Wednesday, July 13, 2011

More on the Separation Between NGO And State: Donors Buy Influence Using NGO's as Middlepeople

Yesterday, I blogged about the OGE's proposed rule allowing federal employees to serve in leadership positions within nonprofit organizations.  My primary complaint was that NGO's were becoming too cozy with government, risking the loss of their identity as a distinct sector of society.  While there was very little thought given before Congress prohibited tax exempt charities from intervening in political campaigns, nor even in the prohibition against "substantial" lobbying, one reason why the prohibitions are nevertheless good policy is that nonprofit organizations ought to exist as alternatives to top down governance in a democratic society.  Nonprofits allow for spontaneous grassroots initiatives and actually better society by showing top downers a better idea.  To the extent nonprofits get involved in the political process, they run the risk of being "captured" by government.  Or more precisely, captured by incumbents.  Today, the online world is abuzz about an Associate Press article describing the new way to purchase influence from incumbents, candidates or government officials, to wit:  make large donations to charities that are the influential target's favored causes.  That phenomenon, coupled with the imminent rule allowing federal employees to serve as officers and board members of nonprofit organizations, and Citizens United seems a recipe for disaster.

"By giving millions to nonprofits and charities that lawmakers have a connection to, lobbyists and special interests have a very discreet way of currying favor with the members of Congress they're trying to influence, one that the public is rarely aware of," said Bill Allison, editorial director of the foundation. "How much more money is contributed to these nonprofits by clients of lobbyists or others with an interest in federal policy is unclear, since only lobbyists have to disclose these contributions."

The AP report comes after the Sunlight Foundation blog reported that:

Last year, four of the country’s biggest military contractors paid $100,000 or more to become top sponsors of a black tie charity gala that honored the influential former chair of the House Armed Services Committee, Rep. Ike Skelton, D-Mo.  In exchange for that gift, some of the company's top executives were placed at Skelton's table and all were given the chance to address the V.I.P. crowd that included many top military officials. The event benefited a charity for families of fallen soldiers.  This kind of lavish corporate spending on galas bestowing awards on executive or legislative officials is common practice in Washington, D.C., and unlike other forms of giving—such as donations from companies’ political action committees—it is unlimited.

The gist of the problem, it seems, is that individuals or corporations seeking to curry favor with incumbents or candidates are subject to limits on the amount they can donate and cannot get an explicit endorsement from a charity because of the prohibition stated in 501(c)(3).  Instead, they can make significant  unlimited charitable contributions to that same charity which then turns around and "honors" the incumbent, candidate, or government officer (the latter of which is not necessarily in violation of 501(c)(3).

Of the over $50 million in these reports, firms employing lobbyists spent $36.3 million honoring members of Congress and $11 million honoring executive branch officials in 2009 and 2010, according to Sunlight’s analysis. In addition, nearly $645,000 went to legislative branch employees—mostly congressional staffers—the reports showed.

The entire Sunlight Foundation report is available online here.


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