This editorial is reprinted with the author's permission https://trustbutverifyreport.substack.com/p/npo-headlines-122723
by Kristine Christlieb | January 9, 2024
Following up its August investigation of nonprofits’ involvement in U.S. elections, the U.S. House Committee on Ways and Means’ Subcommittee on Oversight reconvened on December 13, bringing in experts to shed light on the problems.
Nonprofit watchdog groups have been sounding the alarm for months [here and here] about how some very wealthy (but mostly unknown) 501(c)3 and 501(c)4 nonprofit organizations have been abusing their tax exempt status, particularly in connection with U.S. elections.
In the hearing there appeared to be bipartisan agreement on at least one point: foreign nationals should not be allowed to indirectly interfere with American elections via contributions to 501(c)4 organizations.
Money from Foreign Nationals
The person of interest in this matter is Swiss billionaire Harsjorg Wyss. In July, Americans for Public Trust (APT) published a report outing Wyss as a foreign national, who by federal law, is prohibited from directly or indirectly influencing U. S. elections.
The report claims, despite federal prohibitions, Wyss has directly funded U. S. political candidates. More recently he has adopted the political tactic of choice: a twin set of nonprofits, The Wyss Foundation, a 501(c)3 organization and the Berger Action Fund (BAF), a 501(c)4.
Source: Foreign Influence in U.S. Elections https://americansforpublictrust.org/wp-content/uploads/2023/07/APT-Wyss-Report.pdf
According to AFT, “In 2021 alone, BAF doled out a total of $72.7 million … to groups focused on promoting and supporting President Biden’s agenda.”
His contributions are called “dark money” because he is able to make contributions to the 501(c)4 BAF nonprofit anonymously, allowing him to stay unaccountable in the background.
What the Experts Said
House Ways and Means Committee Chairman Rep. Jason Smith (R-MO) made clear that the issue is money from foreign nationals. In his opening statement he told the committee, “As we protect our electoral process from foreign influence, we cannot sacrifice or risk donor privacy for Americans.
Legislative Attorney Justin C. Chung kicked off the testimony by documenting the astronomical growth of the nonprofit sector in the last thirty years. He reported 546,100 501(c)3 organizations in 1992. By 2022, there were 1.5 million (c)3s.
In response to a question, Chung later told the committee the nonprofit sector currently accounts for $5.5 trillion in assets, making it a very powerful and important sector of the economy.
Scott Walter, president of Capital Research Center, while focusing primarily on Wyss and foreign money, pointed out it is appropriate to also criticize American billionaire donors “when they improperly interfere with American politics as when the Zuckerbergs gave a half billion dollars to manipulate the 2020 elections.“
Stewart Whitson, Legal Director at the Foundation for Government Accountability, presented his organization’s analysis of the Zuckerbergs’ donations to Center for Tech and Civic Life (CTCL), a 501(c)3 nonprofit. He noted that the infusion of Zuckerbucks into targeted, Democrat-leaning jurisdictions “drove up voter turnout in blue districts and allowed partisanship to weasel its way into the one part of elections that is supposed to be non-partisan.”
He summed up:
“It appears that CTCL … used Zuckerbucks to hijack and transform the government itself into a partisan get-out-the-vote tool.”
The final expert witness, University of Pittsburgh Associate Professor of Law Philip Hackney, said, “Where we fall as a nation is in enforcement.” He warned that the IRS budget for the exempt organizations division is inadequate, particularly in view of the rapid growth of the nonprofit sector.
Hackney concluded: “There is good reason to believe that taxpayers are able to take advantage, and indeed are taking advantage, of this system to intervene in politics in ways that violate the tax law.”
Both Republicans and Democrats need to be on alert; their activities under the guise of nonprofits are under scrutiny in an unprecedented way. Lawmakers have awakened and are watching.
Watch the House Ways and Means Committee, Dec. 13, 2023 hearing here:
Kristine Christlieb volunteers for Michigan Fair Elections and serves on MFE's communications team. She publishes Trust but Verify on Substack.
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