CONGRESS considers new requirements for CAMPAIGN COMMUNICATIONS

In the wake of the Supreme Court decision in Citizens United v. Federal Election Commission which lifted restrictions on corporate campaign spending, Senator Charles Schumer (D-NY) and Rep. Chris Van Hollen (D-MD) introduced the DISCLOSE Act (S 3295/ HR 5175) to regulate campaign communications paid for by corporations, labor organizations, and nonprofits exempt from taxation under sections 501(c)(4), (c)(5) or (c)(6) of the Internal Revenue Code.  Nonprofits exempt under section 501(c)(3) of the Code are prohibited from engaging in partisan political activities and are not directly covered by the legislation. 

NEW DEVELOPMENTS
The House of Representatives passed the DISCLOSE Act on June 24 after adopting a controversial amendment that would release from the bill's requirements any nonprofit that was exempt under section 501(c)(4) of the tax code in each of the previous ten calendar years, that had at least 500,000 dues-paying members with at least one member in each State, and that received no more than 15 percent of its total revenues from corporations or labor organizations.

Independent Sector wrote to House Speaker Nancy Pelosi expressing our deep concern over this "carve out," noting that "we would find it very difficult to support legislation that included provisions that would favor larger, generally more powerful organizations over the critical voices of smaller national, regional, state and local nonprofits.

The legislation now moves to the Senate for consideration.

WHAT THE BILL WOULD DO
The DISCLOSE Act imposes new requirements on covered organizations that spend $10,000 or more on campaign communications supporting or opposing a federal candidate. 

The bill would require these organizations to: 

1. Set up a separate account for campaign communications and disclose donors
who gave $1,000 or more in a year to support those communications.  If no separate account is established, all donors who contributed $1,000 or more to the organization and who did not specify that their donations not be used for campaign activity would have to be disclosed. 
2. Certify that contributions so restricted by donors will not be used for campaign-related activity.
3. Disclose campaign-related expenditures within 24 hours on their websites and in any financial reports to shareholders or members.

In addition, the DISCLOSE Act stipulates that:

1. Corporations and organizations that have federal contracts of $50,000 or more (threshold amended up to $7 million in the House bill); recipients of Troubled Assets Relief Program funds; and corporations that are 20 percent or more foreign-owned would be prohibited from making independent campaign communications.
2. Campaign ads must list the top five contributors of unrestricted funds and the CEOs of those contributors would be required to appear personally in the ad saying that they approve the message.
3. The time frame during which electioneering communications (broadcast ads that name a federal candidate) are subject to disclosure rules will be expanded.  The House bill would keep the current time frame of 30 days before a primary and extend the current period prior to a general election from 60 to 120 days.  The Senate bill would extend the time frame to 90 days before the earliest primary until the general election.

Updated July 6, 2010