A congressional oversight committee called on nonprofit experts to testify Wednesday at a hearing on the role of tax-exempt organizations in American politics.
The hearing, held by the House Ways and Means Committee’s oversight panel, follows an August request for information made by Rep. Jason Smith, a Missouri Republican and the full committee’s chairman, regarding the involvement of nonprofit organizations, including those run by foreign nationals, in political campaigns.
The committee’s Republicans focused on the more than $300 million that Facebook founder Mark Zuckerberg donated to the Center for Tech and Civic Life to support the administration of election offices during the 2020 election cycle in a way they say benefited Democratic candidates. The Republicans on the committee also brought up the hundreds of millions of dollars in support Swiss billionaire Hansjörg Wyss provided to left-leaning voter-mobilization nonprofits affiliated with Arabella Advisors, a progressive for-profit philanthropic consulting firm, as an example of so-called dark money influence in American politics.
Billionaires have tried to influence elections through a “charitable backdoor,” Smith said.
“Americans should be concerned that wealthy foreign nationals are using America’s tax code to conceal their attempts to influence the American political process, despite being prohibited from donating directly to campaigns,” he said.
The committee’s ranking Democrat, Rep. Bill Pascrell of New Jersey, said Republicans were “targeting tax-exempt organizations that don’t align with their politics.”
The biggest reason there is so much “dark money” flowing through politics, Pascrell said, is the 2010 Citizens United decision by the Supreme Court, which allowed unlimited spending by corporations, nonprofits, and unions to influence politics.
“Neither side is privy to virtue on this stuff,” Pascrell said.
Appearing before the committee were Justin Chung, legislative attorney at the Congressional Research Service; Scott Walter, president of the Capital Research Center; Stewart Whitson, legal director of the Foundation for Government Accountability; and Philip Hackney, associate professor of law at the University of Pittsburgh.
To check the influence of dark money, Walter warned against greater donor disclosure requirements, which he called an invasion of privacy, or beefing up the enforcement budget of the Internal Revenue Service, which he predicted would invite abuse. Instead, he suggested Congress bar foundations and charities from supporting and executing get-out-the-vote drives.
“The lines governing the districts you represent may have been carved in part by this foreign money," he told the committee, describing Wyss’s support of the National Redistricting Action Fund, the 501(c)(4) affiliate of the National Democratic Redistricting Committee. “The same foreign cash may have funded the turnout efforts in your last elections.”
Hackney responded that “a diverse nonprofit sector that fosters civic participation and engagement is a gem of the United States.”
What Congress needs to do, he told members, is to fund the IRS. The agency’s budget dropped by 20 percent in the decade that ended in 2019, he said, and the number of employees at the division who provide oversight to tax-exempt organizations was nearly halved.
Changing the rules about political activity, Hackney warned, would damage a key element of civil society.
“Get-out-the-vote efforts and nonpartisan information regarding elections all fit well within charity and should be encouraged, not threatened,” he said.
