Closing Campaign Loopholes

No one ever said the task of closing all the loopholes that enable special-interest money to flow into political campaigns would be easy.

Nonetheless, the campaign-finance reformers press on. The latest debate is over how to better regulate so-called tax-exempt noncharitable groups, ranging from the Sierra Club to the National Rifle Association. Such groups often play a dual role in society, as both political advocates and as social organizations of like-minded individuals. Under the legal parlance of the US tax code, they're known as "c-4s," short for the section of tax law known as 501(c)(4).

But should they be required to disclose their officers, affiliations, and finances to the IRS in the same way tax exempt charitable organizations - or "c-3s" - are required to do? Yes. Such disclosure would allow the public to see how they might be spending money for political purposes - making sure it's all on the up and up.

Here's the rub: If politically active c-4s don't disclose that information to the IRS, they could become a huge back channel for money to influence elections.

An Urban Institute study last fall found that though the NRA and Sierra Club run charitable foundations, most (and in the case of the Sierra Club, all) of the money they collected was transferred to their c-4 arms. In theory, such money should be used only for purposes such as voter education, which is perfectly legal, but such transfers raise enough questions to warrant further study. Are there instances of overlap in personnel, and activity, that could be illegal? Without fuller disclosure, it's difficult to tell.

In 1996, a probe on campaign-finance abuses by a Senate committee showed that Triad Management, a corporation which set up two c-4s to run a pro-GOP campaign, were funded by two anonymous trust funds. That same probe also showed both political parties active in routing campaign donations through similar c-4 organizations to disguise their origin.

It's not too much to ask, in the name of clean and open democracy, that these groups more fully disclose their financial transactions to the IRS.

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