Koch Operatives’ Phone Call on HR 1 Leaked to Jane Mayer at ‘The New Yorker’ https://t.co/KAnNs6Xy5o
— Jane Mayer (@JaneMayerNYer) March 29, 2021
The New Yorker’s Jane Mayer has broken another important story about the dark money that drives politics in post-Citizens United days. The Koch fortune is at work trying to derail election reform legislation because it requires more disclosure of donors to elections.
Imagine. Transparency in the financing of election campaigns.
It is just this issue that raised concerns with ethics law author Scott Trotter, which I reported on recently, about legislation sponsored by Rep. David Ray, a former Koch political operative in Arkansas. Co-sponsor Sen. Breanne Davis insists the bill isn’t about much, but she and Ray haven’t identified what specific problem/need is being addressed by a bill that would throw secrecy over, among others, 501(c)(4) political organizations that have pumped millions of dark money into Arkansas election campaigns. Without closer examination, we won’t know the answer to that question until it’s too late. The bill is awaiting a hearing in a Senate committee.
This reminds me of another related issue. The Ray/Davis bill would also extend secrecy to any state records of 501(c)(3) organizations, pure charities which are severely limited by federal law in their political activities. They may NOT contribute to political campaigns related to candidates. They MAY under limited conditions, contribute money to issue campaigns, but they subject themselves to tax penalties with too much spending.
I bring this up because of reports that Little Rock Mayor Frank Scott Jr. is considering the tapping of the Arkansas Zoological Foundation for up to $250,000 to fuel his campaign for a one-cent city sales tax increase. The Foundation is a 501(c)(3) nonprofit.
According to federal tax filings, the foundation operates for the “sole benefit” of the Little Rock Zoo. The zoo would get a hefty share of the sales tax increase, including building a new giraffe exhibit. But the $54 million a year expected from the tax will go to many other purposes besides the zoo.
That’s one issue to consider in tapping nonprofit zoo money for a political campaign.
Another is the IRS rule that says “a section 501(c)(3) organization may contribute to a ballot measure committee (committees supporting or opposing ballot initiatives or referenda), but it must include such contributions in its lobbying calculations for purposes of determining whether a substantial part of its activities consist of attempting to influence legislation.”
One way to make that calculation is by expenditures. Political activities must not exceed amounts set in IRS rules.
For example, if an organization spends less than $500,000 on charitable work (the Zoo foundation spent a bit more than $300,000 in 2018 according to its most recent tax report) it couldn’t spend more than 20 percent of that amount without incurring an excise tax of 25 percent on the excess.
Excess lobbying expenditures can also jeopardize an organization’s nonprofit status and a 5 percent tax of the excess spending can be assessed against the managers of the organization.
Tapping donations to the zoo for a tax increase campaign is on the table because of reported resistance in the business community — traditional bankrollers of city tax campaigns — to the shape of the spending as outlined by the mayor in private meetings. The startup of a couple of new social welfare programs — in daycare and housing — and a perceived insufficient investment in streets and public safety, along with the significant percentage increase in zoo funding, have been mentioned to me as potential sore points.
Note that federal filings don’t identify sources of Zoo Foundation money. If it were to fund a campaign for a sales tax, only its payment would be identified, not the individual sources of the money.