Shareholders of Aetna and Anthem have rejected measures to require the companies to disclose their donations to 501(c)(4) “social welfare” organizations.
In 2012, Aetna accidentally disclosed that it had given more than $7 million to two groups working to defeat the Affordable Care Act, the American Action Network and the US Chamber of Commerce; after this revelation, some shareholders were reportedly “dismayed” at the company’s donations. The International Business Times reported this week that the Connecticut regulator charged with approving a $54 billion merger of Anthem and Cigna is a former lobbyist for Cigna with extensive family ties to the company. According to the Center for Responsive Politics, the health insurance industry spent $73 million on lobbying in 2015, and their PACs and employees have given $13 million to candidates, parties and PACs so far in the 2016 cycle.
501(c)(4)s are technically “social welfare organizations,” but they can engage in political activity, as long as it’s not their “primary activity” (which nonprofit attorneys have interpreted to mean up to 49 percent of their spending). They don’t have to disclose their donors; however, if they run ads explicitly advocating for or against a candidate, they must report these to the Federal Election Commission. Political spending by 501(c)(4)s has continued to grow in recent years.
Despite this growth, the IRS has been unwilling, or unable, to enforce the law. Earlier this year, the IRS granted nonprofit status to Crossroads GPS, a dark money group founded by conservative operative Karl Rove that spent more than $47 million on political ads in the 2014 cycle. The IRS has been particularly unwilling to act on political nonprofits since the 2013 Tea Party targeting scandal, and a rider attached to the omnibus spending bill passed at the end of 2015 actually prevents the IRS from making new rules to clarify its standard for these groups. This perpetuates the status quo, where a paralyzed IRS does little to nothing to provide oversight of these groups.
The same bill also prevented the Securities and Exchange Commission (SEC) from rulemaking on political donations by corporations. That proposed rule has received more than 1 million public comments — though, as Democratic senators pointed out after the bill’s passage, the SEC can still develop and investigate the rule, even though they can’t finalize it.
While some large companies, like Twitter, voluntarily disclose their political spending, reform advocates note that voluntary policies like these “do not hold the promise of a permanent, comprehensive solution” because of a lack of consistent, timely reporting and no real mechanism for enforcement.
But in the absence of an agency willing to enforce the law, or an SEC rule, voluntary compliance of shareholder motions like those at Aetna and Anthem are the few routes to disclosure for those concerned about corporate dark money.