Politicized Philanthropy: Progressive Nonprofits Swaying Elections

January 2, 2025

In the increasingly complex world of modern philanthropy, nonprofit organizations have long played a crucial role in addressing various societal issues. However, a controversial trend has emerged in recent years, particularly among progressive nonprofits, which have become deeply intertwined with Democratic Party election strategies. This intersection of charity and politics raises significant questions about the implications of such activities and the need for policy reforms to ensure nonprofits adhere to their intended purpose. Steve Miller’s article in RealClearInvestigations, published on December 12, sheds light on these concerns and evaluates potential regulatory changes to address the issue.

The Intersection of Nonprofits and Politics

Leveraging Tax-Exempt Status for Political Gain

The nonprofit sector in the United States benefits significantly from tax advantages that are intended to support charitable activities. However, Steve Miller’s article reveals a troubling trend where progressive nonprofit organizations leverage these tax exemptions to support partisan political activities, skirting legal restrictions. These organizations utilize their tax-exempt status to selectively engage in voter participation and education efforts that align with Democratic Party interests, thereby influencing election outcomes while technically staying within the bounds of the law. This practice raises questions about the integrity of the nonprofit sector and the potential need for stricter regulations to prevent such political entanglement.

The Infrastructure of Progressive Nonprofits

The infrastructure supporting progressive nonprofits is extensive, comprising both operational entities directly involved in these activities and grantmaking institutions that strategically distribute resources to favored causes and candidates. This multifaceted network allows progressive nonprofits to outnumber and outspend their conservative counterparts, creating an imbalance in the political influence exerted by different ideological groups. Bradley Smith, Chair of the Institute for Free Speech, emphasizes the significant financial and organizational advantages that progressive nonprofits hold over conservative ones, further highlighting the need for a critical examination of the current nonprofit landscape and its impact on the political arena.

The Progressive Monoculture in Philanthropy

The Overwhelmingly Partisan Nature

Bill Schambra, a co-editor for Giving Review, characterizes contemporary philanthropy, especially from a progressive perspective, as an “oppressively arid, progressive monoculture.” This description accurately reflects the overwhelmingly partisan nature of current nonprofit philanthropy, which poses considerable challenges for conservative philanthropists. The lack of ideological diversity within the nonprofit sector can limit the effectiveness of conservative philanthropic efforts, as they must navigate a landscape dominated by progressive agendas. Addressing this imbalance requires a recognition of the existing challenges and a concerted effort to foster a more inclusive and diverse philanthropic environment.

Legislative and Policy Responses

Acknowledging the growing influence of tax-exempt entities within the U.S. political framework, the House Ways and Means Committee’s Subcommittee on Oversight held a hearing on December 12 to discuss potential legal and regulatory reforms. The proposals put forth during the hearing aim to mitigate the partisan exploitation of nonprofit tax exemptions. Among the suggested reforms were bans on foreign contributions to tax-exempt nonprofits, restrictions on contributions to political super PACs from social-welfare nonprofits accepting foreign funding, prohibitions on private foundations and public charities participating in voter-registration drives, and forbidding private contributions toward state and local election administration. Additionally, there was a call to overhaul IRS Forms 990 and 990-PF to include more detailed information about “fiscally sponsored” projects. These proposed measures represent a significant step toward addressing the politicization of the nonprofit sector.

The College Endowment Accountability Act

Senator J.D. Vance’s Proposal

In response to the concerns raised about the partisan involvement of tax-exempt entities, Senator J.D. Vance introduced the College Endowment Accountability Act just two days after Miller’s article was published and the House hearing took place. This proposed legislation seeks to significantly increase the tax rate on substantial endowment net investment income for private, secular colleges and universities, raising it from 1.4% to 35%. The rationale behind this proposal is to address the outsized influence and independence of these institutions, which have become detached from external political, financial, and public pressures. By subjecting these wealthy institutions to higher taxes, the Act aims to hold them more accountable and ensure they contribute fairly to society.

