Donor Disclosure: 501(c) Groups and Campaign Spending
link to page 1 
October 18, 2018
Donor Disclosure: 501(c) Groups and Campaign Spending
Introduction
In November 2012, Citizens for Responsibility and Ethics
Independent spending in a 2012 Senate race, which resulted
in Washington (CREW), which identifies itself as a
in a recently decided court case, CREW v. FEC, exemplifies
“watchdog” group, filed a complaint with the FEC,
a long-running policy debate about which contributions to
alleging, among other things, that Crossroads GPS failed to
politically active tax-exempt organizations should be
disclose its donors as required under the Federal Election
disclosed in campaign finance reports. Federal Election
Campaign Act (FECA; 52 U.S.C. §§30101-30114) and
Commission (FEC) guidance, and the court ruling, are
agency regulations. In November 2015, FEC
significant because they require publicly reporting the
commissioners deadlocked on whether Crossroads GPS had
original source of some contributions that previously
violated commission regulations and FECA (Matter Under
remained private. Whether those contributions should be
Review 6696). CREW then sued the commission for,
included in campaign finance disclosure reports has been a
among other things, allegedly failing to enforce disclosure
major point of debate in Congress and in the policy
requirements.
community.
In August 2018, Chief Judge Beryl A. Howell, of the U.S.
After the court ruling took effect on September 18, 2018,
District Court for the District of Columbia, ruled in
certain groups that previously did not disclose some of their
CREW’s favor. In part, the opinion invalidates an FEC
donors to the FEC now must do so. The FEC issued filing
regulation that permitted groups to withhold donor
guidance on October 4, 2018, but another rulemaking is
information from the agency in circumstances like the
expected, which could change reporting requirements.
Crossroads GPS fundraising and spending. These
Campaign practitioners offer differing interpretations of the
developments are, therefore, relevant for other politically
new reporting requirements and suggest that additional
active tax-exempt groups that spend money to elect or
litigation could occur. Regardless of what might unfold, or
defeat candidates.
has, in the courts concerning this specific case—which is
beyond the scope of this CRS product—the policy
Disclosing Donors
implications that CREW v. FEC highlights are relevant for
Under FECA and FEC regulations, donor disclosure
congressional debate over donor disclosure in campaigns
depends on the kind of groups receiving and spending
and beyond. The developments also could affect tax-exempt
funds. Figure 1 shows the distinction between different
organizations’ spending to elect or defeat candidates.
entities regulated under campaign finance law and tax law,
which is essential to understanding donor disclosure.
Independent Spending in 2012 Race
The disclosure and spending in question originated in the
Figure 1. Campaign Finance: Intersecting Areas of
2012 U.S. Senate race in Ohio. Affiliated with Republican
Law
super political action committee (super PAC) American
Crossroads, Crossroads Grassroots Policy Strategies
(Crossroads GPS) is a tax-exempt group regulated under
§501(c)(4) of the Internal Revenue Code (IRC). Crossroads
GPS reported making more than $6 million in independent
expenditures (IEs) calling for election or defeat of
candidates in the Ohio contest. It reported no donors for
those IEs in its FEC reports.
This and similar fundraising and spending concerns the
intersection of campaign finance law and tax law. For the
Source: Congressional Research Service figure.
purposes of this discussion, CREW v. FEC addresses
whether tax-exempt organizations that are only partially
Most FECA provisions apply to political committees, which
regulated by campaign finance law must disclose their
are candidate campaign committees, party committees, and
donors in FEC reports. These developments are among the
PACs. Except for super PACs, political committees may
latest in a decades-long debate about which activities and
not accept contributions above amounts specified in FECA.
entities should be regulated by campaign finance law, tax
Political committees are also presumed to be primarily
law, or both. This CRS product does not address other
engaged in electing or defeating federal candidates.
matters in the case, such as legal interpretation or
(Although regulated primarily by election law, political
rulemaking authority.
committees are regulated under IRC §527 for tax purposes.
IRC §527 is unessential for this discussion.)
https://crsreports.congress.gov
Donor Disclosure: 501(c) Groups and Campaign Spending
Crossroads GPS is not a political committee. It reports to
campaign environment of those races in which they choose
the FEC only in specific cases as explained below.
to spend.
