[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]






                               

 
                  HEARING ON GROWTH OF THE TAX-EXEMPT
                 SECTOR AND THE IMPACT ON THE AMERICAN
                          POLITICAL LANDSCAPE

=======================================================================

                                HEARING

                               before the

                       SUBCOMMITTEE ON OVERSIGHT

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           DECEMBER 13, 2023

                               __________

                          Serial No. 118-OS05

                               __________

         Printed for the use of the Committee on Ways and Means
         
         
         
         
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                          ______

             U.S. GOVERNMENT PUBLISHING OFFICE 
 55-787          WASHINGTON : 2024








                      COMMITTEE ON WAYS AND MEANS                     
                      
                      

                    JASON SMITH, Missouri, Chairman
VERN BUCHANAN, Florida               RICHARD E. NEAL, Massachusetts
ADRIAN SMITH, Nebraska               LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania             MIKE THOMPSON, California
DAVID SCHWEIKERT, Arizona            JOHN B. LARSON, Connecticut
DARIN LaHOOD, Illinois               EARL BLUMENAUER, Oregon
BRAD WENSTRUP, Ohio                  BILL PASCRELL, Jr., New Jersey
JODEY ARRINGTON, Texas               DANNY DAVIS, Illinois
DREW FERGUSON, Georgia               LINDA SANCHEZ, California
RON ESTES, Kansas                    BRIAN HIGGINS, New York
LLOYD SMUCKER, Pennsylvania          TERRI SEWELL, Alabama
KEVIN HERN, Oklahoma                 SUZAN DelBENE, Washington
CAROL MILLER, West Virginia          JUDY CHU, California
GREG MURPHY, North Carolina          GWEN MOORE, Wisconsin
DAVID KUSTOFF, Tennessee             DAN KILDEE, Michigan
BRIAN FITZPATRICK, Pennsylvania      DON BEYER, Virginia
GREG STEUBE, Florida                 DWIGHT EVANS, Pennsylvania
CLAUDIA TENNEY, New York             BRAD SCHNEIDER, Illinois
MICHELLE FISCHBACH, Minnesota        JIMMY PANETTA, California
BLAKE MOORE, Utah
MICHELLE STEEL, California
BETH VAN DUYNE, Texas
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio

                       Mark Roman, Staff Director
                 Brandon Casey, Minority Chief Counsel

                                 ------                                

                       SUBCOMMITTEE ON OVERSIGHT

                  DAVID SCHWEIKERT, Arizona, Chairman
BRIAN FITZPATRICK, Pennsylvania      BILL PASCRELL, New Jersey
GREG STEUBE, Florida                 JUDY CHU, California
CLAUDIA TENNEY, New York             BRAD SCHNEIDER, Illinois
MICHELLE FISCHBACH, Minnesota        SUZAN DelBENE, Washington
BETH VAN DUYNE, Texas                GWEN MOORE, Wisconsin
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York

                         C  O  N  T  E  N  T  S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Hon. David Schweikert, Arizona, Chairman.........................     1
Hon. Bill Pascrell, New Jersey, Ranking Member...................     2
Advisory of December 13, 2023 announcing the hearing.............     V

                               WITNESSES

Justin Chung, Legislative Attorney, Congressional Research 
  Service........................................................     9
Scott Walter, President, Capital Research Center.................    22
Stewart Whitson, Legal Director, Foundation for Government 
  Accountability.................................................    33
Philip Hackney, Associate Professor of Law, University of 
  Pittsburgh.....................................................    39

                    MEMBER QUESTIONS FOR THE RECORD

Member Questions for the Record and Responses from Justin Chung, 
  Legislative Attorney, Congressional Research Service...........    98
Member Questions for the Record and Responses from Scott Walter, 
  President, Capital Research Center.............................   101
Member Questions for the Record and Responses from Stewart 
  Whitson, Legal Director, Foundation for Government 
  Accountability.................................................   126

                   PUBLIC SUBMISSIONS FOR THE RECORD

Public Submissions...............................................   134

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    GROWTH OF THE TAX-EXEMPT SECTOR AND THE IMPACT ON THE AMERICAN 
                          POLITICAL LANDSCAPE

