Testimony of Bill de Blasio Public Advocate for the City of New York New York State Office of the

Attorney General Public Hearing on Political Disclosure Regulations for Nonprofits January 15, 2013

Good Afternoon. I would like to thank the Attorney General for holding this important public hearing today. This is an issue that I care about deeply and have worked on closely. As Public Advocate for the City of New York, I serve as ombudsman for more than eight million residents in the five boroughs. My office holds government, private corporations and nonprofits accountable to the law and helps to protect New Yorkers against fraud and deception. In my role as the Citys head watchdog, I have been deeply concerned by the rise of new shadowy nonprofit organizations that emerged in response to the Supreme Courts 2010 ruling on Citizens United v. Federal Election Commission. In recent years, the nonprofit sector has struggled at the hand of a challenging economy. There are 60,000 fewer public charities and private foundations today, compared to January 2010. However, for one segment of nonprofits 501(c)4 advocacy organizations and 501(c)6 trade associations the last three years have been a boon for business. In fact, the number of organizations registered under section 501(c)4 and 501(c)6 of the IRS Code have increased 10% since January 2010, thanks to Citizens United.1
1

National Center for Charitable Statistics (NCCS) at the Urban Institute. Online at http://nccs.urban.org/.

In the last two elections, these groups have spent more money trying to influence voters than all the political action committees combined with much of this spending finding its way into the negative attack ads that Americans despise. 2 Despite their growing role in our elections, we know very little about this new breed of social welfare groups. They often hide behind ambiguous names for example: Americans for Prosperity, the Citizen Awareness Project and Freedom Path.3 They are often registered at obscure Post Office boxes, and many have yet to submit a tax filing to the IRS.4 These sham nonprofits are not only a threat to our democracy but also to the integrity of our nonprofit sector. Let me give you an example of the type of deceptive practices we should worry about and I believe we can prevent with the Attorney Generals regulations. Theres a tax-exempt nonprofit organization with headquarters in Virginia called the 60 Plus Association. As the name suggests the organization focuses senior issues and presumably fundraises heavily from individuals who fit this 60+ demographic. If you look at the organizations IRS tax filings, they indicate a mission to educate, inform and provide resources to aid senior citizens in protecting their rights.5 It sounds like exactly the type of organization that many seniors would like to support. And if you peruse the organizations website you wont find a single mention of the 60 Plus Associations
2

Jonathan Salant, 2012 Campaign Negative as Seemed. Bloomberg, November 15, 2012. Online at http://go.bloomberg.com/politicalcapital/2012-11-15/2012-campaign-negative-as-seemed/ And 2012 Outside Spending, by Groups, The Center for Responsive Politics. Online at http://www.opensecrets.org/outsidespending/summ.php?disp=O 3 2012 Outside Spending, by Groups, The Center for Responsive Politics. Online at http://www.opensecrets.org/outsidespending/summ.php?disp=O 4 Lee Drutman, Dark money in the 2012 elections (so far), Sunlight Foundation. July 16, 2012. Online at http://sunlightfoundation.com/blog/2012/07/16/dark-money/
5

60 Plus Association Inc., IRS Form 990 for fiscal year 2010, filed March 20, 2012. Online at http://www.guidestar.org/FinDocuments/2010/541/564/2010-541564919-08108d83-9OA.pdf

involvement in elections or their support for particular candidates. 6 However, the 60 Plus Association has a dirty little secret. The organization spent more than $10 million on the last two federal elections including more than $800,000 in attack ads targeting a dozen New York candidates. It is appalling to think that one of my elderly neighbors could be tricked into giving money to an organization under false pretense and these donations could wind up funding the dirty campaign ads that they so deeply loathe. What may be equally deceptive is that these attack ads often have zero direct relevance to senior issues. One such television ad that was broadcast in upstate New York this last fall, for example, showed stacks of money painted with the Chinese flag while explaining that Congressman Dan Maffei should be fired for his failure to stop billions in government borrowing from China.7 It is past time to shine a public spotlight on political committees that masquerade as taxexempt nonprofits. We know that the vast majority of social welfare groups, such as volunteer fire departments, Rotary clubs, veterans organizations, and community groups provide great benefit to our society. These sham nonprofits do not. Lets not allow a few bad apples undermine public trust and spoil the great work being done at charities and civic groups across New York. To quote U.S. Supreme Court Justice Louis Brandeis, I believe strongly that sunlight is the best disinfectant and thats exactly what we need here. The Attorney Generals proposed regulations are essential to protecting New Yorkers and bringing much needed transparency to our elections. I applaud this work and urge you to quickly move forward on these reforms. Thank you.

6 7

60 Plus Association Inc. website. Online at http://60plus.org/

Dan Maffei Very Good, Television advertisement by the 60 plus Association on YouTube. Online at http://www.youtube.com/watch?v=v1khzHucQXQ&feature=share&list=UUcX-wx627-WaOL50cd_HlOQ