Crossroads GPS is organized under §501(c)(4) of the IRC
as a social welfare group. Similar provisions apply to
Continue IEs and Disclose Donors
§501(c)(5) unions and §501(c)(6) trade associations. To
In light of the FEC’s guidance implementing the CREW
maintain their tax-exempt status, these groups may not
ruling, some groups could choose to continue making IEs
primarily engage in electing or defeating candidates.
and to disclose their donors to the FEC, if those
Because many of these groups are incorporated, the
contributions fit the FECA contribution definition or were
Supreme Court’s 2010 Citizens United ruling confirmed
made for the purpose of furthering IEs.
that they could expressly advocate election or defeat of
federal candidates through independent expenditures like
Stop Making IEs to Avoid Disclosure
the ones that Crossroads GPS and other groups
Some politically active 501(c) groups have stated that the
subsequently aired, including in the Ohio race.
District Court ruling chills their political speech and that
they will curtail or refrain from making their planned IEs.
Changes in Reporting IE Donors
These groups argue that donors made unrestricted
As nonpolitical committees, 501(c)s generally do not report
contributions, not specifically for IEs, and did not expect to
to the FEC. If they expressly advocate for or against
be identified in FEC reports.
candidates through at least $250 per calendar year in IEs,
however, FECA requires identifying donors who gave at
Shift Spending to Other Communications
least $200 “for the purpose of furthering an independent
Even if a politically active 501(c) group chose to forgo
expenditure.” The FEC regulation (11 C.F.R.
making IEs as planned, at least three other options for
109.10(e)(1)(vi)) invalidated in CREW v. FEC required
electoral participation remain. First, rather than making an
listing only donors who gave to further “the reported
IE itself, a group could contribute to a super PAC, which
independent expenditure” (emphasis added). In practice,
could then make an IE. Second, groups could accept funds
this meant that IE reports pre-CREW regularly listed
for IEs from limited liability corporations (LLCs), which do
expenditures but no donors, because those donors did not
not have traditional “donors,” and use those funds to make
earmark their contributions specifically for use in IEs.
IEs. Third, rather than explicitly calling for election or
defeat of federal candidates, groups could shift their
Potential Policy and Campaign Implications
spending to an advertising category known as
The FEC is expected to consider a new rulemaking for the
electioneering communications (ECs). ECs are cable,
now-invalidated donor-disclosure rule. In the interim, the
broadcast, or satellite messages that refer to clearly
agency issued guidance on October 4, 2018. Disclosure
identified candidates during pre-election periods but do not
specified in that guidance varies depending on when the
expressly advocate election or defeat. Separate “purpose of
contributions and IEs were made, and whether the case was
furthering” disclosure requirements still apply for
under judicial review at the time. The new donor-disclosure
contributions to ECs.
threshold is broader than it was pre-CREW, encompassing
Potential Relationship to IRS Donor Disclosure
IE donors and others. This does not appear to mean that
Separate from FEC reporting requirements, tax-exempt
groups must disclose all donors to the FEC, but campaign
organizations must report their financial activity to the
practitioners have offered varying interpretations of which
Internal Revenue Service (IRS) on an annual information
contributors must be identified.
return (form 990). Donor information is redacted from
public versions of these reports. The IRS announced in July
The October 2018 FEC guidance suggests that nonpolitical
2018 that it would no longer collect donor information on
committees that make at least $250 annually in IEs must
990s, but filers must provide donor information to the
name donors who contributed at least $200 to further IEs,
agency if requested. This matter is not specifically related
and those whose donations meet the FECA contribution
to the CREW case, but both developments affect politically
definition, which includes money given “for the purpose of
active 501(c) groups’ reporting obligations, and therefore
influencing any election for Federal office.” An eventual
may be relevant for general congressional interest in donor
rulemaking might narrow or broaden those disclosure
disclosure.
requirements.
Proponents of more campaign finance reporting
Particularly given this uncertainty, it is unclear whether
requirements generally oppose the IRS change, arguing that
501(c) groups might choose to alter their political spending.
the information is one of the few sources of donor
Some will be unaffected, as they chose not to make IEs
information for money that ultimately affects campaigns,
even before the ruling. IEs by nonpolitical committees have
even if the reports are not public. Those favoring less
been comparatively modest. According to FEC data,
regulation generally contend that the reports are
nonpolitical committees (including (c)(4)s) made $197.2
burdensome and of limited value for campaign finance
million in IEs during the 2016 election cycle. That amount
disclosure and enforcement, especially since they are filed
is approximately 12% of the $1.6 billion in total IEs for the
with the IRS rather than the FEC. Those favoring additional
cycle. However, total spending is perhaps less
disclosure of 501(c) funds affecting campaigns generally
consequential than targeted spending in individual races, as
support the CREW District Court ruling and oppose the IRS
the Ohio case and similar high-profile contests demonstrate.
reporting change.
