potential nonprofit advocacy restrictions

colist at comm-org.utoledo.edu colist at comm-org.utoledo.edu
Wed Feb 4 12:11:39 CST 2004

[ed:  many of you will probably be interested in this.]

From:       Smith-Caronia, Terri" <Smith-Caronia at housingworks.org>

Oh my God, this is awful!

Please -- I know this is a long e-mail, but please take the time
to read it and pass it on to others!

(I have cut and pasted the attached document directly into the
body of the e-mail at the end for folks that may have a problem
opening it)

sorry for duplicate posts . . .

terri smith-caronia
Director, NYC Public Policy
Housing Works NYC Advocacy Department
212-966-0466, ext. 1296
212-925-9618 (fax)
917-734-1808 (cell phone)
smith-caronia at housingworks.org


TO:             NLIHC Board of Directors, State Housing
Coalitions and all NLIHC members

FROM:   Sheila Crowley

DATE:           February 3, 2004

RE:             Potential restrictions on advocacy speech

I have just returned from a briefing on a pending action by the
Federal Election Commission that could severely restrict the
ability of 501(c)(3) and 501 (c)(4) organizations to engage in
federal policy advocacy that could be considered to "promote,
support, attack, or oppose" any candidate for federal office,
including people currently in office. This means that a 501(c)(3)
and 501 (c)(4) organization could not issue a press release, a
report, a fundraising letter, post something on a website, or
engage in any other form of public communication that was
critical or supportive of the policy positions of President Bush,
any other candidate for President, or anyone running for Congress
or the Senate unless it was using funds specifically raised from
individuals who would be limited to contributions of $5,000 or

This would have a severe chilling effect on all federal public
policy advocacy speech. For example, NLIHC's press release
yesterday on President Bush's plans for the housing voucher
program would not be allowable.

A group of public interest attorneys, including NLIHC's attorney
Gail Harmon, have drafted a comment letter to the FEC that is
attached. They are seeking as many as organizations as possible
to sign on to this letter by no later than 10:00 am Wednesday,
February 4. Yes, that is tomorrow. (The implications of the FEC
action have just come to light apparently and the deadline for
comments is tomorrow at noon.) This is simply the first legal
move. An extensive public relations campaign is also planned.

I have added the National Low Income Housing Coalition and the
National Low Income Housing Policy Center (our 501(c)(4)) to the
signatories and urge you to do the same.

To sign on to the letter, email Elliot Mincberg at People for the
American Way at emincberg at pfaw.org <mailto:emincberg at pfaw.org>
with the full name of your organization and the name of the
person authorizing the sign-on.

The Alliance for Justice will be posting details of what the FEC
is doing in the next few days at www.afj.org

Thank you for your prompt response.

 <<sign on letter to FEC.doc>>

Sheila Crowley
National Low Income Housing Coalition
1012 14th St. NW, Suite 610
Washington, DC 20005



Draft (2/3/04)

By Electronic and Hand Delivery

Commission Secretary
Federal Election Commission
999 E Street, NW
Washington, DC  20463

Re:	Draft Advisory Opinion 2003-37

Dear Commission Secretary:

 The [insert final number] undersigned environmental, civil
 rights, civil liberties, women’s rights, and
 ________________organizations submit these comments on the
 General Counsel’s draft of Advisory Opinion 2003-37 prepared in
 response to a request by Americans for a Better Country (“ABC”).
  For the reasons set forth below, we wish to express our
 profound concern over the broad scope of the draft opinion, both
 as it applies to federal political committees and as it appears
 to reach the educational, advocacy and voter participation
 activities of nonfederal political organizations and other
 nonprofit corporations.  There is no authority under the
 Commission’s regulations, the Federal Election Campaign Act
 (“FECA”) or the Supreme Court’s recent opinion in McConnell v.
 FEC to regulate these activities in the manner suggested in the
 draft opinion.