                      WEDNESDAY, DECEMBER 13, 2023

                  House of Representatives,
                         Subcommittee on Oversight,
                               Committee on Ways and Means,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 2:02 p.m. in 
Room 1100, Longworth House Office Building, Hon. David 
Schweikert [Chairman of the Subcommittee] presiding.
    Chairman SCHWEIKERT. So let's actually go ahead and start 
ourselves.
    Good afternoon. Welcome to today's Oversight Subcommittee 
hearing on the growth of tax-exempt sector and the impact on 
the American political landscape. If I could have altered that 
title a little bit, I would have actually gone with The Use of 
Pre-tax Money in These Types of Activities, because that is 
also part of one of my fixations.
    Today we would like to hear from our panel of expert 
witnesses about the growth and changes the tax-exempt sector 
has undergone as well as discuss some political activities of 
these organizations.
    We have read several articles about large sums of money, to 
the tune of millions and millions of dollars, flowing from 
foreign nationals into U.S.-based 501(c)(3)s and 501(c)(4)s, 
which have directed these funds into influencing American 
politics. While U.S. law makes it illegal for foreign nationals 
to donate directly to U.S. candidates for office, it seems 
these actors have found loopholes. This would raise eyebrows 
for all Americans.
    At the same time, I would like to emphasize that Americans 
have a First Amendment right to contribute to these 
organizations with their privacy intact. Under current law, and 
I want to walk through a scenario, and this was as much for all 
of us to sort of think through the exposure: under current law, 
if Vladimir Putin were to donate money tomorrow to a U.S. based 
501(c)(4), the organization is not required to disclose the 
source of those funds. Hypothetically, this organization could 
subsequently direct this money to a super PAC that could help 
directly elect a candidate for U.S. office, for Federal office.
    Some of our colleagues on the other side of this have 
argued that Republicans are the drivers of dark money spending. 
But I would like to point out the fact about Democrats' use of 
sophisticated dark money networks in the hopes that they remain 
intellectually consistent as we have this discussion. According 
to Open Secrets, total dark money spending data from the 2020 
election cycle shows that there were nearly 2-and-a-half times 
more left-wing money than Republican money. While some 
Democrats have called for closure of these loopholes, Open 
Secrets has noticed that this hasn't stopped those very folks 
calling for the closure of the loopholes from using these 
loopholes.
    CNN reported that during the 2020 presidential cycle Mr. 
Biden enjoyed six times the amount of dark money that the 
former President did. Mr. Biden had nearly $123 million of dark 
money that backed his bid, as opposed to 22 million that backed 
former President Trump. It wasn't just the 2020 presidential 
cycle, though. The Democrat dark money advantage in 2018, 2019 
mid-term elections continue.
    I hope our witnesses today can educate us about where they 
are, where there are vulnerabilities to allow this pre-tax 
money to flow into things that intellectually, at least, as we 
believe in the intent of the law, are inappropriate.
    Chairman SCHWEIKERT. And with that I yield to my ranking 
member.
    Mr. PASCRELL. Thank you, Mr. Chairman. I would like to 
start today with just a brief history lesson.
    Chairman SCHWEIKERT. I couldn't stop you if I wanted to.
    Mr. PASCRELL. It has been over 13 years since the Supreme 
Court unleashed a tidal wave of dark money into politics 
through the disastrous--or what I consider--a Citizens United 
decision. And it was quite a controversy after that decision 
and up to this day.
    We have seen political 501(c)(4)s, particularly--the 
chairman has mentioned those organizations pour over $1 billion 
into Federal elections, every dollar, without any requirement 
to disclose the funding source. I think, if you listened to the 
chairman, he was very precise about that. My colleagues, my 
friends on the other side of the aisle, are making today about 
targeting tax-exempt organizations that don't align with their 
politics.
    Mr. Chairman, I ask unanimous consent to enter into the 
record an op ed in the Los Angeles Times entitled, 
``Republicans now want to investigate tax exempt groups, just 
not their own,'' if I may.
    Chairman SCHWEIKERT. So ordered.
    [The information follows:]
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    Mr. PASCRELL. All right. For a decade the other side hailed 
the Supreme Court's hideous decision. I think it is a hideous 
decision, you don't.
    Chairman SCHWEIKERT. Actually, I----
    Mr. PASCRELL. You are not so sure. Okay. To toss out a 
century of campaign finance law and open up the floodgates to 
unlimited dark money in our elections.
    Look, neither side is privy to virtue on this stuff. I have 
been saying that all along. However, I would like to change the 
Supreme Court's mind about that, because I know it has opened 
up for everybody. That is what I am talking about today.
    In the aftermath of Citizens United, I introduced 
legislation to keep foreign influence out of American 
elections. You didn't remember that. My bill would have 
prevented corporations controlled by foreign actors from making 
any contributions to our elections. It got almost no Republican 
support. That doesn't make them bad people, but it got no 
support from the other side except one or two.
    After it was included in a democratic package to promote 
transparency, it died through a filibuster in the Senate.
    Chairman SCHWEIKERT. We didn't do it.
    Mr. PASCRELL. And when the IRS tried to crack down on dark 
money a decade ago, the other side created a fake scandal to 
falsely claim conservative groups. Don't get me started on the 
Lerner case, because people's private information was given to 
the public, and 6103 is pretty specific about that. It pertains 
to both sides, Democrats and Republicans.
    So, despite a comprehensive TIGTA report in 2017 finding no 
unfair targeting, an appropriations rider pushed by the other 
side the Republicans have blocked the IRS from issuing 
regulations governing the very spending that you talked about 
in your opening statement. That is a fact. I hope my colleagues 
across the aisle will support finally allowing the IRS to do 
its job.
    There is a common ground to be found on tax-exempt 
oversight. I personally believe it, or else I wouldn't say it. 
But I am not optimistic, based on the testimony we are 
expecting here in the openly partisan manner by which this 
hearing was conceived.
    Mr. PASCRELL. Thank you, Mr. Chairman, and it is good to 
see you today.
    Chairman SCHWEIKERT. And, Mr. Pascrell, I want to 
congratulate you on your ceremony you have happening today. And 
with that I would actually like to reach out for a few minutes 
from the chairman of the full committee.
    Chairman SMITH. Thank you, Chairman Schweikert, Ranking 
Member Pascrell. It is great to be with you all.
    The number of tax-exempt organizations in this country has 
seen massive growth in recent years. That has coincided with a 
huge influx of capital. Today there is almost 3 times the 
number of charities in the United States compared to 30 years 
ago. In the last 15 years, employment by non-profits has 
increased by over 30 percent. By comparison, jobs in the 
private sector overall only increased by 9 percent in the same 
period.
    The question is what is behind the explosion of these 
organizations in the United States, and for what purposes?
    A chief concern is the money from foreign nationals that 
appears to be pouring into tax-exempt organizations, while at 
the same time those same organizations are seeking to influence 
American politics. Foreign nationals are prohibited from 
directly donating to campaigns or outside political groups. 
However, there is evidence that some individuals are acting 
like a wolf in sheep's clothing and setting up tax-exempt 
organizations for the purposes of affecting our political 
process.
    For example, a Swiss billionaire has reportedly given 
hundreds, hundreds of millions through tax-exempt organizations 
that were focused on promoting then-candidate Joe Biden's 
agenda. This wealthy individual's organizations are part of a 
broader network run and operated by an umbrella organization 
called Arabella Advisors that have formed a key part of the 
Democrat Party's political infrastructure in recent years.
    Other billionaires have tried to influence elections 
through a supposedly charitable back door. During the 2020 
election, Mark Zuckerberg donated 328 million to 501(c)(3) 
organizations that funded state and local election offices in 
ways that may have helped one political party over another.
    Americans should be concerned that wealthy foreign 
nationals are using America's tax code to conceal their 
attempts to influence the American political process, despite 
being prohibited from donating directly to campaigns. The only 
people that should be influencing the outcomes of American 
elections are Americans.
    As we explore these issues, I want to note the importance 
of privacy protections for Americans who donate to tax-exempt 
groups. As we protect our electoral process from foreign 
influence, we cannot sacrifice or risk donor privacy for 
Americans.
    I am pleased we are having this hearing today, and I am 
grateful to our witnesses for sharing their expertise with us. 
I would note that two of our witnesses submitted formal 
responses to the request for information we put out earlier 
this year. My hope is that today's hearing will help us better 
understand the growth of the tax-exempt sector and its impact 
on American politics.
    Chairman SMITH. I yield back, Mr. Chairman.
    Chairman SCHWEIKERT. Thank you, Mr. Chairman. And just a 
slight point of personal privilege, thank you for letting me do 
a couple of these more technical hearings of areas of personal 
interest. I think it is good public policy to delve into these. 
So thank you, Mr. Chairman. We are now going to introduce the 
witnesses.
    Justin Chung is legislative attorney for the Congressional 
Research Services.
    Scott Walter is president of Capital Research Center.
    Stewart Whitson is legal director at the Foundation for 
Government Accountability.
    Philip Hackney is associate professor of law at the 
University of Pittsburgh.
    Thank you for joining us all today. Your written statements 
will be made part of the hearing record. You each have five 
minutes.
    An idiosyncrasy of this room, this room has horrible 
acoustics. Get really close to that microphone. Please start.

