Think Progress, the reporting arm of the Center for American Progress, is out with a big story today about how the U.S. Chamber of Commerce raises hundreds of thousands of dollars from foreign nationals and corporations.
The Chamber is in the midst of a $75 million midterm ad campaign focused largely on supporting Republican candidates and has aired more than 8,000 ads so far. It also lobbied heavily against health care reform and financial reform.
The Chamber has raised hundreds of thousands through its international branches, called AmChams, in India, Egypt, Bahrain and elsewhere around the world. As TP points out, on the web site of its Indian operation, the Chamber’s U.S.-India Business Council writes that it “can play a helpful role in guiding U.S. companies to India.” Members of these mini-Chambers, who include foreign nationals and corporations, pay thousands in yearly dues.
According to federal election law, “foreign nationals are prohibited from contributing, donating or spending funds in connection with any federal, state, or local election in the United States, either directly or indirectly.” It is also illegal to “solicit, receive or accept contributions or donations from them.”
The Chamber is not organized as a PAC or political campaign. Instead, it’s organized under the IRS as a 501(c)(6), or “business league.” We have a request in to the IRS to explain whether business leagues can accept contributions from outside the U.S., but it appears that they can.
But they still engage in political activity and lobbying. That’s allowed under IRS rules, although such activity can’t be a business league’s “primary activity.”
If the Chamber is breaking campaign law by soliciting election donations from foreign nationals, it’s unlikely the IRS or the FEC will go after them. From a New York Times story this September about the Karl Rove-backed nonprofit called Crossroads:
The chances, however, that the flotilla of groups will draw much legal scrutiny for their campaign activities seem slim, because the organizations, which have been growing in popularity as conduits for large, unrestricted donations among both Republicans and Democrats since the 2006 election, fall into something of a regulatory netherworld.
Neither the Internal Revenue Service, which has jurisdiction over nonprofits, nor the Federal Election Commission, which regulates the financing of federal races, appears likely to examine them closely, according to campaign finance watchdogs, lawyers who specialize in the field and current and former federal officials.