Historical Context and Broader Implications

The current 1.4% tax rate on college endowment net investment income was established by the Tax Cuts and Jobs Act of 2017. University of Kentucky law professor Jennifer Bird-Pollan, in her analysis of this tax, suggested that it opens the door to broader discussions about taxing large nonprofit endowments beyond just higher education institutions. This historical context is crucial in understanding the implications of Vance’s proposed tax increase and the broader movement to reassess nonprofit tax privileges. By examining the impact of existing tax policies and the potential benefits of more stringent regulations, policymakers can better address the accumulation of wealth and influence by massive nonprofit endowments.

Reassessing Nonprofit Tax Privileges

Incremental Policy Measures

The 2020 Further Consolidated Appropriations Act, which set a flat 1.39% excise tax rate on private-foundation endowments, reflects a growing recognition of the need to address the accumulation of wealth and influence within the nonprofit sector. Vance’s bill echoes similar sentiments, representing an incremental yet substantial policy measure aimed at ensuring nonprofits use their resources in alignment with their charitable purposes. By implementing these measures, policymakers can address the disparities within the nonprofit sector and ensure that tax-exempt privileges are not exploited for partisan political gain.

Vance’s Broader Vision

Senator Vance’s broader vision extends beyond just targeting wealthy universities. Prior to his Senate run, Vance proposed sweeping nonprofit tax reforms to curtail the influence of entities promoting divisive ideologies. He argued that such organizations should not receive taxpayer subsidies and advocated for heavier taxation of these nonprofits. Additionally, Vance suggested that charitable organizations with endowments exceeding $100 million should be required to allocate at least 20% of their endowments annually or face the loss of their preferential tax status. This proposal underscores the need to reevaluate the justification for granting tax advantages to well-endowed institutions that may not serve the broader interests of taxpayers.

The Future of Philanthropy and Politics

The Role of Conservative Philanthropy

The intersection of philanthropy and politics raises pivotal questions for conservative philanthropists, who must reassess the role and purpose of their charitable efforts. With the increasing politicization of the nonprofit sector, conservatives face the challenge of navigating a landscape dominated by progressive agendas. This necessitates considering whether subtle regulatory reforms or bold policy interventions are needed to restore the traditional understanding of charity, free from political machinations. By addressing these concerns, conservative philanthropists can work towards fostering a more balanced and inclusive philanthropic environment that upholds the integrity of charitable activities.

Reconceptualizing Nonprofit Tax Privileges

In today’s complex landscape of modern philanthropy, nonprofit organizations have long been essential in tackling various societal challenges. However, a controversial trend has been observed over recent years, especially among progressive nonprofits aligning closely with Democratic Party election strategies. This fusion of charitable work and political agendas brings forth critical questions about the impacts of these activities and the necessity for policy reforms to ensure that nonprofits stay true to their core missions.

Steve Miller’s article in RealClearInvestigations, published on December 12, sheds significant light on these concerns. Miller meticulously explores the growing entanglement between nonprofits and partisan politics, particularly the ways in which progressive organizations have intertwined their charitable efforts with Democratic electoral goals. This blending of roles complicates the traditional mission of nonprofits, raising ethical and legal concerns about their true purpose and operational transparency.

Moreover, Miller’s analysis highlights the potential need for regulatory changes to address this issue. There is a growing call for updating policies to ensure that nonprofits maintain their intended focus on social welfare without becoming de facto political entities. By doing so, the core mission of addressing societal issues can remain unmarred by partisan interests, preserving public trust in nonprofit organizations.

In sum, as nonprofits continue to play a vital role in society, it is essential to scrutinize and potentially reform policies to keep their activities aligned with their foundational goals, steering clear of political entanglement that risks undermining their mission and public trust.

Subscribe to our weekly news digest.

Join now and become a part of our fast-growing community.

Invalid Email Address
Thanks for Subscribing!
We'll be sending you our best soon!
Something went wrong, please try again later