In a rare case, a so-called “dark money” group has now publicly released the names of its donors.  Under federal law, if an organization has as its “major purpose” the nomination or election of federal candidates, the organization may be a “political committee” required to report its receipts and disbursements with the Federal Election Committee.  Relying on this definition of a “political committee,” in 2012, Citizens for Responsibility and Ethics in Washington filed a complaint with the FEC arguing that Americans for Job Security, a 501(c)(4) social welfare organization, should have registered as a PAC and publicly disclosed its donors and expenses.  CREW argued that because 72 percent of AJS’s spending in 2010 was for independent expenditures (advertisements that expressly advocate the election or defeat of a federal candidate) or electioneering communications (TV or radio advertisements naming or depicting a federal candidate shortly before an election), AJS had, as its “major purpose,” the election of federal candidates.  Thus, CREW contended, AJS should have registered as a PAC.

For the next seven years, the matter wound its way through the FEC and the courts until last month AJS entered into a “conciliation agreement” with the FEC to finally settle the case.  Under the terms of the agreement, AJS agreed to effectively back-register and report as a PAC by making a single filing with the FEC that disclosed “its receipts, including the identity of any person or organization that gave money to AJS, and disbursements for 2010 through 2012.”  This information has now been filed with the FEC and made public.

As this case highlights, there is no guarantee that donations to a 501(c)(4) non-profit will be forever kept confidential.  Within the last decade, state regulators have inadvertently disclosed confidential donor information online, donor identities have leaked to the press, and several state enforcement cases have resulted in donor disclosure.  Donors concerned about their anonymity should therefore carefully vet recipient groups before donating, rather than merely relying on the organization’s 501(c)(4) status to assume their donations will be kept confidential.  At a minimum, donors should understand how the group spends its money, the political and non-political activities in which the group engages, and the safeguards the group has in place to ensure that it will not engage in activities that trigger donor disclosure.  It is often also prudent for donors to obtain an “assurance” letter from the recipient group that clarifies many of these points.  These risks should be calibrated, and the assurance letter obtained, before writing the check or sending the wire.