STATEMENT OF JUSTIN CHUNG, LEGISLATIVE ATTORNEY, CONGRESSIONAL 
                        RESEARCH SERVICE

    Mr. CHUNG. Chairman Smith, Chairman Schweikert, Ranking 
Member Pascrell, members of the subcommittee, my name is Justin 
Chung, and I am a legislative attorney in the American law 
division of the Congressional Research Service. Thank you for 
the opportunity to testify today on tax-exempt organizations 
and their involvement in political activity. As you have 
requested, I will focus on three subjects.
    First I will discuss the development of Federal law on tax-
exempt organizations with a focus on section 501(c)(3) 
charitable organizations, and section 501(c)(4) social welfare 
organizations.
    Second, I will illustrate the growth of these groups over 
the past several decades.
    And third, I will explain the current reporting 
requirements for these entities.
    The Wilson-Gorman Tariff Act of 1894 contained one of the 
earliest statutory references to tax exemption for charitable 
organizations. The Act also established the requirement that 
exempt charities operate for certain enumerated purposes. 
Congress first introduced the separate tax exemption for social 
welfare organizations in 1913. The Internal Revenue Code of 
1954 introduced the current structure of the code, with section 
501(c) describing the now familiar categories of tax-exempt 
organizations. These included 501(c)(3) charitable groups and 
501(c)(4) social welfare groups.
    The 1954 code also established limits on political 
activities: 501(c)(3)s were explicitly prohibited from 
participating in or intervening in a political campaign of a 
candidate for public office. The code did not impose the same 
explicit limits on (c)(4)s. Subsequent IRS rulings gave (c)(4)s 
more leeway to engage in lobbying and political activities than 
(c)(3)s. The 1954 code further distinguished between a public 
charity and a private foundation for 501(c)(3)s. Public 
charities generally engage in greater public activity and 
receive more public support than private foundations.
    The 501(c)(3)s and (c)(4)s are the first and second most 
common type of exempt organizations today. They differ in some 
significant ways.
    First, charitable contributions to (c)(3)s may be tax 
deductible, while contributions to (c)(4)s generally are not.
    Second, (c)(3)s and (c)(4)s differ in their ability to 
engage in political activity, such as electioneering and 
lobbying. For example, (c)(3)s may not engage in campaign 
activity and may only conduct a limited amount of lobbying. 
Meanwhile, (c)(4)s may engage in campaign activity as long as 
it is not its primary purpose of the organization, and an 
unlimited amount of lobbying if it is related to the group's 
exempt purposes.
    By many measures, there has been substantial growth among 
501(c)(3)s and (c)(4)s over the past several decades.
    Under its constitutional taxing power, Congress has the 
authority to condition an organization's exempt status on 
regular reporting of certain information. Section 501 
organizations generally must file some version of the Form 990. 
Schedules for the Form 990 request additional information. The 
current schedule B and instructions do not delineate between 
foreign and domestic contributions. Schedule B reports 
substantial donors' contributions.
    They also do not have specific instructions on reporting 
the receipt of foreign contributions. Schedule B does not ask 
501(c)(3)s and (c)(4)s to report the purpose and use of 
contributions.
    Generally, all 501 organizations, including (c)(3)s and 
(c)(4)s, must report the dollar amount of significant 
contributions on Schedule B. However, under the code and 
current IRS regulations, whether donor information--that is, 
names and addresses--must be reported in the Schedule B depends 
on the type of organizations: (c)(3)s must report donor 
information while (c)(4)s do not. Whether the donor information 
by 501(c)(3)s is released to the public depends on whether it 
is a private foundation or--a private foundation or a public 
charity. Donor information by a private foundation is publicly 
available, but not donor information reported by public 
charities.
    Thank you again for the opportunity to testify. I welcome 
questions from the committee.
    [The statement of Mr. Chung follows:]
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    Chairman SCHWEIKERT. Thank you, Mr. Chung.
    Mr. Walter.

