The political speech of charities in the face of Citizens United: a defense of prohibition.

• Author: Colinvaux, Roger
• Position: II. Does Citizens United Condemn the Political Activities Prohibition? D. A Ban on Speech through Conclusion, with footnotes, p. 721-756

4. A Ban on Speech

   A third factor important to the Citizens United Court was its characterization of the Electioneering Rule as a ban on speech. The Court said that the Electioneering Rule is a ban "notwithstanding the fact that a PAC created by a corporation can still speak." (174) The Court noted that a "PAC is a separate association from the corporation." (175) Therefore, the Court said, the availability of the option to speak through a PAC does not allow the corporation to speak. (176) Setting aside the implications of the assertion that a PAC is a separate association, the point the Court made is quite clear and dovetails with its concern that corporations as corporations are worthy of protection. In effect, what the Court was saying is that speech of the corporation's PAC is not the same as speech by the corporation, and therefore, the ban is a ban.

   The Citizens United Court's conclusion that the Electioneering Rule was a "ban on speech," (177) despite the availability of a PAC-speech option, appears to have rather ominous implications for the Political Activities Prohibition and other tax rules limiting the lobbying and political activity of charities and other exempt organizations. Since the Court's 1983 decision in TWR, it has been commonly understood that segregating speech by use of a PAC or an affiliated organization was an important means to inoculate a rule affecting speech from a constitutional challenge. Justice Rehnquist's majority opinion in TWR referred to such an alternate channel approvingly. (178) Justice Blackmun's concurrence in TWR (joined by two other Justices) was based on the availability of the affiliate structure, and the fact that the IRS did not require more than separate incorporation and minimal record keeping to ensure that tax-deductible contributions were not used for lobbying. (179) Indeed, the one court to consider (and uphold) the constitutionality of the Political Activities Prohibition cited TWR, concluding that a section 501(c)(3) organization had a suitable alternate channel for political activity because a section 501(c)(3) organization could set up an affiliated section 501(c)(4) organization, which in turn could establish a related PAC or political organization to conduct political activity. (180) Of course, the section 501(c)(3) organization must take steps to ensure that the political activities of the PAC are not attributable to the section 501(c)(3) organization.

   Thus, the Court's statement in Citizens United that a PAC is a separate association insufficient to speak for the corporation is hard to square with the Court's statements about alternate channels in the tax context. Indeed, directly applying the Court's statements to the tax context seems to go against separate incorporation as a panacea. Rather, it seems to require that the speech of any separate but related organization be attributable to the original organization.

   One possibility is that the Court's thinking on alternate channels in the tax context has quite simply changed. If so, however, it does not necessarily follow that the Political Activities Prohibition (and for that matter the lobbying limitation) is suddenly unconstitutional. The presence of a sufficient alternate channel seems to be part of the constitutional analysis. (181) But the extent to which an alternate channel for speech was necessary given Congress's broad power to make subsidy decisions has never been clear. (182)

   Further, the Court's statement regarding the insufficiency of PACs is perhaps best viewed in connection with the nature of the Electioneering Rule as a ban on corporate-level speech. Under such a rule, the corporation as corporation was simply prevented (under threat of criminal sanction) from speaking. But it is different for section 501(c)(3) organizations. The Political Activities Prohibition does not prevent the organization from speaking as such (that is, the prohibition is not an entity-level rule); rather it prevents the organization from speaking as a section 501 (c)(3) organization.

   This is not just a matter of semantics. The distinction between an entity-level rule and a tax classification-level rule may be significant for the alternate channel analysis under the First Amendment. In the tax context, the "organization" can be viewed more broadly than the tax classification, that is, the several tax-exemption provisions work as a whole to provide for organization or entity-level speech for tax purposes. (183) The question is whether there is some way for the organization to speak, if not as a section 501(c)(3) organization, then as something else like a social welfare organization or a PAC. (184) Thus, a section 501(c)(3) should not be viewed in isolation but in connection with other tax-exemption provisions. (185) Under the Electioneering Rule, there was no similar alternate structure available, because the ban was an organization-level ban. In other words, the Court in the past has not, and even in the future might not, view a PAC or a social welfare organization as "separate" for purposes of an alternate channel analysis in the tax-exempt organization context.