Nonpolitical committees can substantially affect the
https://crsreports.congress.gov
Donor Disclosure: 501(c) Groups and Campaign Spending
R. Sam Garrett, Specialist in American National
Government
IF11005
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF11005 · VERSION 2 · NEW
October 18, 2018
Donor Disclosure: 501(c) Groups and Campaign Spending
Introduction
In November 2012, Citizens for Responsibility and Ethics
Independent spending in a 2012 Senate race, which resulted
in Washington (CREW), which identifies itself as a
in a recently decided court case, CREW v. FEC, exemplifies
“watchdog” group, filed a complaint with the FEC,
a long-running policy debate about which contributions to
alleging, among other things, that Crossroads GPS failed to
politically active tax-exempt organizations should be
disclose its donors as required under the Federal Election
disclosed in campaign finance reports. Federal Election
Campaign Act (FECA; 52 U.S.C. §§30101-30114) and
Commission (FEC) guidance, and the court ruling, are
agency regulations. In November 2015, FEC
significant because they require publicly reporting the
commissioners deadlocked on whether Crossroads GPS had
original source of some contributions that previously
violated commission regulations and FECA (Matter Under
remained private. Whether those contributions should be
Review 6696). CREW then sued the commission for,
included in campaign finance disclosure reports has been a
among other things, allegedly failing to enforce disclosure
major point of debate in Congress and in the policy
requirements.
community.
In August 2018, Chief Judge Beryl A. Howell, of the U.S.
After the court ruling took effect on September 18, 2018,
District Court for the District of Columbia, ruled in
certain groups that previously did not disclose some of their
CREW’s favor. In part, the opinion invalidates an FEC
donors to the FEC now must do so. The FEC issued filing
regulation that permitted groups to withhold donor
guidance on October 4, 2018, but another rulemaking is
information from the agency in circumstances like the
expected, which could change reporting requirements.
Crossroads GPS fundraising and spending. These
Campaign practitioners offer differing interpretations of the
developments are, therefore, relevant for other politically
new reporting requirements and suggest that additional
active tax-exempt groups that spend money to elect or
litigation could occur. Regardless of what might unfold, or
defeat candidates.
has, in the courts concerning this specific case—which is
beyond the scope of this CRS product—the policy
Disclosing Donors
implications that CREW v. FEC highlights are relevant for
Under FECA and FEC regulations, donor disclosure
congressional debate over donor disclosure in campaigns
depends on the kind of groups receiving and spending
and beyond. The developments also could affect tax-exempt
funds. Figure 1 shows the distinction between different
organizations’ spending to elect or defeat candidates.
entities regulated under campaign finance law and tax law,
which is essential to understanding donor disclosure.
Independent Spending in 2012 Race
The disclosure and spending in question originated in the
Figure 1. Campaign Finance: Intersecting Areas of
2012 U.S. Senate race in Ohio. Affiliated with Republican
Law
super political action committee (super PAC) American
Crossroads, Crossroads Grassroots Policy Strategies
(Crossroads GPS) is a tax-exempt group regulated under
§501(c)(4) of the Internal Revenue Code (IRC). Crossroads
GPS reported making more than $6 million in independent
expenditures (IEs) calling for election or defeat of
candidates in the Ohio contest. It reported no donors for
those IEs in its FEC reports.
This and similar fundraising and spending concerns the
intersection of campaign finance law and tax law. For the
Source: Congressional Research Service figure.
purposes of this discussion, CREW v. FEC addresses
whether tax-exempt organizations that are only partially
Most FECA provisions apply to political committees, which
regulated by campaign finance law must disclose their
are candidate campaign committees, party committees, and
donors in FEC reports. These developments are among the
PACs. Except for super PACs, political committees may
latest in a decades-long debate about which activities and
not accept contributions above amounts specified in FECA.
entities should be regulated by campaign finance law, tax
Political committees are also presumed to be primarily
law, or both. This CRS product does not address other
engaged in electing or defeating federal candidates.
matters in the case, such as legal interpretation or
(Although regulated primarily by election law, political
rulemaking authority.
committees are regulated under IRC §527 for tax purposes.
IRC §527 is unessential for this discussion.)
https://crsreports.congress.gov
Donor Disclosure: 501(c) Groups and Campaign Spending
Crossroads GPS is not a political committee. It reports to
campaign environment of those races in which they choose
the FEC only in specific cases as explained below.
to spend.
Crossroads GPS is organized under §501(c)(4) of the IRC
as a social welfare group. Similar provisions apply to
Continue IEs and Disclose Donors
§501(c)(5) unions and §501(c)(6) trade associations. To
In light of the FEC’s guidance implementing the CREW
maintain their tax-exempt status, these groups may not
ruling, some groups could choose to continue making IEs
primarily engage in electing or defeating candidates.
and to disclose their donors to the FEC, if those
Because many of these groups are incorporated, the
contributions fit the FECA contribution definition or were
Supreme Court’s 2010 Citizens United ruling confirmed
made for the purpose of furthering IEs.
that they could expressly advocate election or defeat of
federal candidates through independent expenditures like
Stop Making IEs to Avoid Disclosure
the ones that Crossroads GPS and other groups
Some politically active 501(c) groups have stated that the
subsequently aired, including in the Ohio race.
