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Mark Rosenman

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Tax-Exempt Charities Get Bad Rap When 'Social Welfare' Groups Donate To Campaigns

Posted: 09/06/2012 9:09 am

Charities depend on people's trust and on the public's support for their very existence. That good will is being eroded by the terrible behavior of some other nonprofit organizations in the Obama-Romney presidential race.

First, it's important to understand that there are lots of different kinds of nonprofit organizations that receive tax-exempt status from the IRS. They range from "business leagues" and what are called "social welfare organizations" to the "charitable and religious" groups that we usually think of when we hear the term "nonprofit." However, it is only charities and religious groups that can receive contributions for which the donor gets a tax-deduction.

For years and years, most "social welfare organizations" operated in service to charitable concerns with both serving the broader community. The main difference between them and charities is that the former are allowed extensive powers to lobby government although it may "not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office." As my grandmother used to say, that's all gone to hell in a handbasket since the Supreme Court's Citizens United decision -- and that hurts charities.

A lot is being written about the partisan political abuses of what is called (c)4 status (that's the IRS code for social welfare groups; charities are called [c]3s). They are using secrecy -- tax-exempt groups do not need to make public reports about who is funding them -- to pour millions of dollars into vitriolic ad campaigns that are clearly intended to influence voters.

A side effect of the decidedly nasty and often deceitful ads run by these nonprofit groups, and the increasing press attention to these abusive practices, is that "nonprofits" are getting the blame. And most people don't distinguish between them and charities. The good and noble work of charities, work that is so dependent on public support, is being tarnished by cynical political operatives.

The corrupting influence of money in politics has long been a problem for charities. They are at a grievous disadvantage in advocating for the common good in legislative chambers and executive offices whose occupants are mightily beholden to private interests. Our system no longer honors "one person, one vote," but rather now rewards "many dollars, much influence."

Charities and legitimate social welfare organizations indeed should advocate and lobby for their clients, their communities and their causes. And sometimes it may even be difficult to distinguish between nonprofits working for the public interest and those serving pecuniary and partisan purposes. Yet, charities cannot allow the current corruption of social welfare nonprofit status to go unchallenged.

To help protect themselves while also encouraging a more democratic society, charities of all missions and purposes need to work together to moderate the influence of money in politics. They can do this by calling for the timely and energetic investigations of (c)4 groups that violate strictures on partisan political activity, such as the IRS seems to be belatedly initiating with Karl Rove's Crossroads GPS.

Charities must call for transparency in political contributions no matter what the tax status of the organizational vehicles principal to hateful partisan campaigns. And they must work to support legislation and other policies that help restore the power of ordinary people and curb that of millionaire campaign donors.

Doing so will help charities save themselves and our democracy.

This post is part of the HuffPost Shadow Conventions 2012, a series spotlighting three issues that are not being discussed at the national GOP and Democratic conventions: The Drug War, Poverty in America, and Money in Politics.

HuffPost Live will be taking a comprehensive look at the corrupting influence of money on our politics August 29th and September 5th from 12-4 pm ET and 6-10 pm ET. Click here to check it out -- and join the conversation.

 
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