 STATEMENT OF SCOTT WALTER, PRESIDENT, CAPITAL RESEARCH CENTER

    Mr. WALTER. Chairmen Smith and Schweikert, Ranking Member 
Pascrell, distinguished members of the subcommittee, thank you 
for the honor of testifying. I am president of the Capitol 
Research Center, where we study how special interests engage in 
politics, especially through non-profits.
    I am excited to be asked to discuss foreign money in 
American non-profits because in our deeply polarized world, 
foreign money in our politics is opposed by nearly everyone: 
left, right and center.
    Last year, when I testified alongside today's Democratic 
witness, he raised the specter of illegal foreign contributions 
to 501(c)(4) non-profits and cited a journal article whose 
author insisted foreign donations pose ``different and greater 
dangers'' than legal domestic donations to (c)(4)s, donations 
often criticized as dark money. Our happy task of bringing left 
and right together on this threat should be even easier. 
Because by far, the largest case I know of where foreign money 
flows to American (c)(4)s and (c)(3)s involves a billionaire. 
While conservatives don't insist billionaires shouldn't even 
exist, as one Democratic member of this House has said, we do 
criticize billionaire donors when they improperly interfere 
with American politics, as when the Zuckerbergs gave a half 
billion dollars to manipulate the 2020 elections.
    Today we can focus on the Swiss billionaire and foreign 
national, Hansjorg Wyss, who in the last two decades gave 
roughly a half billion dollars to America's largest dark money 
network, the sprawling empire run by Arabella Advisors. Don't 
think I am pushing a conspiracy theory. My written testimony 
carefully documents this foreign billionaire's meddling in 
American politics, citing only mainstream media sources: The 
New York Times, Politico, and the Associated Press, plus the 
Federal Election Commission's general counsel.
    The FEC's general counsel notes Wyss illegally-made direct 
political contributions, though the statute of limitations has 
expired, giving to Senator Dick Durbin and Representatives Jay 
Inslee and Mark Udall, among others. The Associated Press calls 
Wyss a Democratic-aligned megadonor, and reports his non-
profits helped ``bankroll efforts to lift President Joe Biden's 
agenda, and paid for TV ads promoting Democratic 
congressional candidates in the mid-terms.''
    The New York Times reports, ``Tax filings show the Wyss 
Foundation and (c)(4) Berger Action Fund donated $208 million 
from 2016 through 2020 to 3 other non-profit funds that doled 
out money to a wide array of groups that backed progressive 
causes and helped Democrats in their efforts to win the white 
House and control of Congress.''
    Beneficiaries of Wyss's direct giving included 
organizations that ``ran voter registration and mobilization 
campaigns to increase Democratic turnout, and built media 
outlets accused of slanting the news to favor Democrats.''
    Politico reports Wyss gave $1 million to the National 
Redistricting Action Fund, a sister group of Democrats' 
National Redistricting Hub. This is truly shocking: a foreign 
national billionaire appears to have affected the very 
membership of this House and this committee. The lines 
governing the districts you represent may have been carved in 
part by this foreign money. The same foreign cash may have 
funded the turnout efforts in your last elections.
    Surely, we can all agree this is not the role of foreign 
billionaires. Note that this foreign billionaire wasn't 
operating alone. For two decades he has been joined at the hip 
with the undisputed heavyweight of Democratic dark money, the 
Arabella Advisors empire. The non-profits run by Arabella 
include (c)(3)s and (c)(4)s. They are gargantuan. In the 2018 
election cycle these non-profits raised $1.2 billion; in 2020, 
2.6 billion; in 2022, 3 billion.
    Several remedies have been suggested to deal with this 
problem. Some are reasonable. For instance, legislation 
introduced into the House that would prohibit (c)(4)s that 
receive foreign cash from donating to super PACs for several 
years. Other responses include Professor Hackney's suggestion 
that private foundations be eliminated from the tax code, and 
my own think tank's suggestion that (c)(3) foundations and 
charities not be allowed to fund or execute voter registration 
and turnout.
    The President of Wyss's Foundation and (c)(4), Molly 
McUsic, was involved in a massive (c)(3) voter registration 
scheme that is still active and deserves its own hearing.
    Some people call for greater enforcement by the IRS, but we 
all know the IRS has been badly abused by both parties in the 
past, and is always likely to have partisans like Lois Lerner 
overseeing enforcement.
    Lastly, there is the supposed all-purpose cure for 
everything non-profit, namely government-coerced donor 
disclosure. I am proud to stand with the NAACP of Bull Connor's 
1950s Alabama and the NAACP of this afternoon who oppose that 
ugly intrusion on the privacy of American citizens. Thank you.
    [The statement of Mr. Walter follows:]
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 STATEMENT OF STEWART WHITSON, LEGAL DIRECTOR, FOUNDATION FOR 
                   GOVERNMENT ACCOUNTABILITY

    Mr. WHITSON. Chairman Smith, Chairman Schweikert, Ranking 
Member Pascrell, members of the committee, good afternoon. My 
name is Stewart Whitson, and I am the legal director at the 
Foundation for Government Accountability. FGA is a non-
partisan, non-profit organization that seeks to enhance the 
lives of all Americans by improving welfare, workforce, health 
care, and election integrity policy at the state and Federal 
levels.
    During the 2020 election, the Chan Zuckerberg Initiative 
donated more than $400 million to fund election activities. 
Most of those funds, coined Zuckerbucks, were provided to the 
center for Tech and Civic Life, a left-leaning non-profit run 
by a former Obama Foundation fellow. Marketed as money for 
purchasing personal protective equipment in response to COVID-
19, the funds were instead used primarily to drive procedural 
changes and get out the vote efforts that benefitted the left.
    Groundbreaking research and analysis by my colleagues at 
FGA revealed large disparities in Zuckerbucks funding 
allocation. Counties won by President Biden in 2020 received 
significantly more in Zuckerbucks funding than counties won by 
former President Trump. The infusion of cash into certain 
jurisdictions, those that leaned heavily Democrat, drove up 
voter turnout in blue districts and allowed partisanship to 
weasel its way into the one part of elections that is supposed 
to be non-partisan.
    In other words, it appears that CTCL, a 501(c)(3) 
organization, used Zuckerbucks to hijack and transform the 
government itself into a partisan get-out-the-vote tool. 
Recognizing the danger posed by CTCL's efforts, 27 states have 
passed Zuckerbucks bans, some bipartisan, prohibiting local 
governments from applying for, accepting, or spending any 
private funding for election administration.
    Unfortunately, CTCL seems to be actively working to 
sidestep these new state laws by rebranding itself as the U.S. 
Alliance for Election Excellence. According to an announcement 
made by CTCL, the new program will distribute at least $80 
million in funding across the country, while providing coaching 
and other support to a select group of local election 
officials. CTCL appears to have abused its 501(c)(3) tax exempt 
status in 2020, and it may be actively working to do so again 
in 2024.
    But unfortunately, CTCL isn't the only 501(c)(3) group 
whose actions should draw serious concern from this committee. 
There is another group, Demos, that appears to be an even 
graver concern.
    So back in March 2021, President Biden signed Executive 
Order 14019. We call this scheme Bidenbucks because it is 
Zuckerbucks on steroids. Instead of Mark Zuckerberg, it is 
President Biden. And instead of $400 million, it is unlimited 
funding, resources, and reach of the Federal Government and its 
offices located in states across the country. The order 
commands the head of every Federal agency to develop a plan to 
do two things: promote voter registration and promote voter 
participation.
    The order also commands all Federal agencies to solicit and 
support ``approved third-party organizations''' to allow them 
to use Federal resources to register and mobilize the voters 
these groups target, and to do so on Federal property located 
in every state.
    So which groups will receive this special approval? We 
don't know, because the Biden Administration refuses to 
disclose the list or even the criteria for approval, not only 
to FGA, but to the dozens of Members of Congress who have 
demanded answers, as well.
    Fortunately, Bidenbucks has not gone unnoticed by Congress. 
And in fact, one of the members of this committee, 
Congresswoman Claudia Tenney, has introduced legislation to 
defund the Bidenbucks executive order.
    In addition, dozens of members from both the House and the 
Senate have demanded transparency from the Biden 
Administration, calling out Demos for its outsized role in what 
appears to be an unlawful, partisan effort to keep the current 
President's political party in power.
    So with that I thank the chairman for the opportunity to 
provide testimony today, and I look forward to answering any 
questions you might have.
    [The statement of Mr. Whitson follows:]
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    Chairman SCHWEIKERT. Professor.