5. Identity Discrimination

   Citizens United is notable for its elevation of the corporate form as worthy of virtually the same First Amendment protection as individuals. The Court said:

   [T]he Government may commit a constitutional wrong when by law it identifies certain preferred speakers. By taking the right to speak from some and giving it to others, the Government deprives the disadvantaged person or class of the right to use speech to strive to establish worth, standing, and respect for the speaker's voice. The Government may not by these means deprive the public of the right and privilege to determine for itself what speech and speakers are worthy of consideration. The First Amendment protects speech and speaker, and the ideas that flow from each. (186) The Court concluded that corporations, as corporations, have a viewpoint and a fight to speak. (187) Thus, the Electioneering Rule wrongfully singled out the corporation for speech suppression.

   Once again, on its face, the tenor of the Court's words strongly suggest that the Political Activities Prohibition is problematic. If Congress shall make no law singling out certain groups to suppress their speech, then surely, in adding the Political Activities Prohibition to section 501(c)(3) in 1954, Congress targeted section 501(c)(3) organizations for speech suppression just as surely as the Electioneering Rule singled out corporations and barred their speech.

   Yet it is not so straightforward. As a ban on corporate speech, the Electioneering Rule applies at the entity level. (188) The corporate form is generic and a creature of state law. Corporations can and do have many purposes and functions. The corporate form is an archetype of essential legal forms and is considered a "person" for many purposes. (189) In short, the corporation is a foundational category of the legal system. Whether or not one agrees that corporations should have the same speech rights as natural persons, it seems indisputable that the corporate form organizationally is fundamental and that a rule targeting the speech of a corporation is directed at a core identity of the legal system.

   By contrast, section 501(c)(3) (190) is a creature of federal tax law--a tax classification (191)--and not an organizational form. The purposes of a section 501(c)(3) organization are not generic but limited. Because so many organizations take advantage of the tax classification, there are of course many section 501(c)(3) organizations, (192) and section 501(c)(3) organizations certainly form an important part of the economy and society. But the widespread use of section 501(c)(3) does not change its character as a tax classification. As such, the Political Activities Prohibition does not target the speech of section 501(c)(3) organizations as organizations as did the Electioneering Rule. Rather, the Political Activities Prohibition is a condition to receive a particular tax status, not a prohibition directed to the organization per se. (193) Thus, importantly, although section 501 (c)(3) status formally does not survive political speech, the entity retains its identity as a corporation (assuming it was so organized) and may speak. In short, the Political Activities Prohibition is best viewed as a condition of a tax classification and not an identity-based restriction, at least not in the same sense of the Electioneering Rule. Concluding otherwise would extend the Court's concern about identity-based bans on speech beyond the entity level to cover other, arguably lesser, identities such as tax classifications. In other words, if a tax classification has the same First Amendment standing as the more generic legal concept of a corporation, it is not clear where the identity line stops, making speech-based, and perhaps other, distinctions because of tax status problematic.

6. Existing Jurisprudence Supports the Political Activities Prohibition

   On the surface there is language in Citizens United that suggests existential (neigh constitutional) peril for the Political Activities Prohibition. At one point, the Court said bluntly: "No sufficient governmental interest justifies limits on the political speech of nonprofit or for-profit corporations." (194) Facially, there appears to be no contest: a charity typically is a nonprofit corporation and the Political Activities Prohibition is a limit on political speech and therefore, the prohibition is unconstitutional. But, as argued above, such a conclusion is too quick.

   Purpose, sanction, and a ban on corporate speech are the factors that moved the Court in Citizens United to conclude that the Electioneering Rule was a burden on speech and therefore that strict scrutiny applied. (195) With respect to each factor, the hypothetical Our Country and the Political Activities Prohibition is...