ASK ELi: Are the Chamber's Mailers Legal?
A reader asks, "Why are candidate Shanna Draheim's last two campaign mailers paid for by the Lansing Regional Chamber of Commerce instead of by her campaign committee? Is this a campaign violation?”
Eli looked into the first question here. In this article we focus on the issue of the legality of a non-profit organization sending mailers in support of specific candidates or encouraging voters not to vote for specific candidates. If you want to see examples of the Chamber’s mailers that we are talking about, click here and here.
According to their own website, The Lansing Regional Chamber of Commerce is a 501(c)6 corporation. The Internal Revenue Service (IRS) says that “IRC 501(c)(6) provides for exemption of business leagues, chambers of commerce, real estate boards, boards of trade, and professional football leagues (whether or not administering a pension fund for football players), which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.”
In other words, organizations like the Lansing Regional Chamber of Commerce enjoy tax-exempt status as long as they follow IRS guidelines.
As a general rule, those guidelines allow 501(c)6 nonprofits to advocate for or against political candidates and political issues on a limited basis. The Code states that “participating directly or indirectly, or intervening, in political campaigns on behalf of or in opposition to any candidate for public office does not further exempt purposes under Internal Revenue Code section 501(c)(6). However, a section 501(c)(6) business league may engage in some political activities, so long as that is not its primary activity.” Determining “primary purpose” is at the discretion of the IRS.
Without access to the Chamber’s financial and personnel records, it is impossible to determine whether their “primary purpose” is political activities, but it seems highly unlikely, based on the number of non-political activities in which they engage, that this kind of political activity constitutes anything like the Chamber’s “primary purpose” in terms of financial expenditure or human effort.
The Chamber’s President and CEO has said that the Chamber’s advertisements represent “educational” materials because they do not contain words like “vote for” or “vote against.” As we reported yesterday, our County Clerk has agreed.
We asked ELi’s board member Michael Lawrence, MSU professor of law, for help understanding this issue. He explains, “One of the things Citizens United v. Federal Election Commission (2010) held is that corporations do have a 1st amendment-protected right of speech independent of any PAC they might choose to organize.” He adds that “after Citizens United it appears that a corporation may engage in electioneering speech of this sort—even if it has a PAC.” (The Chamber does have a PAC which has endorsed Draheim, Mark Meadows, and Nathan Triplett, but the ads we are talking about come say they are paid for by the Chamber, not the PAC.)
Bottom line: It appears to us that the Chamber is acting within the law.
Note that Draheim has stated that she was unaware the Chamber was going to be sending out these ads promoting her campaign; read more.
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