PRESS RELEASE
Tuesday, Jan. 29, 2002
Contact: James Bopp, Jr., General Counsel
Phone 812/232-2434; Fax 812/235-3685
jboppjr@bopplaw.com, www.jamesmadisoncenter.org
 

On January 25, the James Madison Center won an important victory for not-for-profit ideological corporations against the Federal Election Commission in a case called Beaumont v. FEC. The United States Court of Appeals for the Fourth Circuit held a federal ban on corporate contributions to candidates was unconstitutional as applied to not-for-profit ideological corporations, such as Plaintiff North Carolina Right to Life.

In the 1986 case of FEC v. Massachusetts Citizens for Life ("MCFL"), the United States Supreme Court had held that not-for-profit ideological corporations like MCFL posed no threat of the corruption of the electoral system that justified limits on independent expenditures (i.e., expenditures advocating the election or defeat of a candidate made without coordination with the candidate) by business corporations, so they must be exempted from a federal corporate independent expenditure ban.

In Beaumont, the  Fourth Circuit applied that rationale to contributions to candidates. Because not-for-profit ideological corporations pose no corruption threat, then nothing justified prohibiting them from also making contributions. Requiring them to do so through  political action committees "could effectively cripple small, nonprofit advocacy groups that may have few or no ties to the world inhabited by for-profit corporations." The Court concluded that any "congressional interest in minimizing corruption" was adequately addressed by the $1,000 limitation on contributions to a candidate.

In order to qualify for the MCFL exception to the FEC's ban on corporate independent expenditures and contributions, the not-for-profit ideological corporation must: (1) not engage in profit-making activity, (2) have no shareholders or other persons who might have a claim on its assets and earnings, (3) be exempt from federal income taxation, and (4) either not accept business corporation donations or  be funded overwhelmingly by private, individual donations.

James Madison Center general counsel James Bopp, Jr., who represented the Plaintiffs against the FEC in the case, declared the case "a significant expansion of the ability of not-for-profit corporations to engage in political activity." "The ability of such corporations to do independent expenditures has long been recognized," he noted, "but now it is clear that they can also make direct political contributions, subject to the $1,000 contribution limit."

The opinion is available online at http://pacer.ca4.uscourts.gov/cgi-bin/getopn.pl?OPINION=011348.P  (or enter through http://www.law.cornell.edu/  and follow the menus to Fourth Circuit opinions and search on "Beaumont"). A PDF version or photocopy of the opinion may be obtained by request to Deborah Cundiff at 812/232-2434 or dcundiff@bopplaw.com.

To unsubscribe from the James Madison Center for Free Speech e-mail list, please send an e-mail message with "UNSUBSCRIBE" as the subject to: dcundiff@bopplaw.com.