January 22, 2010. The U.S. Supreme Court ruled on Thursday to lift restrictions on corporate campaign spending by for-profit corporations, and by IRC 501(c)(4) Social Advocacy organizations. The ruling does not affect the restrictions currently applicable to 501(c)(3) organizations. Government watchdogs and other nonprofit groups, however, fear it will allow businesses to drown out the voices of individuals, charities, and smaller advocacy organizations.
The group that lodged the Supreme Court challenge, Citizens United, is a 501(c)(4)nonprofit group that challenged a Federal Election Commission ruling that it could not air commercials advertising a documentary it had produced that was critical of Hillary Clinton.
The Supreme Court ruled in Citizens United v. Federal Election Commission, that a law barring corporations from using money from their general treasuries for “express advocacy” — to urge that a candidate for federal office be elected or defeated — was unconstitutional.
Until now, corporations that wanted to spend money to influence elections had to set up political-action committees, which face limits on the amounts and types of money they can raise. The court also struck down rules that prohibited corporations from spending money on “electioneering communications” — TV or radio ads that mention a specific federal candidate.
Therefore, legal experts say, nonprofit advocacy groups — those covered by section 501c4 of the tax code — may now urge the public to vote for or against a federal candidate without having to set up separate political-action committees. They will also be able to accept contributions from businesses to engage in such activity. Until now, these groups could advocate for a candidate’s election, but only to their members. Businesses may now be tempted to try to influence campaigns indirectly, by funneling money through 501(c)(4) advocacy groups.