Opinion says lawmakers can raise money for political nonprofits

While lawmakers are told to be cautious in using their official titles, an opinion from the Legislative Ethics Committee says lawmakers can raise money for politically involved nonprofit groups.

Posted 11:00 a.m. Dec 30, 2014 — Updated 11:00 a.m. Dec 30, 2014

Mark Binker

RALEIGH, N.C. — North Carolina lawmakers are allowed to raise money for political nonprofits that raise money to lobby or elect members to the legislature, according to a recent legislative ethics opinion.

While other state and federal laws come into play, the opinion appears to erode the separation between purportedly independent political spenders and the candidates and lawmakers they support. It could pave the way for lawmakers to raise unlimited sums of money for politically driven nonprofits, even during legislative sessions when conventional fundraising activities are limited.

"I believe that it certainly provides a path for that kind of giving," said Michael Weisel, a lawyer who specializes in election law, mainly working for Democratic candidates and causes. "My opinion is that the State Board of Elections will probably want to weigh in from an elections law perspective, but from an ethical perspective, the ethics committee has spoken."

Raising money for political nonprofits is frequently easier than gathering cash into campaign accounts because the same fundraising limits don't apply and nonprofits are often not required to disclose the names of donors. As well, nonprofits can raise money from interested groups when an important legislative decision is approaching, rather than having to wait like lawmakers until after the legislature concludes its business for the year.

The opinion, dated Nov. 17, was issued by the Legislative Ethics Committee, a bipartisan, 12-member panel that answers inquiries from legislators and vets complaints about unethical activity by sitting lawmakers. Once a year, the committee posts the opinions it renders to the North Carolina Ethics Commission's website. Those opinions are scrubbed of information that would identify who requested the information.

In this opinion, the committee answers a question from a lawmakers who asked if he or she could raise money for a 501(c)(4), 501(c)(5), 501(c)(6) or 527 organization, all of which are types of nonprofit groups allowed to engage in various political activities.

A 501(c)(4) group, for example, is a "social welfare organization," the like of which has frequently been employed to run campaign-style advertising. Carolina Rising, which backed House Speaker Thom Tillis in his successful U.S. Senate campaign, is an example of this sort of group.

Labor unions are often organized as 501(c)(5) groups, while chambers of commerce are often organized as 501(c)(6) organizations. A 527 group is a specific type of political committee created by the IRS in 1986. Unlike the various 501(c) groups, a 527 has to disclose more about its fundraising and spending.

Independent spending groups have played a huge role in recent North Carolina elections, including the just-concluded $110 million-plus race for U.S. Senate, in which nonprofits and super PACs spent more than the parties and the candidates, but few of those had direct connections to state legislators.

The exception is N.C. House Legislative Partners, a nonprofit purportedly built to spread news about work spearheaded by Republican lawmakers, but which ended up airing what amounted to Tillis' first de facto U.S. Senate campaign ad in 2013.

Roger Knight, a lawyer who works for NCHLP, said that he didn't request the opinion, and he does not believe any of the members of his group did.

Like Weisel, Knight says this ethics opinion could clear the way for sitting lawmakers to raise money for political nonprofits "to a limited extent." As of right now, the State Board of Elections hasn't weighed in on the question of coordination between candidates and nonprofits. Federal law, he said, limits the amounts that candidates and office holders can solicit for such nonprofits.

But, as with other aspects of state and federal elections laws, there are nuances, questions and outright loopholes related to such limits.

Bob Hall, a good-government campaigner for Durham-based Democracy North Carolina, sees this ethics opinion as stemming from a spate of recent U.S. Supreme Court cases that have eroded campaign fundraising limits and opened the door for more political participation by businesses.

"You have to imagine you live in a different universe, with the majority of U.S. Supreme Court justices," Hall said. "In this universe, working hard to raise big money for an entity that runs a million dollars worth of ads for your election has no potential to corrupt or unduly influence you. ... Sadly, this opinion is an example of how the Supreme Court’s make-believe universe is invading more of the real world, taking over more space and replacing common sense with Orwellian double-speak."

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