groups target competitive races. In the four New York Congressional races where 501(c)(4) organizations spent the most money in 2012, the average margin of victory was less than 7 percent. 501(c)(4) organizations accounted for 11 percent of all election expenditures in these races.

“Secret spending by political 501(c)(4) organizations that are abusing the tax code is one of the most disturbing problems in our politics today.  The groups claim non-profit status to exploit gaping loopholes in disclosure rules and the IRS’s failure to address these abuses — but voters deserve to know who is trying to influence their votes and who is trying to influence elected officials through big political spending. This report clearly lays out why immediate reform is needed not only in New York, but across the country,” said J. Adam Skaggs of the Brennan Center for Justice at NYU School of Law.

“Because of current loopholes, social welfare organizations have become a favorite vehicle for dark money – but they need to be driven into the light of transparency and accountability if they choose to spend money in politics,” said Liz Kennedy, Counsel at Demos. “Voters, and donors, need this information to know how their money is being used, and who is trying to influence our elections.”

“This report provides important insight into the dark money problem, as corporations increasingly turn to nonprofits and trade associations to spend their money and keep it secret,” said Lisa Gilbert, Director of Public Citizen's Congress Watch. “We need a window into this dark room, and remedies like a stricter requirements in-state for 501c organizations are critical mechanisms for getting us there.”

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The Coalition for Accountability in Political Spending (CAPS) is a national network of elected officials and pension trustees fighting for greater disclosure and accountability in corporate political spending. Learn more at http://www.politicalspending.org/.

FOR IMMEDIATE RELEASE
Contact: Wiley Norvell, 212-669-4813; 646-422-9614

“Companies cannot keep shareholders in the dark. It’s bad for business and it’s bad for our democracy. Three years ago, the Supreme Court opened the door for corporate treasuries to spend undisclosed millions to influence our elections. With the landmark lawsuit filed today, Comptroller DiNapoli is serving the interests of shareholders and voters, both of whom deserve to know when and how corporate dollars are used for political purposes.”

Public Advocate de Blasio is the founder of the Coalition for Accountability in Political Spending (CAPS), of which Comptroller DiNapoli is a member. CAPS is a national network of elected officials and pension trustees fighting for greater disclosure and restraint of corporate political spending. Learn more at politicalspending.org.

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Pressure mounting on S.E.C. to back disclosure of political spending by publicly traded companies

Contact: Wiley Norvell, CAPS, 212-669-4813; 646-422-9614

NEW YORK – New ads in Washington D.C.’s Metro stations are naming names. The Coalition for Accountability in Political Spending (CAPS) is turning up the pressure on commissioners at the Securities and Exchange Commission to act on runaway political spending. New ads feature photos of the five current S.E.C. Commissioners and will be highlighted through an on-street canvasing effort that began on Tuesday. Teams of organizers with sandwich boards will hand out S.E.C. Commissioner “trading cards” in front of the S.E.C. headquarters and Union Station during rush hours for the next month.

The 2012 election is shattering all records for political spending by outside groups, with more than $600 million spent so far. Most troubling, 501c4 and 501c6 groups – who are not required to disclose their donors – have spent more money on TV ads than all the Super PACs combined. The S.E.C. has the power to mandate that publicly-traded companies disclose their political spending with nonprofit groups, but has thus far refused to act. CAPS’ latest campaign builds on the largest outreach campaign in S.E.C. history.

“This is no longer just inside baseball. This effort is going to be in front of hundreds of thousands of people, and the S.E.C. commissioners are going to feel the pressure,” said CAPS founder, New York City Public Advocate Bill de Blasio. “We may not see new rules implemented in 2012, but if we can get the S.E.C. to signal that disclosure is on the way, big corporate donors will be much more likely to restrain their spending in the lead up to November.”

The new ads, which are already up Washington DC’s Union Station and Tenleytown metro stops, urge passersby to visit www.politicalspending.org to “Meet their S.E.C. Commissioners” and fill out a comment to the S.E.C. urging disclosure of political spending. The organizing effort also includes new videos highlighting the negative impact of secret political spending on corporate shareholders and employees.

“The record number of public comments the SEC has received on this topic are sending a clear message,” said Lisa Gilbert, acting director of Public Citizen’s Congress Watch division and co-chair of the Corporate Reform Coalition, the 70-plus organizations calling for an SEC rule on the disclosure political spending. “Citizens and shareholders could not be speaking louder. This rule is in line with SEC responsibilities to investors, and the American public demands it.”

The Supreme Court’s Citizens United ruling allowed corporations to spend directly in elections with funds from the company treasury—without informing shareholders, pension funds or the public. Because of its refusal to stand up for transparency, the S.E.C. is facing the biggest public outcry in its history.
To date, more than 292,000 people have called on the S.E.C. to act – breaking all prior records for public comments at the S.E.C. It takes a vote of three S.E.C. Commissioners to adopt new rules to shine a light on secret corporate spending in elections. In February 2012, S.E.C. Commissioner Aguilar announced his support for these reforms, leaving just two more Commissioners left to secure a majority vote for passage.

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