Last Wednesday, the Supreme Court released its 5-to-4 decision in McCutcheon v. Federal Election Commission. The opinion, authored by Chief Justice John Roberts and joined by three others in a plurality, overturned aggregate campaign contribution limits. This means that while campaign contributions per political candidate remain, the limits of how many candidates to which a donor may contribute per cycle were removed. This major change in campaign finance has been pilloried as “Citizens United 2.0.” Some, like South Dakota Senate candidate Rick Wieland (D), have even called the Court’s ruling the “worst decision since Dred Scott reaffirmed slavery.”
(Although many have debated who the real "winners and losers" are in this case, one GOP consultant cleverly tweeted, “Big losers in McCutcheon: Wealthy Texas donors who use ‘cycle max out’ excuse!”)
Unsurprisingly, the nature of this case led many nonprofits to file briefs, and such organizations could be found on either side of this debate – groups like the Cato Institute, the American Civil Rights Union, and The Campaign Legal Center, as well as politicians and national political committees.
While most of the political discourse in the wake of McCutcheon has been on the topic of how this decision would directly impact our politics (or more specifically, our democracy), there has also been a parallel conversation regarding the ruling’s indirect effects on nonprofit groups. One such piece is David Callahan’s “How Will the Change in Campaign Finance Laws Affect Nonprofit Fundraising?” published in Inside Philanthropy. Callahan’s argument, starting from the premise that the ruling was “lousy” for democracy, could be summarized as follows: now that donors may contribute with fewer restrictions to candidates and parties, less money will be funneled through “nonprofits who are fighting for [similar] beliefs.”
Secondarily, Callahan argues that there will be less money flowing through 501(c)(3) groups. As his main example, he points to The Heritage Foundation:
Take a place like the Heritage Foundation, which raises the majority of its funding from wealthy individual donors who want to promote their conservative beliefs. Many of these donors also contribute to Republican politicians and party committees—but, of course, there have been limits to how much money they can send that way. It's probably no coincidence that Heritage began its climb to mega budgets in the 1970s, following the passage of campaign finance reform. Or that the foundation started to grow to it current super size—with a $76 million budget in 2012—after the passage of McCain-Feingold in 2002.
While I would certainly agree with Callahan’s earlier point regarding the ruling’s effect on Super PACs and other overtly political organizations (“political” defined rather narrowly), I have tremendous doubts regarding whether this applies to “philanthropic money that flows to 501(c)(3) nonprofits that work to move an ideological agenda or a specific cause.”
To look at his case of The Heritage Foundation (which may now be considered a poor case study considering recent, popular charges of the think tank’s waning influence; see here and here), one cannot confuse the research institution with Heritage Action for America, a related, yet distinct, 501(c)(4) organization. While the former is a nonpartisan group, albeit with an ideological inclination, the latter is directly involved in political affairs. While I agree with Callahan that groups like Action may lose monetary resources as a result of McCutcheon (due to the ruling’s "cutting out the middle man"), I am less persuaded that a think tank’s major donors will now necessarily redirect their philanthropy towards political organizations.
Previously, if a donor wanted to contribute to partisan or political causes, he or she had the opportunity to donate to third party organizations – just ask the Left about the Koch brothers’ groups or ask the Right about George Soros. Instead, donors to 501(c)(3) groups (like the donors to The Heritage Foundation) made a conscious decision to direct their funds to such organizations. I posit that this class of donors will be unmoved by McCutcheon, and this class of nonprofits should not fear the repercussions of this case.
Philanthropists know where they are donating their money; if they wanted to donate to partisan and political causes before April 2nd, they simply would have done so.