In a recent hearing of the Ways and Means Subcommittee on Oversight, members discussed the alarming lack of transparency surrounding the influence of money from foreign nationals on the American political system. The focus was on how nonprofit organizations, specifically 501(c)(3) and 501(c)(4) organizations, can funnel millions of dollars from foreign donors into the political system without any trace. This loophole allows foreign nationals to potentially manipulate American elections through tax-exempt charities.
One example highlighted during the hearing involved a Swiss billionaire who donated over $200 million to political groups that aided Democrats in their efforts to win the White House and control of Congress. These political groups were found to be associated with the Arabella Advisors network, which has been described as a leading vehicle for "dark money" on the left.
However, it's not just foreign nationals who are taking advantage of these loopholes. In 2020, Mark Zuckerberg donated $328 million to 501(c)(3) charities, which subsequently funded grants to state and local election offices in a clearly partisan manner. These grants were found to be predominantly given to counties that voted for then-candidate Joe Biden.
During the hearing, witnesses discussed how money from foreign nationals can continue to play a significant role in American politics due to the lack of disclosure requirements for contributions received by U.S. nonprofits. One Democrat super PAC even praised donations to these groups as "the single most effective tactic for ensuring Democratic victories."
The issue of transparency was also raised, particularly in relation to the Form 990 required by 501(c)(3) and 501(c)(4) organizations. Currently, these organizations do not have to list foreign donors on this form, allowing some groups to take advantage of this loophole. Scott Walter, a political financing expert, highlighted how this lack of transparency allows certain groups to "hide in greater darkness than a regular nonprofit."
The impact of private donors using the tax code to influence public elections was also discussed. Witnesses testified that during the 2020 election, a significant amount of funding, referred to as "Zuckerbucks," went to Democrat-run cities and counties in swing states. This raised concerns about potential abuse of the tax code to favor one political party over another. Representative Claudia Tenney proposed legislation, the End Zuckerbucks Act, to prohibit state and local election offices from accepting private donations.
One of the most concerning aspects discussed during the hearing was the possibility of a foreign adversary manipulating U.S. elections without the public's knowledge. In response to a series of hypothetical scenarios, Philip Hackney, a nonprofit tax law professor, acknowledged that a foreign adversary could donate to a 501(c)(3) organization, which could then spend millions on issue campaigns, support get-out-the-vote efforts, and send money to a super PAC through a 501(c)(4) organization to air political TV ads. This highlights the need for greater transparency and reporting requirements to prevent foreign interference in American elections.
The hearing shed light on the urgent need for reforms to address the influence of foreign nationals and private donors on the American political system. Greater transparency and disclosure requirements for nonprofit organizations, as well as stricter regulations on the use of tax-exempt charities for political purposes, are crucial to safeguard the integrity of the electoral process. Without these reforms, groups will continue to exploit loopholes, hiding in the darkness of "dark money" and potentially undermining the democratic principles of the United States.
For additional details, please follow this link: https://waysandmeans.house.gov/groups-hide-in-greater-darkness-foreign-nationals-using-charity-backdoor-to-influence-american-elections/