 The organizations signing this letter are organized as nonprofit
 corporations under state law and are exempt from federal income
 taxation under sections 501(c)(3) and 501(c)(4) of the Internal
 Revenue Code (“Code”).  Several organizations operate as
 qualified nonprofit corporations under 11 C.F.R. § 114.10.  A
 number of the signatories have established separate segregated
 funds that are registered with the Commission as political
 committees; many also maintain nonfederal political
 organizations established under IRC section 527(e)(3) that are
 not registered with the Commission.  The common interest among
 all of these organizations is that we regularly seek to educate
 the public and to advocate positions on progressive legislative
 and policy issues, including the positions taken by federal
 officeholders with respect to these issues.  

 If the draft opinion is adopted as proposed by the General
 Counsel, the result may be that we could no longer conduct these
 activities unless we raise and spend funds in accordance with
 the source and contribution limitations of the FECA.  For most
 of our organizations, raising funds under these restrictions
 would be impossible.  For those organizations represented here
 that are exclusively organized under IRC section 501(c)(3), we
 are not permitted under federal tax law to establish or maintain
 a separate segregated fund to engage in political activity. 
 Therefore, this opinion would entirely shut down many of the
 advocacy activities of our organizations.  As 501(c)(3) and
 501(c)(4) organizations, we are funded by large and small
 donors.  Most of the undersigned organizations could not exist
 without the large grants and contributions from foundations,
 corporations and individuals that are prohibited under FECA. 
 See 2 U.S.C. § 441a and 441b.  Even those of us that operate
 federal political committees are able to raise relatively small
 amounts from our members for these purposes - amounts that could
 never support the extensive educational and advocacy programs we
 have conducted for many years.  In any event these limited
 contributions are desperately needed to support our political
 programs as required by law.  We therefore urge the Commission,
 with the greatest sense of urgency and in the strongest terms
 possible, not to issue the draft opinion in its present form.  


 Although numerous aspects of the draft opinion are extremely
 troublesome, we are most concerned by the opinion’s proposed
 reworking and expansion of the definition of “expenditures” in
 FECA § 431(9) to include any communication that “promotes,
 supports, attacks, or opposes” a candidate for federal office. 
 While the facts of the current request concern a nonconnected
 political committee, by adopting this analysis the opinion can
 be read to extend to independent issue groups as well.  As
 nonprofit corporations, the vast majority of us are flatly
 prohibited by FECA § 441b from making any “contribution or
 expenditure in connection with any election to any political
 office.”  Because we frequently refer to federal officeholders
 and candidates in our communications with the general public,
 and do so in a manner that may be highly critical of the
 officeholders’ positions on issues, the proposed redefinition of
 “expenditures” would cause many of our currently lawful
 communications to become unlawful corporate expenditures.  

 Just in the past few months, for example, the organizations
 represented here have criticized Congress’ and the
 Administration’s policies and actions concerning such issues as
 tax cuts for the rich, Medicare and prescription drugs, oil
 exploration in the Arctic, nominations to the federal judiciary,
 abuses of civil liberties in connection with the war on terror,
 and numerous other issues.  There is little doubt, we fear, that
 these communications would be perceived both by our opponents,
 who are constantly looking for ways to handcuff our efforts on
 behalf of our causes, and, based on the reasoning of this draft,
 by the Commission itself, as “opposing”, or even “attacking,”
 President Bush and other federal officeholders.  This is the
 case even though these communications have not identified Mr.
 Bush or any other officeholder as a candidate for re-election,
 referred to the November 2004 election, or otherwise urged or
 implied opposition to the President’s or any other individual’s

  These communications have been aimed, not at these individuals
  as candidates, but as current officeholders in an attempt to
  influence legislation and public policy.  Making it unlawful to
  criticize the policies and actions of a sitting President or
  Members of Congress except under the auspices of a registered
  political committee is one of the most fundamental attacks on
  the freedom of speech and freedom of association of American
  citizens ever contemplated by a governmental agency.

