De Blasio controversy is giving nonprofits a bad name

Nonprofits have been dominating New York City news coverage lately. But not for their efforts to stem the homelessness crisis, or for their work with young people with disabilities, or for their care of older adults and other vulnerable populations. These nonprofits – established by allies of Mayor Bill de Blasio and supporting his agenda – have been in the news for accepting financial contributions from individuals and entities that have business before the city.

Every time another tendril of this controversy unfurls, the term nonprofit is bantered about in a way that is beginning to sound, at least to those who care about the sector, more and more like a curse.

“Court Is Asked to Compel de Blasio Nonprofit to Heed Subpoena,” “Federal Probe Expands to Nonprofit Tied to New York Mayor Bill de Blasio” the headlines scream.

Who wouldn’t want to distance themselves from this growing menace that seems to be, once again, underscoring the public’s greatest fears about nonprofits – that they are abusing their tax-exempt status and misusing funds in their care? So I feel it is important, as often and as thoroughly as possible, to make the distinction between political nonprofits and the rest of the sector. When that distinction is not made, the nonprofit sector as a whole – one that is already struggling to build public trust and sustain its fiscal health – wears the negative press of all these new scandals like an albatross around the neck.

It is true, the organizations at the heart of the alleged wrongdoing on behalf of the mayor’s agenda are nonprofits. But they are not human services nonprofits working with limited resources to help new immigrants learn the English language or low-income teens get into college. These are political nonprofits – 501(c)4s. They are tax exempt, but exist for very different reasons than 501(c)(3)s. According to the IRS, 501(c)(3) nonprofits are granted exemptions for “charitable, religious, educational, scientific,” and other such purposes. They are charitable organizations – where “charity” is defined as including “relief of the poor, the distressed, or the underprivileged,” among other tasks. They are severely limited in the amount of political lobbying they can participate in and are forbidden from being organized or operated for the benefit of private interests.

501(c)(4) organizations, on the other hand, are social welfare organizations that may lobby as their primary activity without jeopardizing their tax-exempt status. Funds in their care are sometimes referred to as “dark money” because 501(c)(4)s can receive unlimited contributions from corporations, individuals, or unions without making the source of these donations public. They can even inform “the public and policymakers about legislative and public policy options” – as Campaign for One New York’s certificate of incorporation declares – as long as their actions pass muster with the Conflict of Interest Board. (Whether the COIB has the enforcement capability to regulate dark-money nonprofits is another story.)

It remains to be seen whether anyone related to de Blasio’s 501(c)(4)s will be charged with wrongdoing, but there’s already much wrong being done to the reputation of well-meaning human services agencies across the state as the press gives the play-by-play on this unfolding drama.

How can we address this? The harm could be ameliorated somewhat if the media is consistently careful to specify in headlines and throughout their news copy that “de Blasio’s nonprofits” are 501(c)(4) political nonprofits. At New York Nonprofit Media, we have made the editorial decision not to cover the activities of these “dark money” nonprofits, because we find their work and intent to be significantly different from the primarily human services nonprofits we cover. Our sister publication, City & State, is careful to call these entities “political nonprofits” in its headlines and draw the distinction throughout its stories.

These choices – being made right now at editorial desks across the state about a story that’s likely to be in the public eye for quite a bit longer – are significant in that they can be used to make subtle distinctions among nonprofits and help prevent the entire sector from being painted with the same scandalous brush.

So, to all who are in the business of choosing words, I implore you to choose well when you cover this issue. And for the sake of every well-meaning nonprofit in the state, I can only hope your choices help the public make that distinction, too.