District Court ruling chills their political speech and that
they will curtail or refrain from making their planned IEs.
Changes in Reporting IE Donors
These groups argue that donors made unrestricted
As nonpolitical committees, 501(c)s generally do not report
contributions, not specifically for IEs, and did not expect to
to the FEC. If they expressly advocate for or against
be identified in FEC reports.
candidates through at least $250 per calendar year in IEs,
however, FECA requires identifying donors who gave at
Shift Spending to Other Communications
least $200 “for the purpose of furthering an independent
Even if a politically active 501(c) group chose to forgo
expenditure.” The FEC regulation (11 C.F.R.
making IEs as planned, at least three other options for
109.10(e)(1)(vi)) invalidated in CREW v. FEC required
electoral participation remain. First, rather than making an
listing only donors who gave to further “the reported
IE itself, a group could contribute to a super PAC, which
independent expenditure” (emphasis added). In practice,
could then make an IE. Second, groups could accept funds
this meant that IE reports pre-CREW regularly listed
for IEs from limited liability corporations (LLCs), which do
expenditures but no donors, because those donors did not
not have traditional “donors,” and use those funds to make
earmark their contributions specifically for use in IEs.
IEs. Third, rather than explicitly calling for election or
defeat of federal candidates, groups could shift their
Potential Policy and Campaign Implications
spending to an advertising category known as
The FEC is expected to consider a new rulemaking for the
electioneering communications (ECs). ECs are cable,
now-invalidated donor-disclosure rule. In the interim, the
broadcast, or satellite messages that refer to clearly
agency issued guidance on October 4, 2018. Disclosure
identified candidates during pre-election periods but do not
specified in that guidance varies depending on when the
expressly advocate election or defeat. Separate “purpose of
contributions and IEs were made, and whether the case was
furthering” disclosure requirements still apply for
under judicial review at the time. The new donor-disclosure
contributions to ECs.
threshold is broader than it was pre-CREW, encompassing
Potential Relationship to IRS Donor Disclosure
IE donors and others. This does not appear to mean that
Separate from FEC reporting requirements, tax-exempt
groups must disclose all donors to the FEC, but campaign
organizations must report their financial activity to the
practitioners have offered varying interpretations of which
Internal Revenue Service (IRS) on an annual information
contributors must be identified.
return (form 990). Donor information is redacted from
public versions of these reports. The IRS announced in July
The October 2018 FEC guidance suggests that nonpolitical
2018 that it would no longer collect donor information on
committees that make at least $250 annually in IEs must
990s, but filers must provide donor information to the
name donors who contributed at least $200 to further IEs,
agency if requested. This matter is not specifically related
and those whose donations meet the FECA contribution
to the CREW case, but both developments affect politically
definition, which includes money given “for the purpose of
active 501(c) groups’ reporting obligations, and therefore
influencing any election for Federal office.” An eventual
may be relevant for general congressional interest in donor
rulemaking might narrow or broaden those disclosure
disclosure.
requirements.
Proponents of more campaign finance reporting
Particularly given this uncertainty, it is unclear whether
requirements generally oppose the IRS change, arguing that
501(c) groups might choose to alter their political spending.
the information is one of the few sources of donor
Some will be unaffected, as they chose not to make IEs
information for money that ultimately affects campaigns,
even before the ruling. IEs by nonpolitical committees have
even if the reports are not public. Those favoring less
been comparatively modest. According to FEC data,
regulation generally contend that the reports are
nonpolitical committees (including (c)(4)s) made $197.2
burdensome and of limited value for campaign finance
million in IEs during the 2016 election cycle. That amount
disclosure and enforcement, especially since they are filed
is approximately 12% of the $1.6 billion in total IEs for the
with the IRS rather than the FEC. Those favoring additional
cycle. However, total spending is perhaps less
disclosure of 501(c) funds affecting campaigns generally
consequential than targeted spending in individual races, as
support the CREW District Court ruling and oppose the IRS
the Ohio case and similar high-profile contests demonstrate.
reporting change.
Nonpolitical committees can substantially affect the
https://crsreports.congress.gov
Donor Disclosure: 501(c) Groups and Campaign Spending
R. Sam Garrett, Specialist in American National
Government
IF11005
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF11005 · VERSION 2 · NEW