A federal appeals court panel declined to stay a ruling on donor disclosure for so-called “electioneering” advertising, which could lead to the largest independent expenditure campaigns in America having to reveal their donor networks for the 2012 cycle. Conservative groups wanted to stay the ruling pending appeal, which won’t be heard until September.
In a 2-to-1 decision issued Monday evening, a U.S. Court of Appeals panel here declined to stay a ruling by a federal judge requiring tax-exempt organizations that run election-related television ads to disclose their donors.
The panel’s decision was a significant victory for campaign finance reform advocates who have been fighting against the deluge of money — much of it from undisclosed donors — that has flooded the political landscape in the wake of several Supreme Court decisions, including the 2010 Citizens United case.
“It’s the first major breakthrough in overcoming the massive amounts of secret contributions that are flowing into federal elections,” said Fred Wertheimer, president of the reform group Democracy 21, one of the groups involved in the case brought by Rep. Chris Van Hollen (D-Md.) against the Federal Election Commission.
Conservatives made their familiar whine about possible retribution for political spending, as if free speech is a shield from criticism.
This would affect “electioneering” ads, TV spots that refer to a candidate but don’t actually tell voters to vote one way or another. These kinds of ads were very popular for conservative groups in 2010. Some of the tax-exempt groups which could be affected by this ruling include the US Chamber of Commerce, and conservative organizations like Americans for Prosperity and Karl Rove’s Crossroads GPS, which just announced a $25 million ad buy today.
It’s possible that these groups will simply set up segregated accounts with disclosure that pay for the ads, while continuing the undisclosed donors to pay for other communications. But that would diminish their advertising accounts. Another group, the American Future Fund, thinks they can get away with just saying “the White House” instead of “Barack Obama” and get away with keeping their ads undisclosed. But that’s not entirely likely to fly with the FEC. And there’s another factor here:
Ironically, some groups may now begin airing more explicitly political ads — ones that call for the election or defeat of a candidate — because those “express advocacy” ads still require only limited donor disclosure.
But doing more direct political spending could threaten the tax status of nonprofit groups, whose political activity is limited by Internal Revenue Service rules.
For now, the court’s decision could prompt some donors — particularly corporations — to halt their giving while they wait to see how the case unfolds.
Nonprofits have to spend a large amount of their treasuries on “educational” measures, which these electioneering ads can fall under. So take them away, and they lose tax-exempt status, costing millions of dollars.
The conservative groups could take their bid for a stay to the Supreme Court, but even in Citizens United, as one of the appeals court judges noted yesterday, the Supreme Court endorsed disclosure. So that’s likely to be where this ends until at least the hearing in September. It’s a real pickle for these dark money groups.
Andy Kroll has more.