Court Overturns Ban On Nonprofit Contributions To Federal Candidates

Citing First Amendment considerations, the Fourth Circuit Court of Appeals distinguished between nonprofits, which serve as vehicles for citizen participation in the political process, and for-profit corporations, which are concerned with "aggregation of capital or the issuance of equity shares." The Fourth Circuit Court of Appeals has upheld a federal District Court ruling finding the ban on corporate contributions to federal candidates in the Federal Election Campaign Act's Section 441b(a)b unconstitutional as applied to nonprofit organizations. The case, Beaumont v. FEC, arose out of a challenge to the ban by North Carolina Right to Life (NCRL). The Fourth Circuit includes Maryland, North Carolina, South Carolina, Virginia and West Virginia. The ruling does not affect the Internal Revenue Code ban on partisan activity by public charities, but instead applies to other nonprofits, such as 501(c)(4) social welfare organizations. Citing First Amendment considerations, the Court distinguished between nonprofits, which serve as vehicles for citizen participation in the political process, and for-profit corporations, which are concerned with "aggregation of capital or the issuance of equity shares." Because of these differences, the Court found that the First Amendment guarantees of freedom of speech and association include the right to make expenditures on campaigns, since effective advocacy of points of view is likely to require some expenditures. The court noted "nonprofit advocacy organizations play a distinctive role in the political scheme," and "through their expressive activities, groups such as NCFL and NCRL help empower citizens to make informed political choices…. That the functioning of these groups if vital to our democratic political process is abundantly clear from looking at the types of activities in which they engage." Activities cited by the court include public education activities such as conferences and debates, grassroots fundraising, membership participation, legislative lobbying and media programs. The ruling extended the logic of the 1986 Supreme Court case FEC v. Massachusetts Citizens for Life, which overturned a ban on independent campaign expenditures by nonprofit advocacy groups that are not funded by business. The Court found that direct contributions to candidates are another type of protected outlet for political speech. The FEC did not comment on the ruling. A majority of its six Commissioners would have to approve any appeal to the Supreme Court, and then the U.S. Solicitor General, Theodore Olsen, would also have to agree to appeal. The Court could take the case to settle the question, since the Sixth Circuit Court of Appeals came to the opposite conclusion in the 1997 Kentucky Right to Life v. Terry case. The text of the Court's Opinion is available on line.
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