Think Tank Disclosure Amendment | Transparify's Statement

In the hearing of the SubCommittee on Rules and Organization of the US House of Representatives, Representative Jackie Speier (Democrat, California), put forward an amendment that would require witnesses before the House to disclose payments they receive from foreign governments. For Speier's full statement, check the video clip here.

Eric Lipton at the New York Times has covered this proposed amendment, and a number of major reactions. Transparify is also quoted. The NYT piece is here.

Our full statement on the proposed amendment is the following:

"Transparify welcomes U.S. legislators' interest in verifying the funding sources of witnesses that testify before committees, including those working for think tanks. However, limiting such disclosure requirements to recipients of foreign government money alone is problematic. For example, the proposed rule does not cover payments by foreign companies, including state-owned enterprises or by foreign oligarchs. Transparify believes that the current debate on foreign funding for think tanks only touches the tip of the iceberg. This "foreign-government funding" debate ignores the far greater amounts of money that are poured into think tanks by domestic players, including corporations and trade unions, which should also be disclosed. This well-intentioned amendment is too narrow in scope and will not solve the problem of disclosing potential conflicts of interests from think tanks and other expert witnesses, including those not affiliated with think tanks. Instead, Congress should work with those think tanks that already voluntarily disclose who funds them and with watchdog organizations to develop rules and laws that will work effectively in practice."

For further information or comment please contact Hans Gutbrod at hans@transparify.org.

Think Tanks and the Right to Information

Guest blogger Michael Karanicolas explores the applicability of the right to information to think tanks. Transparify does not edit the content of guest blogs; the views expressed in this blog are those of the author alone, and may not reflect the views of Transparify.

The right to information is internationally recognised as a human right which lies at the core of democratic accountability. Since State institutions are funded by public money, it is only natural to expect that the people have a right to know how their resources are being spent. In a democratic society, access to information held by the government is vital to ensuring that the electorate is fully and accurately informed, and can properly engage in the decision-making process. The right to information also fosters trust in government, and promotes efficiency through robust public oversight.

The right to information is not limited to State institutions. International standards hold that the right to information should apply to any private organisations that receive State funding or perform a public function to the extent of that funding or function. It is clear that, where an NGO – a category that includes most think tanks – is substantially funded from a State budget, a duty of transparency should apply.

However, many think tanks and other NGOs are not supported by State funds, and here the question becomes more difficult. Most right to information laws do not apply to NGOs, but there are exceptions. Indonesia’s Public Information Disclosure Act applies to NGOs which receive funding from public donations or from foreign sources, as well as any that receive money from the State budget. South Africa’s Promotion of Access to Information Act, 2000 allows for requests to any private organisation, including NGOs, if the information is required for the exercise or protection of any right. Sierra Leone’s Right to Access Information Act, which was passed in late 2013, includes a similar provision.

Several countries also impose additional transparency requirements on organisations which claim charitable status. This makes sense as charitable status is, in essence, a tax subsidy provided by the State.

Transparency is generally a good thing. However, there are legitimate reasons why NGOs may be wary of these requirements. For one thing, many smaller or developing world organisations lack the resources to respond efficiently to access to information requests, particularly if their records are not digitised. Another issue is that NGOs will sometimes require a certain amount of space to operate. Advocacy strategies, for example, will often need to be kept under wraps in order to ensure their efficacy. Although it is conceptually dangerous to start expanding the legitimate limits of exceptions to the right to information, these ideas require development to be properly applied to the NGO sector. 

But beyond the legal requirements of what NGOs must publish, there are legitimate operational reasons to want to push more information into the public domain. If an NGO seeks to pressure governments or corporations into being more transparent, while simultaneously guarding the secrecy of its own documentation, it runs the risk of being labelled a hypocrite.

Good advocacy means practicing what you preach, even if this may lead to some operational difficulties. Strictly speaking, the right to know does not generally extend to information that is held by NGOs. But if an NGO seeks to be an effective voice for transparency, it may need to lead by example.

Michael Karanicolas is the Legal Officer of the Centre for Law and Democracy, in Halifax, Canada.

Think Tanks Would Benefit from Better IRS Rules for Nonprofit Political Activity

Guest blogger Emily Peterson-Cassin of the Bright Lines Project argues that all nonprofits would benefit from a clearer definition of political activity. Transparify does not edit the content of guest blogs; the views expressed in this blog are those of the author alone, and may not reflect the views of Transparify.

Since the U.S. Supreme Court’s 2010 Citizens United decision, 501(c)(4) “social welfare” groups that can collect donations without disclosing their donors have proven irresistible to those looking for ways to spend millions on manipulating elections in secret. Through these groups, corporations and individuals were able to raise and spend more than 300 million dollars in the 2012 election cycle, leaving voters in the dark about their identity and unable to evaluate their motives.

To its credit, the IRS has recognized that this influx of dark money is a problem for its current system of classifying nonprofit entities.In November 2013, it proposed new rules for 501(c)(4)s that garnered more than 146,000 public comments – a record. The proposed rules are problematic for a variety of reasons, including that they don’t do enough to stop the dark money flowing into our elections. 

Nevertheless, groups that would be affected by the new rules overwhelmingly want the rulemaking to continue. 67% of organizations commenting or signing on to comments on the rules – the very entities the new rules would most affect –encourage the IRS to move forward in their effort to change the rules governing nonprofits, according to our analysis of the comments.

The existing rules not only have allowed groups to aggressively flout tax rules and pour millions into manipulating elections, but they also have constrained smaller groups dedicated to civic engagement. Too afraid of jeopardizing their nonprofit status, smaller groups have not participated in America’s democracy as fully as they are allowed. The IRS’ new rules seek to fix this imbalance by resolving the ambiguity of the current “facts and circumstances” test. Improving this definition will lead to more clarity for IRS agents as they work to monitor abuses and will help nonprofits engage confidently, knowing with certainty what they can and cannot do.

Currently, 501(c)(3) nonprofits such as think tanks are not allowed to engage in any political activity, and neither the proposed rules nor the Bright Lines Project’s suggested rules would change that.

However, the rules as proposed could jeopardize the daily operations of some 501(c)(3)s by complicating their relationships with (c)(4)s. Unless the same rules apply to all 501’s, organizations that fund or work with (c)(4)s could find that they are engaging in prohibited political activity merely by donating to a (c)(4), or possibly even linking to a (c)(4)’s website. 

That’s why the Bright Lines Project has advocated for clear rules that apply to all nonprofits.  Bright-line rules have the potential to greatly increase the amount of civic participation think tanks can undertake. 

The IRS has a long review process ahead, but should not lose focus on the realities that nonprofits face in navigating the confusion caused by the current rules.  The 67% of organizations that want to continue the rulemaking are resoundingly telling the IRS that they have taken a necessary first step. It’s essential that IRS continue the rulemaking and create a final rule that will help bring dark money into the light.

Emily Peterson-Cassin is the project coordinator of the Bright Lines Project, which was formed nearly five years ago to draft and advocate for clearer tax rules governing nonprofits. The project is housed at Public Citizen in Washington, D.C.