Last updated: April 6, 2004

FEDERAL ELECTION COMMISSION RULES THREATEN TO SILENCE NONPROFIT ADVOCACY

by Michael Kink and the Staff of Housing Works

: CLICK NOW TO SEND YOUR COMMENTS TO WASHINGTON TO PROTECT FREE SPEECH AND AIDS ACTIVISM

The Federal Election Commission has proposed new regulations that, if passed, will impose strict fundraising restrictions and reporting requirements on nonprofits that engage in issue advocacy or nonpartisan voter education. Advocates have called the proposed new rules the greatest threat to nonprofit free speech in the last fifty years.

Under the proposed rules, the FEC would:

(1) Redefine any materials critical of federal elected officials or candidates as ãattackä materials;

(2) Redefine nonprofits that criticize federal officials or carry out nonpartisan voter education as ãfederal political committeesä and;

(3) Bar these nonprofits from receiving receive foundation, corporate, or union contributions, or individual contributions in excess of $5,000 for their work.

Contributions from not-for-profit businesses would also be limited. These groups would either have to cease their activities under the new rules, or would be forced to agree to raise all their funds in the form of smaller donations from individuals.

We oppose these rules, because they threaten both free speech and progress against AIDS here at home and around the world. Over the course of the AIDS epidemic, one of the most persistent truths has been that democracy and free speech have saved lives. Advocacy has saved lives. Criticism of elected officials for their inaction on HIV/AIDS has spurred remarkable public and private responses to the epidemic. These responses have literally saved millions of lives all over the world.

The proposed rules would also hit Housing Works particularly hard, since we devote so much energy and so many resources to carrying out advocacy. Under the new rules, supporters of the Housing Works Thrift Shops, Used Book Caf⁄, and other ventures could be prevented from supporting AIDS advocacy through their purchases and donations, and Housing Works itself could be reclassified as a "federal political committee," even though we are primarily an AIDS housing, service and advocacy organization.

Silencing the voices of AIDS activists and other issue activists is not the proper function of the FEC, and yet these proposed rules threaten to do just that. We need your help to stop the effort to silence nonprofit advocacy: send an email, a fax, or submit comments today!

CHOOSE YOUR ACTION: ONE-CLICK EMAIL, ONE-CLICK FAX, OR FULL COMMENTS

1. SEND A ONE-CLICK EMAIL TO THE FEC TO OPPOSE THE NEW REGULATIONS

You can use the "Take Action Now" section of the Housing Works website to send a one-click email to the Federal Election Commission to oppose the proposed rules.

To submit your one-click comments, just click here: http://206.252.132.18:8080/aidissues/TakeAction.jsp

2. SEND A FREE FAX TO THE FEC TO OPPOSE THE NEW REGULATIONS:

Thanks to People for the American Way, you can send a free fax to the Federal Election Commission today urging that they reject the proposed rules on Political Committee Status.

To send your fax, just click here: http://www.pfaw.org/go/FAX_the_FEC/

3. SUBMIT FULL COMMENTS TO THE FEC BY ELECTRONIC MAIL

The Coalition to Protect Nonprofit Advocacy has developed draft comments for organizations that wish to submit comprehensive comments on the proposed rules. Comments can be sent to the FEC by email at politicalcommitteestatus@fec.gov.

Details on the proposed rules follow, and the full-comment template is available by emailing hayes@housingworks.org, kink@housingworks.org or ludwig@housingworks.org.

COMPLETE DETAILS ON THE PROPOSED FEC RULES

FEC Issues Notice of Proposed Rulemaking Affecting Advocacy Organizations

On March 4, 2004, the Federal Election Commission approved a Notice of Proposed Rulemaking (NPRM) on the subject of political committees, 527 organizations and voter mobilization.

The NPRM goes well beyond the controversial but limited ruling issued by the Commission several weeks ago to Americans For A Better Country ( Advisory Opinion 2003-27), and, if ultimately adopted by the Commission as a final regulation, will have a devastating impact on advocacy and voter mobilization activities of nonprofit organizations of all kinds.

Expansive Definition of Federal Political Committee. Under federal election law, organizations classified as "political committees" may not accept contributions from corporations, including private foundations, and labor organizations, or contributions in excess of $5,000 from individuals. Under the NPRM, a large number of advocacy organizations throughout the United States would for the first time be treated as federal political committees, regardless of whether they are organized under sections 501(c)(3), 501(c)(4), 501(c)(5), 501(c)(6) or 527 of the Internal Revenue Code, including organizations that are now exempt from many federal law restrictions because of the so-called MCFL exception established by the Supreme Court.

