April 22, 2014

High Court Ruling Heaps Power on the Rich and Burden on Charities

Olivier Douliery/ABACAUSA

Protesters outside of the U.S. Supreme Court during oral arguments in McCutcheon v. Federal Election Commission, October 2013.

This month’s Supreme Court campaign-finance ruling to further relax limits on how much Americans can give to political candidates should concern nonprofits. They will need to step up their efforts, especially in community organizing, that now are needed more than ever as a strong counter to the growing influence of the rich over civic life.

The court’s ruling made it possible for the wealthy to contribute more than $3-million apiece to political candidates in every election cycle. By giving the rich license to so dominate democracy, the court added to the pressure on charities and foundations that work mightily to help the needy and improve the quality of life of all Americans. It means that an American oligarchy has more power to assert its own private interests over the public interest and the common good.

While every American has an equal vote, we do not have an equal ability to influence the outcome of the elections that decide which politicians win and ultimately make the decisions about government policies, programs, and regulations. Nor do charities have an ability equal to that of corporations to shape politicians’ decisions once they are elected to office.

In the 2012 election, over $6-billion was gathered in campaign contributions. More than a quarter of that money came from the top 1 percent of the top 1 percent of all Americans—that means that elected officials have big reasons to feel beholden to the top one ten-thousandth of the U.S. population. The money from the superrich was so important that not a single politician was elected to the U.S. Senate or the House of Representatives without their campaign contributions. Although more than half the members of Congress are themselves millionaires, they still depend on the wealthy to win and hold onto their positions.

For the wealthy, supporting political candidates makes good business sense.

Look at the industries that gave the most—finance, insurance, and real estate. Among donors who constitute the top one-hundredth of a percent of Americans, 20 percent came from those industries. And of the 1,000 donors who gave the most, 34 percent were from those industries.

And they get a very good return on their investment. The share of GDP attributable to just a portion of financial, insurance, and real-estate businesses has almost doubled since 1980, the period in which elected officials deregulated the financial industry, as economist Paul Krugman points out. These companies and individuals significantly increased their campaign contributions and lobbying dollars over those decades, especially when some re-regulation was being considered.

Such self-interested behavior by the wealthy and the politicians they support creates very real problems for nonprofits and the people they serve. Too often the loyalties of elected officials at the federal, state, and local levels go to their campaign contributors more than to the American people.

Charities have been and are advocating for the preservation—and now restoration—of sensible safeguards against the financial-industry abuses that caused so much misery for so many Americans. They have argued for public policies to compel the financial industry to compensate those who lost much and are still suffering and for government programs to help people while they work to recover from the economic havoc of the recession.

Indeed, some charities have urged government to prosecute the individual and institutional architects of the crisis for their alleged criminal acts.

In most of these and similar efforts, charities have failed to move politicians to appropriate and satisfactory action. Those working in the public interest will never have the resources to win the pay-to-play game that increasingly characterizes America’s democratic process. They will always be outspent by those who work for the private interests of the superrich and the corporations that give them their wealth.

Current environmental battles offer another example. Business organizations and wealthy donors are spending millions of dollars to oppose government regulation of greenhouse gases from power plants. They have long been able to stave off any significant action to curb climate change, even as the seas rise and extraordinarily severe weather patterns begin to plague the nation.

To counter such industry efforts, nonprofit groups are organizing a collaborative that will employ the same tactics—also to spend millions in campaign contributions and lobbying in favor of controlling climate change. “We need more environmental money in politics,” Gene Karpinski, president of the League of Conservation Voters, one of the organizers of the effort told The Washington Post.

Laudable as that effort is, it doesn’t make sense for nonprofits to try to win a corrupt and corrupting game, especially when the rules are so stacked in favor of the wealthy. The rules are written by those with power. As long as campaign finance is unrestricted and so opaque, those representing pecuniary private interests will always be able to outspend groups fighting for the common good. When money rules, when money is power, wealthy oligarchs will win.

In fact, according to a research paper by scholars at Northwestern and Princeton soon to be published in a journal of the American Political Science Association, the U.S. already is an oligarchy in which policy decisions reflect the preferences of “economic elites and organized groups representing business interests.” That has to change.

So the challenge for charities and foundations is to figure out how to counter the economically, socially, and environmentally destructive corrosion of the democratic process in the U.S. If the rules of the game can’t easily be changed, how can ordinary people be helped to better understand and promote their shared interest in the common good? How can it be made more likely that people will elect politicians who truly represent them instead of acting in the interests of wealthy campaign contributors and fat-cat lobbyists?

The answer is in building broad democratic participation through organizing and educational activities at the local level.

It’s important to remember that campaign dollars influence and animate voters at election time. In contrast, charities and foundations need to spend the money to build enduring grassroots organizations, groups that use new techniques and media (as well as old proven methods) to engage and continually spur people to rally for policies that help everyone, not just the affluent.

The Supreme Court ruling should serve as a warning bell for grant makers and nonprofits that it’s time to take the growing democratic—and economic—inequality in America more seriously and to plunge into action.

Mark Rosenman is professor emeritus at Union Institute & University.