Last week, the FEC dismissed our 2020 complaint alleging a secret donor to Democratic super PACs violated the law.
The FEC’s Democrats wanted to pursue the case, but the GOP Commissioners shut it down.
fec.gov/data/legal/mat…
The FEC’s Democrats wanted to pursue the case, but the GOP Commissioners shut it down.
fec.gov/data/legal/mat…
In 2018 & 2020, a mystery donor gave millions to newly-created nonprofits, which turned around and donated to Dem super PACs.
The super PACs disclosed receiving money from the nonprofits, but not the name of the donor who actually provided the funds.
From our complaint:
The super PACs disclosed receiving money from the nonprofits, but not the name of the donor who actually provided the funds.
From our complaint:
Given the timing of the transfers and the nature of the nonprofits, CLC’s complaint alleged that that those transactions violated federal law’s “straw donor” ban, which prohibits any person from making a contribution in the name of anybody else.
campaignlegal.org/update/wealthy…
campaignlegal.org/update/wealthy…
Yet in an illustration of the FEC’s ideological divide, it was the agency’s Democrats who wanted to pursue a case against this Democratic dark money donor, and the FEC’s Republicans who thwarted the probe.
This is another example of how the FEC’s failure to enforce the law opens the door to secret spending, and helps rig our politics in favor of special interests.
But there’s another interesting wrinkle. The secret donor didn't write the nonprofits a check, but instead funded them with stock.
By giving appreciated stock to the nonprofits, which then gave to the super PACs in the next tax year, the donor likely avoided capital gains taxes.
By giving appreciated stock to the nonprofits, which then gave to the super PACs in the next tax year, the donor likely avoided capital gains taxes.
The donor could have sold the stock and donated the proceeds to the super PACs, or given the stock directly to the super PACs, but those transactions would have been subject to capital gains taxes—and the donor’s name would also have been disclosed.
The donor could have sold the stock and donated the proceeds to the super PACs, or given the stock directly to the super PACs, but those transactions would have been subject to capital gains taxes—and the donor’s name would also have been disclosed.
(Here’s a tidy summation of the tax treatment of stock donations to nonprofits versus PACs: arnoldporter.com/en/perspective…)
By the donor routing these stock-funded super PAC contributions through a nonprofit, not only does their identity remain secret, but they also likely received a substantial tax benefit.
It is basically a dark money tax break for megadonors. And the FEC let it happen.
It is basically a dark money tax break for megadonors. And the FEC let it happen.
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