   STATEMENT OF PHILIP HACKNEY, ASSOCIATE PROFESSOR OF LAW, 
                    UNIVERSITY OF PITTSBURGH

    Mr. HACKNEY. Chair Smith, Chair Schweikert, Ranking Member 
Pascrell, distinguished members of the subcommittee, thank you 
for inviting me to speak with you today. I am a professor of 
law at the University of Pittsburgh. I specialize in non-profit 
organizations. From 2006 to 2011 I worked with the IRS chief 
counsel in D.C., overseeing the tax-exempt sector. Today this 
sector is my research focus.
    Our overall legal structure for political activities of 
non-profits is imperfect, but not bad. It is justifiable. 
Indeed, at its best it is very good, a paragon of civil 
society. As I told the Senate Finance Committee just last year, 
where we fall down is enforcement. That failure lies in a 
failed IRS budget and a failure of the IRS to pursue clear 
violations. These failures do not favor one party, but favor 
those interests with the means and the will to abuse that 
structure. I focus on three fundamental points.
    First, a diverse non-profit sector that fosters civic 
participation and engagement is a gem of the United States. 
Let's maintain that.
    Second, the IRS budget for exempt organizations continues 
to not be sufficient to ensure the laws are equally and fairly 
enforced. The efforts to claw back the Inflation Reduction Act 
dollars for the IRS need to stop.
    Third, there are simple things the IRS could do to enforce 
the law it is not doing.
    Diverse non-profit sector. As you embark on this important 
endeavor working to limit abuses of the non-profit sector, ask 
the question how can I make sure that the cure we choose is not 
worse than the disease? As John Gardner said about the non-
profit sector, it is the natural home of non-majoritarian 
impulses. It comfortably harbors innovators, maverick 
movements, groups which feel they must fight for their place in 
the sun, and critics of both liberal and conservative 
persuasion. These organizations make up what we--many refer to 
as civil society. Crafting rules for this sector takes great 
care. Voter registration, get-out-the-vote efforts, non-
partisan information regarding elections all fit well within 
charity, and should be encouraged, not threatened.
    The budget. Congress shrank the IRS budget over the past 
decade. CBO reports the IRS budget fell by 20 percent from 2010 
to 2018: 94,000 employees in 2010, 73,500, 2019. Fewest 
employees IRS has had since 1970. By 2022 we are still at a 
historical low of about 79,000. Worse yet, the EO group at the 
IRS shrank from 889 employees to around 550 in 2019, and it did 
not begin to recover in 2022, when you look at the data. Audits 
in 2010, the IRS had about a 0.38 percent examination rate. By 
2019 TIGTA counted that at 0.13 percent, negligible.
    The tax-exempt sector grew. In 2010 charitable 
organizations alone reported $2.9 trillion in assets; 2019, 
$4.8 trillion in assets. The idea the IRS might be able to use 
its resources to ensure compliance is laughable. Efforts, as 
recommended by the GAO, to make better use of data is the only 
way we are going to get out of this mess.
    Is the IRS using enforcement information and reporting in 
the EO sphere and political activities? Not really. IRS 
recently chose less information, even though it recognizes 
information reporting matters in stopping tax abuse. It ended 
the collection of substantial donor information a few years 
ago--documents occasions where a social welfare organization 
represents to the FEC that it made independent expenditures, 
but reports nothing to the IRS, nothing that would stop the IRS 
from using that data.
    Thank you for inviting me to speak today. The tax laws are 
built fairly well to prohibit the deducting of campaign 
expenditures and promote a strong non-profit sector. But the 
current anemic IRS budget, the lack of IRS enforcement, and 
failure to collect substantial donor information creates a 
crisis. This undermines confidence in the tax system.
    I urge Congress to maintain the Inflation Reduction Act 
dollars for the IRS budget. Please release the rider stopping 
rules from being enacted regarding (c)(4)s, and please protect 
the independence of the non-profit sector. It matters. Thank 
you.
    [The statement of Mr. Hackney follows:]
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    Chairman SCHWEIKERT. Thank you, Professor.
    In consideration of Mr. Pascrell having an appointment 
shortly, I am going to ask Mr. Pascrell to go first, and then 
Chairman Smith.
    Mr. Pascrell.
    Mr. PASCRELL. Mr. Chairman, I appreciate that.
    Professor Hackney, welcome aboard.
    Mr. HACKNEY. Thank you.
    Mr. PASCRELL. Great witnesses.
    Thanks to the Inflation Reduction Act, the IRS finally has 
some resources to go after political malfeasance. You described 
it well. In fact, on page one you talked about some things that 
haven't been discussed in the way they have been discussed, and 
that is the question of testimony in tax-exempt organization 
and politics. Very interesting.
    Can you expand on how the IRS could better regulate 
political involvement by 501(c)(4) organizations, if allowed to 
do so?
    How damaging has the appropriations rider blocking such 
regulations been to the proper oversight of the tax-exempt 
sector?
    Mr. HACKNEY. Thank you, Ranking Member Pascrell. So it has 
been quite damaging, right? The IRS tried to enact rules to 
clarify this world. The IRS Tea Party crisis that we talked 
about earlier, involving Lois Lerner, was created largely by 
the fact that the rules were unclear, and the IRS didn't know 
what to do, and they looked like a gang that couldn't shoot 
straight. As you noted, there was no targeting found, no 
reports found that. And the IRS has made good on an effort to 
try and clear up this problem in the future by clarifying how 
much it is that you can spend.
    With a (c)(4), it is unclear what it is that you can use. 
The statute itself says exclusively you must use these dollars 
for social welfare, and it has been determined that engaging in 
political activities is not furthering a social welfare 
purpose. If the IRS could enact rules regarding this, we could 
clarify what kind of level of expenditures push you into that 
area.
    Mr. PASCRELL. Last year I wrote to the IRS. I write to them 
