PRESS RELEASE
Monday, Nov. 18, 2002
Contact: James Bopp, Jr., General Counsel
Phone 812/232-2434; Fax 812/235-3685
jboppjr@bopplaw.com, www.jamesmadisoncenter.org

 

Madison Center Will Defend the Right of Certain
Not-for-Profit Ideological Corporations to Contribute to Candidates
Before U.S. Supreme Court
 

The United States Supreme Court today accepted review of a decision, Beaumont v. FEC, in which the James Madison Center won an important victory for not-for-profit ideological corporations against the Federal Election Commission. Earlier in 2002, 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.  The U.S. Supreme Court has now decided to review this decision.

In the 1986 case of FEC v. Massachusetts Citizens for Life ("MCFL"), the U.S. Supreme Court  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.  Thus, the Court held that non-for-profit ideological corporations  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."

"Not-for-profit ideological corporations" 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."

"Perhaps more importantly, this case will provide the Supreme Court an opportunity to answer the question whether not-for-profit advocacy groups are entitled to full participation in our political process," said Bopp.  "Whether it is the prohibition on contributions to candidates, at issue in Beaumont, or McCain-Feingold's prohibition on groups mentioning the name of candidates in broadcast ads 60 days before a general election, at issue in McConnell v. FEC, the issue is the same -- the role of citizens groups in our democracy.  Since the First Amendment was designed to protect citizens groups from restrictions intended to benefit incumbent politicians, these restrictions should be fall," said Bopp.

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 A. Cundiff at 812/232-2434 or dcundiff@bopplaw.com.

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