A New 'Citizens United?' The Trump Plan That Could Shake Up Political Fundraising

By Lydia O'Neal, International Business Times

08 June 17

resident Donald Trump’s pledge to “destroy” the Johnson Amendment could boost the kinds of group that launched adviser Steve Bannon’s political career, flooding them with tax-exempt cash. The impact on the political system could be as dramatic as the Citizens United ruling in allowing big donors to further a political agenda.

About a month ago, Trump issued an executive order weakening the Internal Revenue Service measure that sought to prevent donors to charities that engage in political activities from getting tax breaks on their donations. But some groups have spent years using donations to fund overtly partisan efforts anyway — including one that played a major role in the rise of some of the most prominent members of Trump’s cabinet.

As the Washington Post detailed in a Saturday report, the David Horowitz Freedom Center, a charity founded by the anti-establishment conservative whose name it carries, and its leaders have a long history of publishing pamphlets and articles railing against immigration and denying climate change, attacking former President Barack Obama and former Democratic presidential candidate Hillary Clinton and holding events themed “Islamo-Fascism Awareness.” Its contributors include Donors Trust and Donors Capital Fund, which Mother Jones has described as “the dark money ATM of the conservative movement.” 

On the receiving end of $5.4 million in donations in 2015, according to the Post, the center helped Trump’s senior policy adviser Stephen Miller score some of his first jobs in politics, including one with then Senator, now Attorney General Jeff Sessions, and assisted Trump’s chief strategist Bannon with his film and media career. Bannon — the former chairman of the far-right news site Breitbart, which has a tag titled “black crime” and has served as a platform for provocateur Milo Yiannopoulos — has expressed admiration for Third Reich propaganda filmmaker Leni Riefenstahl.

At the bottom of its main page, the David Horowitz Freedom Center states, “We are a 501(c)(3) non-profit organization. All donations are tax-deductible.”

Horowitz, who the Post said made $583,000 from the center in 2015, told the newspaper that any legislation or regulatory overhaul to force charities to more closely align with the Johnson Amendment’s objectives would be “personally devastating to me.”

But, although his executive order was largely symbolic, Trump has taken a step in the opposite direction, encouraging the Treasury Department not to take a harsher stance on groups like the David Horowitz Freedom Center.

A section of Internal Revenue Code introduced by President Lyndon Johnson, then a senator, in 1954 bars section 501(c)(3) organizations, or charities, “from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office.” A violation of that rule could “result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.” Even activities advocating for the act of voting itself are prohibited to the charity if those actions have any “evidence of bias that (a) would favor one candidate over another; (b) oppose a candidate in some manner; or (c) have the effect of favoring a candidate or group of candidates.”

Trump’s executive order, framed as a boon for religious freedom, mandates that Treasury Secretary Steven Mnuchin “ensure” that his department not impose a tax penalty or deny tax-exempt status to any 501(c)(3) organization that “speaks or has spoken about moral or political issues from a religious perspective, where speech of similar character has, consistent with law, not ordinarily been treated as participation or intervention in a political campaign on behalf of (or in opposition to) a candidate for public office.” 

The ripple effects of any rollback would run far beyond the David Horowitz Freedom Center. In a May white paper on the Johnson Amendment, the nonpartisan, nonprofit Campaign Legal Center warned that its elimination “could lead to the creation of an array of new 501(c)(3) ‘super dark money groups’ — groups organized as charities or religious organizations that will operate as tax-deductible vehicles for wealthy donors to secretly influence elections.”

The other side of the aisle has its fair share of 501(c)(3)s “pushing the legal envelope” as well, said Brendan Fischer, the author of the white paper and the CLC's director of Federal Election Commission reform. He cautioned, though, that he “wouldn't say it's necessarily even.” Either way, if Trump were to get rid of the rule completely, it would only increase the influence of a small group of donors, as did the Supreme Court decision in Citizens United v. Federal Election Commission, which allowed corporations to spend money on non-campaign efforts in support of or against political candidates.

“Citizens United,” Fischer said, “coupled with a repeal of the charitable tax deduction guidelines would open the floodgates for dark money spending.”