frequently; it is a lovely day in the neighborhood with the 
IRS, for the deep concern I have with the approval of 
fraudulent charities that applied for tax-exempt status. The 
form is 1023EZ. As you testified, this condensed form simply 
does not require enough information from applicants to 
establish legitimacy in many cases.
    How can the IRS improve its oversight of the application 
process for the organizations to receive tax-exempt status?
    Mr. HACKNEY. Ranking Member Pascrell, it is a challenging 
situation, given the employees that we have. I think we have to 
come back to data and use cross-checks of these organizations 
against other individuals and other tax forms, so I think it is 
using much more sophisticated use of data.
    Whether the Form 1023 can continue to exist, it is a hard 
question. The IRS used it to get out of the backlog that it is 
experiencing. It just couldn't keep up with the flow of the 
applications that are coming in. But I think there is the 
ability to use more data to cross-check against things. This is 
similar to the situation where we have CREW pointing out that 
independent expenditures are being reported to the FEC, but the 
IRS is doing nothing about it and allowing these organizations. 
I think there is a lot of spaces there where there can be more 
cross-checking of data, and I think that could make it a 
significant improvement.
    Mr. PASCRELL. As you know, in 2020 the Trump Administration 
issued a ruling ending the longstanding requirement for tax-
exempt organizations to disclose substantial donor names and 
addresses to the IRS. Can you expand on the damage this has 
done to our campaign finance system, especially as it relates 
to preventing foreign actors to get involved in our own 
elections?
    Mr. HACKNEY. Absolutely. So (c)(4)s are able to do some 
political campaign intervention, and they are not necessarily 
reporting to the FEC about these activities. But the IRS used 
to collect donor names and addresses on these forms. This 
information is critical for the IRS to enforce other aspects of 
the tax law, including a prohibition on inurement to (c)(4)s 
and to other tax excise taxes that apply to misuse of these 
funds. It has made the IRS blind. I called my article, when I 
wrote on this, ``Dark Money Darker'' for this very reason. It 
has made this money impossible to see, impossible to find, even 
the foreign stuff that we were talking about, as Chairman 
Schweikert had pointed out.
    Mr. PASCRELL. Thank you, Mr. Hackney, and thank you to all 
the witnesses who are excellent. I agree with a lot of what you 
are saying, and I think we can come to some general agreement 
here with the troops.
    What do you think?
    Chairman SCHWEIKERT. I am pathologically optimistic. 
[Laughter.]
    Chairman SCHWEIKERT. I am 61 years old with a 17-month-old. 
And with that, thank you, Mr. Pascrell.
    Mr. Chairman.
    Chairman SMITH. Thank you, Mr. Chairman. I want to thank 
each and every one of you for taking time out of your schedule 
to be here.
    Mr. Walter, there are very serious concerns with how 501(c) 
tax-exempt organizations may be used not only to influence 
American politics and our elections, but to do so with foreign 
sources of funding. The organizations under Arabella Network, 
for example, with which you are familiar, have reportedly 
received millions of dollars from foreign nationals while 
spending large sums of money on various political activities. 
Can you explain how this money moves from foreign hands to non-
profits here in the U.S., and then into the political arena?
    Mr. WALTER. Certainly. In the case that I especially was 
focused on, that of Hansjorg Wyss, Mr. Wyss has a (c)(3) 
private foundation with billions of dollars in assets. He also 
has a (c)(4), the Berger Action Fund. That is pretty uncommon. 
George Soros has that kind of arrangement, not many others do. 
And his (c)(3) and his (c)(4) have donated to (c)(3)s and 
(c)(4)s that are run by Arabella Advisors. And of course, those 
(c)(4)s, in turn, are some of the biggest contributors to super 
PACs and general partisan causes.
    Chairman SMITH. Given that our election laws prohibit 
foreign nationals from donating directly to the campaigns of 
candidates for Federal office, do you think we should 
reconsider how we look at foreign donations to tax-exempt 
organizations that get involved in politics?
    And do you have a specific policy change that you would 
recommend?
    Mr. WALTER. Well, as I said in my testimony, (c)(4)s are, 
you know, obviously now, a critical part of the way American 
politics operates. And people on both sides of the aisle today 
have raised concerns about them. So it seems eminently 
reasonable to accept the fact that they are engaged in our 
politics and, therefore, should those (c)(4)s be able to accept 
foreign dollars and then pass on money to super PACs when no 
one is quite sure whether it was the foreign money or not.
    So it seems reasonable, and has been introduced in the 
House already, to have limits on (c)(4)s' ability to give to 
super PACs if they are going to take foreign money. You could 
simply forbid the (c)(4)s from receiving foreign money or you 
could make it, the (c)(4), wait years before it donates to a 
super PAC.
    Chairman SMITH. During this committee's investigation into 
501(c) tax-exempt organizations, we came upon a quote from Mind 
the Gap, a Democrat super PAC that stated in a 2020 memo to 
donors, in part, ``The single most effective tactic for 
ensuring Democrat victory is 501(c)(3) voter registration.'' 
Mr. Walter, do you know if this group continues to hold this 
view and communicate this to their donors?
    Mr. WALTER. I do, thanks to reporter Teddy Schleifer at 
Puck News. I can tell you that they have a 2024 cycle memo, and 
let me just quote a sentence: ``Our strategy early in the 2024 
presidential race will be to massively scale high-performing 
voter registration and mobilization programs.'' The only 
grantee they recommend is the Voter Registration Project, a 
(c)(3).
    Chairman SMITH. Mr. Whitson, a prime example of how 
501(c)(3) tax-exempt organizations have found their way into 
our political system is through the sponsorship of activities 
related to the actual Administration of our elections in a 
clearly partisan manner, the 300-million-plus in so-called 
Zuckerbucks donated by Mark Zuckerberg being a recent example 
