A Sigh of Relief for 501(c)(4)s and Their Contributors

by Stephen M. Hoersting

Today, the U.S. Circuit Court of Appeals for the District of Columbia Circuit handed down an important opinion that will protect political contributors from unnecessary retaliation in the remaining days of the election. The case is Center for Individual Freedom, et al. v. Christopher Van Hollen and Federal Election Commission, No. 12-5117 (September 18, 2012), brought originally by the congressman of the same name, coauthor of the failed DISCLOSE Act, which was designed to put business contributors on the sidelines this campaign season.

The court’s opinion reverses a decision by the D.C. District Court that would have compelled social-welfare organizations chartered under section 501(c)(4) of the Internal Revenue Code, such as Crossroads GPS or Priorities USA, to disclose the name of nearly every donor.

Social-welfare organizations can make independent campaign expenditures and “electioneering communications” that mention candidates on the eve of an election. The burning question in the two years since the Supreme Court’s 2010 opinion in Citizens United has been what has to be disclosed.

The district court originally invalidated an applicable FEC regulation, and held that all funds that enter a 501(c)(4) in amounts above $199 and that could fund electioneering communications must be publicly disclosed, whether or not they actually did fund electioneering communications. The circuit rejected that opinion, remanded the matter to the FEC for further consideration, and thereby restored for the time being the requirement that only those contributors who assent, in some reasonable way, to support the (c)(4)’s electioneering, not just its social-welfare activity, must be disclosed to the public.

The opinion is a welcome one. It has not been lost on campaign-finance attorneys and political writers such as WSJ’s Kim Strassel that contributors have been under extreme pressure from political opponents, both private and official, to sit out this race. (Contributors to the Left, it seems, have had less to fear in the years since Citizens United).

The matter of contributor disclosure is far from settled.  But the D.C. Circuit Court has settled it for the remainder of the 2012 elections, and that’s a good thing.

— Stephen M. Hoersting is an attorney at DB Capitol Strategies PLLC and President of Right Solutions. Follow him @Hoersting. 

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