 The proposed definition of “expenditures” is nowhere to be found
 in section 441b, even though it is the only provision of federal
 election law governing contributions and expenditures by
 nonprofit corporations such as those represented here.  Under
 the Supreme Court’s decisions in Buckley v. Valeo and
 Massachusetts Citizens For Life v. FEC, section 441b was
 authoritatively construed to prohibit corporate communications
 that expressly advocate the election or defeat of clearly
 identified candidates.  We have relied on this long-standing
 interpretation and have fully complied with it in all of our
 educational and advocacy programs.  In passing the Bipartisan
 Campaign Reform Act of 2002 (BCRA), Congress restricted certain
 limited broadcast communications, but it did nothing to modify
 the express advocacy test as applied to communications in other
 forms of media or even to broadcast communications disseminated
 outside of BCRA’s 30/60 day black-out periods. 

 In redefining “expenditures,” the draft opinion relies on the
 Supreme Court’s recent decision in McConnell v. FEC, that upheld
 the constitutionality of BCRA’s provisions limiting, and in some
 case prohibiting, political party committees from using
 nonfederal funds to support communications that “promote,
 support, attack or oppose” federal candidates.  But, these
 restrictions are contained in a separate provision of BCRA, 2
 U.S.C. § 441i, that applies exclusively to political parties and
 no other organization or entity.  Most importantly, Congress did
 not amend the provisions applicable to corporations in a similar
 manner, nor did it revise the statutory definition of
 “expenditures” as proposed in the draft opinion.  The Commission
 has no authority to enact a new standard for corporate
 communications when Congress itself chose not to do so.	

 The extent to which the draft advisory opinion reaches far
 beyond Congress’ intent is also demonstrated by recent
 legislation governing so-called “527" or “soft-money” political
 organizations.  Even prior to BCRA, Congress considered the
 operation of these organizations and concluded that, in the
 interest of greater public disclosure, they should register and
 file reports with the Internal Revenue Service.  See Pub.L.
 106-230, 114 Stat. 477 (July 1, 2000), codified at I.R.C. §§
 527(i)-(j).  In 2002, shortly after it enacted BCRA, Congress
 again considered the disclosure obligations for these
 organizations and amended the registration and reporting
 requirements to ease the burden on some of the organizations
 covered by the 2000 amendments.  See Pub.L. 107-276, 116 Stat.
 1929 (Nov. 2, 2002).  In neither instance, however, did Congress
 outlaw 527 political organizations or even authorize the IRS to
 curtail their activities.  Furthermore, in ruling on the
 constitutionality of BCRA, the Supreme Court expressly noted
 that despite the Act’s limitations on the fundraising abilities
 of political parties, “interest groups, however, remain free to
 raise soft money to fund voter registration, GOTV activities,
 mailings, and broadcast advertising.”  McConnell v. FEC, 540
 U.S. ________ at _________ [slip op. at 80].  This plain reading
 of the statute is inconsistent with the approach of the proposed
 advisory opinion.  If the Commission adopts the ABC opinion as
 drafted, it would be to appropriate to itself authority which
 Congress has twice refused to provide.

 The draft opinion is also inconsistent with the Commission’s own
 rulemaking excluding section 501(c)(3) organizations from the
 ban on electioneering communications.  Several months ago, the
 Commission recognized the need to limit the scope of BCRA’s
 prohibition on 501(c)(3) organizations to protect advocacy
 communications by these groups:  

  The Commission believes the purpose of BCRA is not served by
  discouraging such charitable organizations from participating
  in what the public considers highly desirable and beneficial
  activity, simply to foreclose a theoretical threat from
  organizations that has not been manifested, and which such
  organizations, by their nature, do not do.

Final Rules and Explanation and Justification, “Electioneering
Communications,” 67 Fed. Reg. 65190, 65200 (Oct. 23, 2002)

Based on this draft opinion, it appears the Commission is
prepared to consider denying all 501(c) organizations the ability
to engage in this “highly desirable and beneficial activity.” 
Even if this conclusion is not mandated by the terms of the
opinion itself, it is the logical conclusion based on the
reasoning set forth here.  

