A threat to nonprofits

An impending government ruling could hamper the activities of nonprofit PR professionals.

An impending government ruling could hamper the activities of nonprofit PR professionals.

If it weren't for the fear of unintended consequences, Washington would be a ghost town. Lobbyists, PR pros, activists, organizers - nearly all who work here are in some way just making sure Congress doesn't, in the course of doing the nation's business, accidentally outlaw something vital to their interest or industry. The same goes for every regulatory agency from the FDA to the SEC. After all, lawmakers and regulators can't possibly be experts on everything. So how do they know that making it illegal to mine somewhere in West Virginia would throw the doorknob industry into disarray by depriving them of a vital metal? Because the doorknob lobby is there, monitoring the government's every move. What most PR people don't know is that their industry is in the midst of a doorknob moment right now. The Federal Election Commission (FEC) is expected to issue a ruling this month that could, at worst, render illegal much of what nonprofit PR people do for a living. Why? Because the FEC knows very little about what nonprofit PR people do for a living. Unfortunately, the things they do know about - the flow of big money into the election process - is creeping over into the world of nonprofit advocacy, and they're prepared to do something about it. Effect on nonprofits It all started in 2002, when Congress passed the Bipartisan Campaign Reform Act (BCRA), more commonly known as McCain-Feingold. By outlawing large, unregulated donations to political parties, otherwise known as soft money, the bill was supposed to rid the election process of the influence of wealthy corporate donors. But as the saying goes, money and politics are like water running downhill: Put as many obstacles in its way as you want; water always finds its way down. Unfortunately, that stream now runs right through the nonprofits' back yard. Starting last year, those same wealthy donors began exploiting a loophole in the law by setting up what's become known as "527" groups - so named for the section of the tax code under which they operate. These are essentially nonprofit organizations created exclusively to take money from large donors and spend it on commercials, direct-mail campaigns, get-out-the-vote efforts - anything to influence the election. The first and most lavishly funded were liberal - MoveOn.org, The Media Fund - but the right wing is quickly catching up. The FEC likely will decide this month whether to reclassify 527s as "political committees," thereby bringing them under the jurisdiction of the BCRA and curtailing their advocacy work. The FEC will do this by defining a "political committee" based on the language a group uses when referring to political candidates and the amount of money they spend doing it. Thanks to the law of unintended consequences, legitimate, longstanding nonprofits that do advocacy work could get silenced, as well. If the ruling adheres to the most severe language proposed, many believe that 501(c)(3)s and 501(c)(4)s, which include such everyday charities as the American Heart Association and the American Cancer Society, also will be affected. Many such groups work hard to move legislation on Capitol Hill - often through ads and direct-mail campaigns that mention elected officials by name. But they rarely take sides in an election. Their work is vital to educating the public on bills that could affect them and their loved ones. But the FEC, by saying the use of certain language automatically makes a nonprofit a "political committee," could quickly make their work illegal - or at least legally risky. "The trouble with the standard is that it's so vague people don't even agree on what it means," says Kay Guinane, manager of community education at OMB Watch. "If you criticize a president over a policy position he's taken, even if you think of him as an officeholder and not a candidate, you could still be found to have violated campaign laws." For example, let's say the American Diabetes Association (ADA) ran a campaign endorsing a bill that increases access to dialysis machines for low-income children. It's entirely likely that such an effort would include comments about key members of Congress - many of whom could easily be up for re-election. Due to those comments, the ADA would be classified as doing electoral work and could be hauled into court. "We're engaged in policy work. We're taking a stance on political issues. We want candidates and lawmakers to understand an issue and address it in their campaigns. But that doesn't mean we are taking a partisan position," explains Rick Cohen, executive director of the National Committee for Responsive Philanthropy. "It doesn't mean that we are campaigning for or against the candidates." Concerns about the outcome Luckily, a handful of nonprofit watchdogs, such as Guinane and Liz Baumgarten, president of Charity Lobbying in the Public Interest, have been monitoring the situation. Because such groups banded together and availed themselves of the FEC's public comment period, it now seems likely the FEC will take a more conservative route. "I think the efforts of our coalition will probably lead to an outcome that won't affect 401(c)(3)s and (c)(4)s," says Baumgarten. But that doesn't mean such groups are out of the woods. Though the ruling may not specifically outlaw advocacy work by nonprofits, it could still be vague enough to scare off donors and activists. Cohen says his greatest concern now is "the chill effect that makes nonprofits shy away from a behavior because they fear inappropriate enforcement." "For an organization like ours, even if [what we're doing is] completely legal, a funder could say, 'We can't fund you because we're afraid you're edging up to the boundary of what the FEC is calling for,'" he says. "So the result of this may be inappropriate self-enforcement." While Cohen is concerned for his own group and others like it, Baumgarten expresses regret over what this may do to smaller or less political nonprofits that may be flirting with the idea of getting more involved in advocacy. She says too vague a ruling could easily dissuade them from wading in at all. And it's not as though advocacy work is easy for nonprofits to begin with. As Cohen explains, many donors already don't like their money going to even marginally political activities. "There are already many funders that don't even like nonprofits engaged in advocacy work," he says. "There are funders who, despite the fact that our advocacy is entirely legal, will say their grants cannot be used for funding advocacy. So it's that kind of chill that exists among funders that can be exacerbated by inappropriate regulation by the FEC." Unfortunately, the FEC public comment period is long since ended. So what is being done now to make sure the above scenarios don't play out? Unfortunately, not much. "All we can really do now is wait and see," says Baumgarten. The ruling is expected in the next couple weeks. Meanwhile, some of these groups are reaching out to the nonprofits themselves. They want to educate these charities now so, regardless of what the FEC does, they won't be dissuaded from doing their advocacy work. "We continue to try and make nonprofits feel comfortable with this," says Baumgarten. "What we're telling them is that if anything, this should make you want to exercise your rights even more." 527 major players Liberal: The Media Fund 2004 campaign expenditures to date: $27.2 million Key personnel: Harold Ickes, president and founder (deputy Clinton White House chief of staff) and Ellen Malcolm, fundraiser (president, EMILY's List) Main advocacy work: TV commercials, some print ads America Coming Together 2004 campaign expenditures to date: $24.2 million Key personnel: Ellen Malcolm, president (president, EMILY's List) and Steve Rosenthal, chief executive officer (former political director, AFL-CIO) Main advocacy work: Get-out-the-vote efforts in 17 battleground states Conservative: Americans for a Better Country 2004 campaign expenditures to date: N/A Key personnel: Frank Donatelli, co-founder (Republican political consultant and adviser in the Reagan and Bush I administrations) and Craig Shirley, cofounder (owner, Shirley & Banister Public Affairs) Main advocacy work: Just launched this spring, this group is now fundraising to counter the impact of liberal 527s Leadership Forum 2004 campaign expenditures to date: $21,424 Key personnel: Susan Hirschmann, president (Rep. Tom DeLay's former chief of staff) and Former Rep. Bill Paxon (R-NY), VP Main advocacy work: Advocates in favor of House Republican candidates

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