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FEC Struggles to Enforce Campaign Finance Laws

by Alex Gauthier, published

Illustrart / Illustrart /

The filing deadline for political groups to turn records to the FEC is Monday the 15th. Big players like Obama's Organizing for Action have already posted their earnings for the first quarter following the 2012 election.

Reportedly OFA was able to raise $4.8 million in just three months; an impressive feat considering 109,582 people donated while the average contribution was about $44. Surprisingly, the group did make good on its promise to disclose donors of over $250, despite not being compelled to given its 501(c)4, social welfare status.

Conversely, the FEC is struggling to ensure compliance with other 'dark money' 501(c)4 groups. American Crossroads GPS reported $70 million in independent expenditure spending in 2012, but disclosed none of the donors who earmarked funds to specific races.

Traditionally donations made, even to social welfare organizations, are still subject to  disclosure with the FEC if they are for independent expenditures that go towards advocating for the election or defeat of a clearly defined candidate. A caveat which the FEC was unable to decide in a previous review of the issue, not an uncommon occurrence.

The Federal Elections Commission sent a 'stern' letter to the social welfare group earlier this week:

"This letter is prompted by the Commission's preliminary review of the Report of Independent Expenditures Made and Contributions Received... This notice requests information essential to full public disclosure of your federal election campaign finances. An adequate response must be received at the Commission by the response date noted above."
The FEC has sent several such letters to American Crossroads GPS regarding donations received during the 4th quarter of 2012. All were responded to in a similar fashion to the most recent exchange. This time however, prompted unusual language from Treasurer, Caleb Crosby. He responded in a letter shortly after receiving the notification Wednesday:
"Just as we noted in our previous responses, though, no contributions or donations accepted by Crossroads Grassroots Policy Strategies were solicited or received for the purpose of furthering the reported independent expenditures. Accordingly, no contributions or donations were required to be reported under the regulations cited in the RFAI. However, if you are required by Commission guidelines or procedures to continue to send them, we will continue to respond with the exact same explanation."

The complication arises as the distinctions between what ads do and do not require disclosure of donors. Ads from Crossroads GPS like the one below, do clearly identify a candidate (in this case president Obama), which might require those who paid for it to be disclosed to the FEC depending on one's interpretation of the ad.

Since the ad ran only months before the election one could infer it was also urging the defeat of Obama while communicating concern for the economy.

Yet if seen merely as an issue advocacy ads "bringing a problem to light" could also be considered the primary purpose of the clip.

Inconsistencies here are what government watchdogs like the California Fair Political Practices Commission need resolved in order to hold law-breakers accountable. A difficult task when the law remains murky at best. The commission endorsed SB 27 from Lou Correa (D - Santa Ana) just this week as the bill is set to be heard by the Committee on Election and Constitutional Amendments, April 30th.

The bill would amend the Political Reform Act of 1974 to include 501(c)4 groups like Crossroads GPS and Organizing for Action  from seeking to influence California elections. From the bill:

"Nonprofit and other multipurpose organizations that make contributions or expenditures to support or oppose California candidates or ballot measures are subject to the same rules as those entities that raise funds specifically for California elections - they must disclose the sources of funds used for their political expenditures."

Nevertheless, the federal enforcement of campaign finance law remains spotty at best. Bright legal lines would ensure that tax exempt non-profits like 501(c)4 social welfare organizations were not influencing elections, a blatant misuse of their tax status.

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