Federal court allows top donors to tax-exempt groups to remain secret

By Eric W. Dolan
Tuesday, September 18, 2012 17:03 EDT
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Money via AFP
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The D.C. Circuit Court on Tuesday ruled that tax-exempt groups like Crossroads GPS only had to disclose donors who give money for the specific purpose of funding campaign ads.

The Court of Appeals reversed (PDF) the decision of a lower court, which held that the Federal Election Commission (FEC) had created a loophole by limiting disclosure of donors to only those who explicitly contributed “for the purpose of furthering electioneering communications.”

Rep. Chris Van Hollen (D-Maryland), who challenged the FEC regulation, argued that the Bipartisan Campaign Reform Act required organizations engaged in campaign activities to identify all contributors who donated over $1,000. By including the “purpose” language in their regulation, the FEC allowed for outside campaign groups to improperly keep many of their top donors a secret, he alleged.

“Today, the D.C. Court of Appeals struck a blow against transparency in the funding of political campaigns and reinstated the flawed regulation that rendered the disclosure requirements meaningless – made clear by the fact that millions of dollars of special interest money has flooded the airwaves with ads from anonymous sources,” Van Hollen said in a statement. “The Court of Appeals’ decision today will keep the American people, for the time being, in the dark about who is attempting to influence their vote with secret money.”

The Center for Individual Freedom and the Hispanic Leadership Fund argued against Van Hollen, saying that forcing tax-exempt groups to disclose their donors was an unconstitutional restriction on free speech.

The case will return to the lower court for further consideration, giving the FEC a chance to conduct a new rulemaking.

“Hopefully, either the FEC will issue a new disclosure regulation that actually requires disclosure or the District Court will strike down the existing regulation as arbitrary and capricious,” Van Hollen said. “We will continue to examine all of our options as we move forward.”

Eric W. Dolan
Eric W. Dolan
Eric W. Dolan has served as an editor for Raw Story since August 2010, and is based out of Sacramento, California. He grew up in the suburbs of Chicago and received a Bachelor of Science from Bradley University. Eric is also the publisher and editor of PsyPost. You can follow him on Twitter @ewdolan.
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