The Chamber of Commerce Foundation and the Futility of Regulating Campaign Intervention

 

Incumbent Peter Meijer was ousted because he was one of the few Republicans voting in favor of Trump's Impeachment. 

The Hill has some interesting investigative reporting out this week.  Here’s the hook:

The U.S. Chamber of Commerce received a $800,000 wire transfer from billionaire donor Hank Meijer days after it endorsed his son, then-Rep. Peter Meijer (R-Mich.), in a contentious 2022 primary, according to previously unreported internal emails reviewed by The Hill. Within days of the transfer, the Chamber spent $381,000 on “Media Advertisement – Energy and Taxes – Mentioning Rep. Peter Meijer,” according to a report filed with the Federal Election Commission (FEC). 

The report does not address the prohibition against campaign intervention in 501(c)(3) because it accepts that the political ad posted above was paid for by the U.S. Chamber of Commerce.  The Chamber is (c)(6) not subject to the prohibition.  But Daddy Warbucks could also not take a charitable deduction for the contribution to the 501(c)(6).  On the other hand, the Chamber of Commerce Foundation is a (c)(3).  Donations to the Foundation generate a charitable contribution deduction and those donations can be funneled or sifted or laundered, whatever, into the Chamber to pay for campaign intervention. Don't look at me like that.  Who among us would really not be tempted to donate the money to the Foundation, take the tax deduction, and then expect that "coincidentally" the Chamber will endorse our candidate? And that before, during, or after, the Foundation will grant money to the Chamber for other things the Chamber does.  Moral hazard much? Besides, the law ultimately soothes my qualms. Your qualms are your business.  Lloyd even talks about those  legal rules in a recent article.  

So come on.  Was the donation really made to the Chamber, a (c)(6) generating no deduction?  Really?! Or was it made to the Foundation, a (c)(3)? I'm just asking and given the law it might even be malpractice to not advise that path.  Regardless, the public never perceives a distinction between the Chamber and the Foundation.  I didn't at first.  I wrote to the reporter, with an air of knowing superiority, saying it all looks like campaign intervention not just an FEC violation.  Instructively, she pointed out that these are two different organizations, one a (c)(6) the other a (c)(3).  I didn't note the distinction at first.  The public is not supposed to ever perceive the distinction.  That's the whole point.

By the way, it is scientifically impossible to trace the donation to any particular use within the Chamber family even if the donation went to the Foundation.  Oh sure, the two organizations have separate books with plenty of line item entries showing the Foundation received the donation and made grants for the Chamber's nonpolitical activities.  And the Chamber has line items showing that donation's use for nonpolitical activities.  But look.  It's scientifically impossible to segregate money.  Money is fungible.  A dollar granted to the Chamber from the Foundation for nonpolitical activities, frees up the Chamber's other dollars for campaign intervention.  The Foundation will deny involvement in Warbucks' son's campaign, of course.  And with lots of cover provided by byzantine rules in tax law allowing for campaign intervention through affiliated organizations.  

And another thing.  The report explains in pretty good detail the nuances and loopholes of campaign finance laws, about which I know about as much as I know about building rockets.  I am not a rocket scientist.  Apparently, you can’t explicitly endorse a candidate under federal campaign finance laws, at least not without some disclosures.  But you can say a lot of things that amount to an implicit endorsement.  As if there can be such distinctions in the English language.  The whole thing, and the prohibition against campaign intervention in IRC 501(c)(3), is absurdly silly if you ask me.  The inherent ambiguity in any language precludes regulating the conveyance of political endorsements. 

But because the ad — entitled “Thank you, Rep. Peter Meijer” — does not explicitly advocate for his election or defeat, the pro-business lobbying giant did not have to legally disclose the donation from Hank Meijer, the co-chair and CEO of the Meijer chain of superstores. It also did not have to disclose any other potential contributions behind the $1.8 million it told the FEC it spent on “electioneering communications” that cycle. 

Not explicitly?  What is explicit and how can we ever distinguish it from implicit or not at all?  If we say it’s a matter of degree we are essentially admitting the futility of the effort.  Add to that the First Amendment-based right to donor anonymity – dark money – and the futility of regulating campaign speech becomes even more apparent:

Nonprofits such as the Chamber are not legally required to publicly disclose their donors. The Supreme Court recently ruled nonprofit disclosure requirements violated donors’ First Amendment rights and risks deterring donors who don’t want their names to be public. Under federal campaign finance law, however, it is illegal for a campaign and spender to coordinate on so-called “independent expenditures” — election communications such as an ad. But the involvement of a candidate’s family member is not de facto coordination, campaign finance experts told The Hill, and so long as the group does not coordinate with the candidate, campaign or its agents on an endorsement, or spending touting that endorsement, they would legally be in the clear. 

Coordination and coordinate.  More wiggly and hopelessly ambiguous terms.   

The ad praises Peter Meijer but stops short of using the eight specific words and phrases established in the Supreme Court’s 1976 decision in Buckley v. Valeo that would require the Chamber to report the ad as an independent expenditure, and thus disclose the source of the funds: “vote for,” “vote against,” “elect,” “defeat,” “support,” “reject,” “cast your ballot for” or “Smith for Congress.”

The report's ignoring the tax law campaign intervention issue is appropriate if we believe the Chamber and the Foundation really are two different entities.  I just don't believe it and I am not even an economist. Why do we call something that is not factually true a legal fiction? There is something oxymoronic about the phrase.  Anyway, that we should ignore the issue is precisely the point when any endorsing organization creates a related (c)(3) that generates charitable contribution deductions.  The prohibition is such a waste of time and money.

darryll k. jones