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Abstract

Since the Supreme Court’s 2010 decision in Citizens United v. FEC, there has been an explosion in section 501(c)(4) organizations active in politics. Unable to effectively process applications, the IRS mishandled organizations with conservative political ties, producing a scandal from which the agency has yet to recover. It proposed regulations that would have helped it more easily determine eligibility for 501(c)(4) exemption, but after massive public outcry, the regulations were withdrawn. No new regulations will be proposed before the 2016 presidential election.

Given the federal government’s inability to address the problem of dark money politicking by 501(c)(4) organizations through either federal tax law or federal election law, this article considers whether state nonprofit law can fill that gap. It describes the efforts taken by California and New York to limit the influence of out-of-state anonymous money in state elections, and considers the policies that states might pursue in regulating politicking by nonprofits under their jurisdiction. While it argues that states are appropriately concerned about protecting charities from the taint of political non-charitable nonprofits, and legitimately concerned about protecting donors to all nonprofits, it is ultimately skeptical of the states’ ability to protect charities, donors, and voters.

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