Last week, the Los Angeles Times reported that city lawmakers could soon be deciding on whether to allow nonprofits to be exempt from reporting their lobbying contributions in local government. Nonprofits often seem discouraged from getting involved with local government, fearing they are unable to compete with wealthier opponents like the billion-dollar Koch industry, but could play a crucial role in Los Angeles’ political landscape.
While the law may seem beneficial to the community on the surface, there is one key problem that needs to be considered: Not all nonprofits are created equal. The decision to allow exemptions for all nonprofits is inherently problematic because it fails to consider the difference between smaller organizations and those that act as large corporations.
In fact, this law has the potential to alter how USC participates in the local political sphere. Considering USC’s status as a 501(c)3 registered nonprofit organization, the decision could impact what the University is required to disclose when it comes to lobbying. And while there are numerous benefits to the aforementioned exemptions, they also have the potential to confuse University policy on community matters.
So far, the University has done well in this arena. The USC Office of Government Relations recently stated, “Because governmental decisions have the potential to significantly impact the University, USC frequently participates in the governmental process at the federal, state and local level.”
In the past, laws have required nonprofits to release information on conducted research. But the problem with this rule is that it limits organizations with smaller bandwidth and fewer resources, preventing them from completing even basic research on issues that are crucial to the organization.
There is, however, a legitimate justification for why several organizations have requested that the exemptions include all nonprofits: The law would allow them to function properly and achieve their goals without fear of unintended consequences, such as being vilified by opponents or losing donors because of their categorization as a lobbying group.
But because of the wide range of nonprofits that exist with great diversity in resources, operation, distribution of funds and other factors, an overarching protection for all 501(c)3 registered organizations would not provide the impact that this exemption intends to engender. This blanket exemption would have some positive impact on smaller organizations — but overall, it would primarily prevent larger organizations from being held accountable for their interactions with the government.
Considering the obstacles small nonprofits face — such as lack of resources and political backing — this law would give large nonprofits an unfair advantage over corporations or for-profit organizations with similar intentions.
A 501(c)3 stamp on an organization does not guarantee that all of its lobbying efforts and funding are going directly to public goods. Large nonprofit organizations can get caught up in bureaucracy and politics just as corporations do. If they have the same resources as corporations, they should be held to the same standards.
Instead of an overarching 501c3 protection, a more nuanced solution must be considered. Instating a higher lobbying limit before allowing exemption for nonprofits is one way to differentiate between wealthy nonprofits and smaller ones. As mentioned by the Los Angeles commission, another recommendation is to differentiate nonprofits not by their lobbying contributions, but rather by their annual income — doing so would ensure that even smaller nonprofits would be able to compete with larger organizations without having to shoulder the burden of added regulations under current laws.
Los Angeles has the ability to set a precedent for the way the public holds corporations and government officials accountable for upholding their political interests — and, as mentioned previously, such decisions have the potential to impact USC’s political standing in the community. Therefore, lawmakers must consider a multi-faceted approach to this issue to ensure transparency.