of how private funds may have influenced the electoral process 
as they found their way into the actual administration of 
elections by state and local governments.
    What impact do you see this sort of very large, private, 
targeted sponsorship of electoral activity having on the 
outcome of elections and on the American people's faith in a 
fair and transparent system?
    Mr. WHITSON. Thank you for that question, Mr. Chairman. So 
it is kind of twofold. I think, number one, it is about 
inspiring voter confidence and, number two, it is about what 
the outcome is going to be.
    And so for FGA we are not trying to litigate the 2020 
election, but we are trying to learn from it. And so to answer 
your question, if we want to look at what damage we think this 
could do in 2024, we do have to look to 2020 and see what 
damage it did then. And so again, as I alluded to, thanks to 
the great work of our team, as far as their analysis and 
research, we can see what some of the effect has been across 
the country. And I will give you one example: Georgia.
    So in Georgia, the population of Georgia only accounts for 
about 3.2 percent of the population in the U.S. But Georgia 
received nine percent of Zuckerbucks. Of the Zuckerbucks money 
that went in, this is interesting, there are 6 counties that 
received grants of over $1 million, all 6 of those counties 
were won by Hillary Clinton in 2016 and won by Joe Biden in 
2024. Nine out of the ten highest-recipient counties in the 
State of Georgia were won by both Clinton and Biden.
    So again, what we see from the past, what happened in 2020, 
is money funneled disproportionately into Democrat strongholds 
based on outcomes from 2016, and that the money funneled into 
the jurisdictions, the outcome was that Joe Biden won at an 
incredibly high rate. So it seems the money followed Democrats, 
and it seemed to have benefitted Democrats, based on our 
research.
    Chairman SMITH. Thank you.
    I yield back, Mr. Chairman.
    Chairman SCHWEIKERT. Thank you, Mr. Chairman. Let me yield 
myself a few minutes here, just to understand some things.
    Mr. Chung, more because you have some of the technical 
background, we have had a running discussion on some previous 
hearings that the, is it a 990 form, where tax-exempts, whether 
it be from a hospital to these, does that form need to be 
redesigned for what the mission for both research purposes, but 
also for us doing tax policy?
    Mr. CHUNG. Yes, thank you for your question. As you know, 
CRS is a non-partisan organization, so I can't say whether the 
form should be designed or redesigned or not. I can describe 
what information is presented to the IRS from exempt 
organizations on those forms.
    The Form 990 generally has information about revenue, 
assets, and expenses of the organization, and then the 
schedules to the schedules to the 990 contain more specific 
information. And organizations may have to fill out those 
various schedules, depending on different circumstances.
    So as I mentioned in my testimony, the Schedule B contains 
information about substantial donors, which is generally 
understood to be $5,000 or more a year.
    Chairman SCHWEIKERT. Okay. The professor said something 
which was far beyond even things I have read, that there could 
be as much as four trillion in assets held by these. Is that 
something that CRS would actually be able to document, or is 
that a number you have seen?
    Mr. CHUNG. Yes, the IRS does report aggregate data from the 
Form 990, and so that is information that is able to be found 
out. And I was able to look up some specific numbers during my 
preparation for this hearing.
    So, for example, the IRS reported that in 1990 to 2022, the 
number of 501(c)(3) organizations grew from 546,000 to about 
1.48 million. And then there was, in lockstep with that 
increase, an increase in the number of assets that they hold. 
So from tax year 1990 to tax year 2020, total assets held by 
(c)(3)s grew from $696 billion to 5.5 trillion.
    Chairman SCHWEIKERT. Five point five trillion? Okay. At 
some point that is actually going to be another area of 
research.
    Mr. Walter, the same sort of question on would a change in 
the 990 forms make at least understanding what is really going 
on out there in the world easier for the researchers?
    And that same question for everyone.
    Mr. WALTER. Yes, Mr. Chairman. There--I would be happy to 
submit for the record reports that we have made suggesting a 
variety of changes on the 990 and 990PF.
    The most single obvious thing would be in the case of 
Arabella Advisors. They have literally hundreds of fiscally 
sponsored groups, and nothing in the 990 requires them to say 
anything about those particular groups, which lets those groups 
hide in greater darkness than a regular non-profit like mine.
    Chairman SCHWEIKERT. Okay.
    Mr. WHITSON. So this is an area a little bit outside of 
FGA's wheelhouse. And so I think our biggest thing is, you 
know, those who don't learn from history are doomed to repeat 
it, and so we keep coming. I applaud the efforts to come up 
with solutions, but our position is always to look at this, 
look back to 2013 and the Lois Lerner example, but then also 
look back even further to 1958, to the NAACP v Alabama case, 
and just see in the past when----
    Chairman SCHWEIKERT. That is donor disclosure.
    Mr. WHITSON. Yes. And so any time we are in--yes, Mr. 
Chairman.
    Chairman SCHWEIKERT. Okay. Professor, 990, for those of us 
who want to just do sort of aggregate research, do we need to 
update the forms?
    Mr. HACKNEY. Yes, and I will explain why. When I was there 
2006 to 2011, the office did a major redo of it, and it 
improved it in some ways. But the thing that I think is still 
missing is a uniformity of concept.
    So you can have organizations that are taking certain 
terms, like community benefit that a hospital does, and have 
all sorts of different concepts about what that concept means. 
So I think the most critical thing is to have a uniform concept 
of what individuals are reporting. So more definitional 
aspects.
    I think there could be improvement in the way that 
information is presented. I haven't given enough thought about 
it, but the uniformity of what it means when you use certain 
terms, that would be an enormous help so that you have data 
