In the aftermath of the Supreme Court’s decision in Citizens United, nonprofit organizations originally designed to promote social welfare interests have become the latest loophole for political financiers to bypass campaign finance regulations. The federal regime of campaign finance laws—designed to prevent corruption and preserve the integrity of our democratic institutions—is being circumvented by wealthy interests. Donors use these nonprofits, organized under § 501(c)(4) of the tax code, to anonymously inject unlimited amounts of political money into the electoral process. The 2010 midterm election witnessed the largest amount of independent spending from interest groups in a nonpresidential election. Nearly $293 million came from outside interest groups, with at least $138 million from organizations with anonymous donors. These numbers are staggering, and without reform, the Note contends, the political influence of secretive money will only grow in future elections.
The Note examines the rise of § 501(c)(4) nonprofit organizations as a modern tool for bypassing campaign finance regulation and looks critically at case studies from the 2010 midterm elections. After assessing possible avenues for reform, the Note advocates for disclosure and disclaimer requirements as the best option for reforming § 501(c)(4) political activity. Disclosure and disclaimer requirements improve voter confidence in the electoral process, prevent corruption and/or the appearance of corruption, aid in the enforcement of contribution limits, and allow voters to completely evaluate candidates. Although legislation called the DISCLOSE Act failed in the last Congress, the Note argues that similar legislation is both politically feasible and constitutionally sound, and should be passed immediately before future elections further undermine our democratic institutions.