Specifically, under the proposal, an entity will be defined as a political committee if the nomination or election of one or more federal candidates is "a major purpose" of the organization. An organization will meet this standard if it meets any one of the following tests:

(i) the organization's major purpose is to nominate, elect, defeat, promote, support, attack or oppose one or more candidates for federal office or a political party, as determined by its organizational documents, solicitations, advertising or other materials, and it makes more than $10,000 in disbursements for communications that promote, support, attack or oppose a federal candidate or political party ("PSAO communications"), or for certain voter registration, voter identification, or get-out-the-vote activities (ãcovered voter mobilizationä); or

(ii) the organization spent more than 50% of its total disbursements during any one of the previous four calendar years for PSAO communications or covered mobilization activities; or

(iii) during the current year or any of the previous four years, the organization spends or spent more than $50,000 on PSAO communications or covered voter mobilization activities; or

(iv) regardless of its expenditures, the organization is exempt from federal taxation under section 527 of the Internal Revenue Code, with certain possible exceptions relating to state and local political activity.

Under these rules, the following organizations would be treated as federal political committees and therefore could not receive corporate or union contributions or contributions in excess of $5,000 from individuals:

  • A "good governmentä organization" [€501(c)(3)] that spends more than $50,000 to research and publish a report criticizing several members of the House of Representatives for taking an all-expense trip to the Bahamas as guests of the hotel industry.
  • A civil rights organization [€€501(c)(3) or 501(c)(4)] that spends more than $50,000 to conduct non-partisan voter registration activities in Hispanic and African-American communities after July 5, 2004.
  • A fund [€527] created by a national environmental organization to provide information to the public regarding federal candidatesâ voting records on environmental issues, as long as the organization receives contributions or makes expenditures totaling $1000.
  • A civic organization [€501(c)(6) that spends $50,000 during 2004 to send letters to all registered voters in the community urging them to vote on November 2, 2004 because ãit is your civic duty.ä
  • A labor union that spends more than $50,000 on communications to its members opposing legislation and identifying specific Members of Congress as supporters of the legislation, if those Members are running for re-election.

Prohibition on Advocacy Communications. Advocacy organizations that do not fall under the new definition of political committee would still have their advocacy activities severely curtailed. The NPRM contains a new definition of the term "expenditure" which would prohibit any corporation, including nonprofit corporations, and labor organizations from sponsoring any public communication that refers to a candidate for federal office and "promotes or supports, or attacks or opposes" the candidate. The NPRM provides no guidance on the meaning of these terms.

Restrictions on Voter Mobilization Activities. Advocacy organizations that are not classified as federal political committees would also be subject to new restrictions on their voter mobilization activities such as voter registration, voter identification and get-out-the-vote. Specifically, voter mobilization activities conducted by corporations and labor unions would be prohibited from using any message that "promotes, supports, attacks, or opposes a federal or non-federal candidate or that promotes or opposes a political party". Also, groups conducting voter registration activities may not use information concerning "likely party or candidate preference" to determine which individuals it encourages to register or to vote. It is unclear whether this would prohibit groups from targeting certain communities or demographic groups simply because members of those communities or demographic groups have historically supported candidates from a particular party to a greater extent than candidates of the other party.

Effective Date Uncertain. One of the major issues to be resolved is when the new rules will take effect if they are adopted in final form by the FEC. Any new rules could take effect as early as June of this year, although there appears to be some support on the Commission for delaying the effective date until after the November election.

Look Back Rule. Whenever the rules take effect, the NPRM contains a draconian look-back rule under which any existing organization that becomes a federal political committee as a result of the new definitions will be required to raise hard money and repay the old soft-money organization for any expenses the soft-money organization incurred during the current and previous calendar year to the extent that those expenses would now be required to be paid with hard money. The new federal committee could not conduct any new activities until its debt to the old organization is repaid.

Next Steps. Comments regarding the NPRM must be submitted to the FEC by April 5, 2004. The Commission plans to hold a public hearing on the proposal on April 14-15, 2004, and to complete the rulemaking process by May 14, 2004.