Does the Citizens United Decision Affect Not-for-Profit Organizations?
In its highly divisive 5-4 opinion in Citizens United v. FEC, the Supreme Court dramatically altered the framework regulating corporate speech during federal elections. Released on January 21, 2010, the Court’s decision struck down legislative and judicial restrictions that have been in place for decades, preventing corporations and labor unions from using general treasury funds on political speech during federal elections. In addition to directly impacting for-profit corporations and labor unions, this case will have a substantial effect on the not-for-profit sector.
The case arose when Citizens United—a 501(c)(4) organization—used general treasury funds to produce a movie highly critical of then-Presidential candidate Hillary Clinton, and then sought to air the movie through video-on-demand services several weeks before the 2008 election. The Federal Election Commission, and subsequently the lower courts, determined that the movie expressly advocated against voting for Hilary Clinton, thus violating the independent expenditure prohibition contained in the Bipartisan Campaign Reform Act of 2002, commonly known as McCain-Feingold Bill.
Prior to Citizens United, if a corporation spent money advocating for or against a candidate during federal elections, it could only do so using funds voluntarily given by individual officers or employees to separate political action committees (PACs or Section 527 organizations). Similarly, labor unions could only use funds voluntarily given by individual union members. Now, as a result of Citizens United, corporations—including certain not-for-profit corporations, such as issue-based 501(c)(4)s and 501(c)(6)s—can use general treasury funds to make independent expenditures expressly advocating for or against candidates in federal elections. The decision left unchanged, however, the existing limits on direct or in-kind contributions to candidates and the required disclosures for corporations making independent advertisements.
