Maine Rep. Golden introduces bill creating donor disclosure requirements for 501(c)(4)s   

On July 9, Rep. Jared Golden (D), of Maine's second congressional district, introduced HR7525 in the U.S. House of Representatives. The legislation proposes new donor disclosure requirements for 501(c)(4) nonprofits that make political expenditures in any amount. The bill also proposes capping a 501(c)(4)'s political spending at 10 percent of its total annual expenditures.  

Background 

Nonprofits organized under Section 501(c)(4) of the Internal Revenue Code are commonly referred to as social welfare organizations, which the Internal Revenue Service defines as "organizations that may be performing some type of public or community benefit but whose principal feature is lack of private benefit or profit." 

Under existing law and agency rules, donations made to 501(c)(4)s are not tax-deductible. 501(c)(4) nonprofits can engage in political lobbying and campaign activities. They are not required to publicly disclose identifying information about their donors. 

Examples of 501(c)(4)s include the American Civil Liberties Union (ACLU) and the National Rifle Association (NRA). 

What does the bill propose?

HR7525 would amend the Internal Revenue Code as follows:

• Limits a 501(c)(4)'s political spending to 10 percent of its total annual expenditures. 

• Repeals an existing cap on political organizations' nonpolitical spending (thereby allowing organizations no longer recognized under Section 501(c)(4) to register as Section 527 entities). 

  • A 527 group is a nonprofit organization whose chief purpose is to influence the election or selection of candidates for office. Examples of 527 groups include The Democratic Governors Association and the Republican Governors Association. 527 groups must file regular reports disclosing their donors. 

• Requires a 501(c)(4) that spends any amount of money on political purposes to disclose the identities of its donors who contributed $5,000 or more. 

Political context

Golden was first elected to Congress in 2018, defeating then-incumbent Rep. Bruce Poliquin (R) 50.6 percent to 49.4 percent. Ballotpedia has designated this year's general election for Maine's 2nd Congressional District a battleground race. In the 2016 presidential contest, Donald Trump (R) defeated Hillary Clinton (D) 51 percent to 41 percent in the district. 

Golden issued a press release on July 9, announcing the introduction of HR7525 as part of his 14-bill "Plan to Fix a Broken Washington." Golden said, "If we’re ever going to make real progress on the issues that matter most to Mainers, we need to fix the entire system. Over the past year, I’ve been developing and identifying a set of proposals that will fight corruption and dark money in our politics, wrest power away from corporations and special interests, and help return power to regular people. I want people to have faith in the power of our democracy and our leaders again, and I’m hopeful these proposals will put us on that path." In the press release, individuals from Maine Citizens for Clean Elections and the End Citizens United Action Fund registered their support for the plan. 

The Institute for Free Speech makes the following argument against expanded donor disclosure requirements: "[Disclosure] laws ... present significant First Amendment harms. If an individual’s personal information is reported to the government and then published on the internet for all to see, they are less likely to contribute, particularly if the speech they are supporting is unpopular or controversial. ...Unfortunately, privacy from government disclosure laws for those engaged in issue speech is under attack. Politicians unhappy with that speech seek more and more disclosure rules that have little to do with fighting corruption." No organized opposition to the legislation has yet appeared.

What comes next?   

On July 9, HR7525 was referred to the House Committee on Ways and Means. Ways and Means has 42 members: 25 Democrats and 17 Republicans. The committee chairman is Richard Neal (D–Mass.). The ranking member is Kevin Brady (R–Texas). Neither the full committee nor any of its subcommittees has taken up the bill.
 

What we've been reading

• The Washington Times, "Conservative nonprofit asks DOJ to help it fend off lawsuit demanding donor disclosure," July 19, 2020

• Sludge, "Dark Money Floods in to State Elections, Revealing Cracks in Disclosure Laws," July 17, 2020

• The Center Square, "Op-Ed: Troubling trend of states attacking private donors," June 29, 2020

The big picture

Number of relevant bills by state: We're currently tracking 47 pieces of legislation dealing with donor disclosure. On the map below, a darker shade of green indicates a greater number of relevant bills. Click here for a complete list of all the bills we're tracking. 

Number of relevant bills by current legislative status: 

Number of relevant bills by partisan status of sponsor(s): 

Recent legislative actions

No legislative actions have been taken on relevant bills since our last issue.

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