  Recent IRS guidance, in stark contrast to the position set
  forth in the draft opinion, confirms that 501(c) organizations
  are permitted to continue their advocacy activities, including
  attempts to influence legislative and administrative actions,
  throughout an election year.  See Rev. Rul. 2004-6.  These
  communications may in some cases oppose the position of an
  officeholder, who is also a candidate, in a manner that could
  be deemed, under the broad language of the General Counsel’s
  draft, to “support” or “attack” a candidate for federal office.
   Nevertheless, the IRS ruled that such communications, under
  the circumstances described in the ruling, are consistent with
  the exempt purposes of a 501(c) organization and would not
  subject them to tax or jeopardize their exempt status.

 While we have focused on the impact of the draft opinion on
 nonprofit organizations’ educational and advocacy activities, we
 are also concerned about how the opinion would handcuff our
 ability to undertake voter participation activities such as
 voter registration and get-out-the-vote, especially among
 minority and other under-represented communities.  In response
 to question 8 of the opinion, the draft proposes that voter
 registration and GOTV public communications that do not
 expressly advocate, but “promote, support, attack or oppose” a
 federal candidate, must be paid entirely with federally
 permissible funds.  Therefore, a nonprofit organization that
 informs the public that President Bush and his Administration
 has permitted corporations to increase harmful mercury emissions
 and encourages individuals to register to vote would be required
 to pay for this activity with federal funds.  The regulations at
 section 114.4 state only that voter registration conducted by a
 corporation must not contain express advocacy or be coordinated
 with a candidate or political party.  The Commission has no
 authority to broaden the restriction placed on these voter
 participation activities.  

 We would like to address two other aspects of the draft opinion,
 which cause equally deep concerns.  First, the draft opinion
 states that any fundraising communications that “support,
 promote, attack or oppose” a federal candidate must be paid for
 with federally permissible funds and may only raise funds
 subject to the federal source and contribution limits.  Unlike
 other portions of the opinion, this language is not even
 arguably limited to the nonconnected PAC making this request but
 applies to any solicitation.  Thus, it appears that a
 fundraising letter from our organizations that appeals for
 contributions to “fight against President Bush’s budget cuts
 that threaten to undermine effective international family
 planning” would be subject to this requirement.  The effect of
 such a conclusion is staggering.  In addition to soliciting
 contributions, fundraising communications provide another
 critical avenue for reinforcing and generating public support
 for our advocacy messages.  We, and other nonprofit
 organizations like us, would be required to choose to forgo
 either the messages that inform our supporters about the public
 policy debate or the funds that are vital to our existence. 
 There is no legal basis for imposing this restraint on the
 broader nonprofit community.

  Finally, the draft opinion proposes to extend the prohibition
  on foreign national contributions to any organizations that
  engage in voter registration, get-out-the-vote and other
  activities in connection with a federal, state or local
  election for public office as well as ballot measures.  Many of
  our 501(c) organizations conduct these activities.  For some of
  us, these activities comprise a major part of our program;
  others engage in these activities only as the need arises
  related to a specific policy objective or program.  Our ability
  to continue to engage in these activities would be threatened
  if we were required to screen all of our contributions to
  determine whether or not they were made by a foreign national
  as defined under the FECA.  The Commission, even in its own
  rulemakings on foreign national contributions, has never
  suggested that there is a need to extend the coverage of this
  provision to all nonprofit organizations that conduct voter
  participation activities.  Such an intrusion would have a
  severe impact on these nonpartisan activities that are vital to
  fostering civic participation.


 This draft opinion poses an unprecedented threat to the advocacy
 and educational activities of the undersigned organizations as
 well as many organizations that are not represented. We
 respectfully urge the Commission to reject this draft in its
 current form.

Respectfully submitted,

------- End of forwarded message -------

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