that you can compare. Right now you can't compare that. It is 
apples to oranges.
    One other thing. Churches don't report, which has its 
benefits and its detractions. I have written about this. But 
that creates a hole there, as well, so you miss some data.
    But uniformity of terms would help a lot.
    Chairman SCHWEIKERT. Okay. Look, I don't mean to ramble on 
this, but there was a story, I think it is ProPublica, about a 
year-and-a-half, two years ago. And the focus of the article 
was actually the use of 501(c)(3)s and others, and almost 
creating sort of a generational skipping trust, and the 
movement of money, and the ways to use pre-tax monies. And only 
two-thirds through the article then you got an, ``Oh, and by 
the way, some of this is also going into politics.'' And that 
is actually what generated part of this discussion here.
    So it is both, pre-tax money isn't supposed to go into 
politics. And if I need to fixate on that, I will. But also the 
use of some of these pre-tax-type of entities as a way to avoid 
certain taxes, also something we also need to understand. That 
is a little beyond the scope of this, but that is where the 990 
question comes in, there may be a much broader breadth here. 
And with that I am going to reach over to Ms. Chu.
    It is yours.
    Ms. CHU. Thank you, Mr. Chair. Before I begin, I ask 
unanimous consent to enter into the record written testimony 
from Citizens for Responsibility and Ethics in Washington, or 
CREW, and it says that Congress should take action to shine 
light on dark money by empowering the IRS to both enforce and 
clarify the rules governing political activity by tax-exempting 
organizations.
    Well, Professor Hackney, I am working with Senator Sheldon 
Whitehouse, chair of the Senate Budget Committee, on 
legislation to close a harmful loophole in the tax code that I 
was so pleased you mentioned in your testimony. Wealthy 
individuals who hold appreciated property like stock in a 
company can actually donate that property to a 501(c)(4) 
organization which is not subject to the gift tax, and 
completely avoid paying capital gains taxes on that donation.
    This loophole effectively gives a public subsidy to the 
wealthy who seek to influence politics and elections through 
dark money organizations. As I mentioned at a hearing last 
week, billionaire Barre Seid donated $1.6 billion in stock 
earlier this year to a right-wing non-profit organization that 
engages in political activity, avoiding a tax bill of up to 
$400 million.
    So, Professor Hackney, can you briefly describe the 
difference in the tax treatment of a donation of appreciated 
property like company stock to a 527 political organization 
versus the same donation to a 501(c)(4)?
    Mr. HACKNEY. Thank you, Member Chu, great question. And I 
think this is an issue that goes to the heart of Chair 
Schweikert's interest in making sure we are neutral to this.
    If you donate to a 527 or contribute to a 527, this is a 
political organization carrying out election activities. 
Section 84 of the code applies a tax on the gain to the 
contributor, so they wIll pay tax on the difference between 
what they bought the thing at, say they bought it at $10 and it 
is now $100, they are going to pay tax on that gain, that $90 
gain. You do the same thing to a (c)(4), there is no tax, no 
gift tax either. So there is a real nice way, if you are 
wealthy, to get tax advantage contributions and accomplish 
political purposes, at least about 49 percent, potentially, 
under many people's conceptions.
    Ms. CHU. And many 501(c)(4) organizations do, in fact, 
engage in political activity, as long as that is not their 
primary purpose. Correct?
    Mr. HACKNEY. That is correct.
    Ms. CHU. So, in effect, a billionaire can receive a massive 
tax break for donating appreciated stock to a 501(c)(4) that 
seeks to influence our politics and elections, while also 
avoiding the public disclosure rules that apply to 527 
organizations like PACs. Correct?
    Mr. HACKNEY. That is absolutely correct.
    Ms. CHU. So, can you expand on why you suggest Congress 
should consider closing this loophole and treating donations of 
appreciated property to 501(c)(4)s in the same way as donations 
to 527s for purposes of capital gains tax, and what impact that 
would have in helping the IRS adequately enforce our tax laws 
with respect to tax-exempt organizations and political 
activities?
    Mr. HACKNEY. I think the fundamental aspect is that I think 
Congress has made a choice, and I think we as a nation have 
made a choice that the government should be neutral as to 
politics. Section 84 would stop this from happening at the 
(c)(4) level. Our (c)(4)s are absolutely engaging in politics. 
This would put a tax.
    And one of the things that is particularly problematic 
about it is the wealthier you are, the more benefit you get 
from these rules. Putting Section 84 there would make the fisc 
neutral to these matters, as Chair Schweikert is looking to 
accomplish. I think Section 84 is a really good start to an 
answer to Chair Schweikert's questions.
    Ms. CHU. And you have talked quite eloquently about the 
need for IRS enforcement. I found a statistic. In 2010 the IRS 
reviewed more than 65,000 applications and rejected 517. But in 
2022 the number of applications grew exponentially to 136,000, 
and they rejected just 86 of those applications. So, can you 
tell us why IRS enforcement is so important?
    Mr. HACKNEY. It is key, because these dollars are being 
used to carry out the most important things we do. If there is 
no check on that, we subject ourselves to fraud, and we subject 
our fisc to being abused in significant ways, and the Federal 
Government effectively endorsing problematic activities.
    I think we need a stronger application checking system and 
a stronger audit system. It makes a difference in terms of our 
non-profit sector that is carrying out such important aspects: 
our health care, getting food on the table of people, 
supporting elections, and supporting our democracy. That is 
key.
    Ms. CHU. Thank you.
    I yield back.
    Chairman SCHWEIKERT. Unanimous consent to accept the 
documents for the record from Ms. Chu.
    [The information follows:]
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    Chairman SCHWEIKERT. Now we are going to go to two to one, 
Mr. Fitzpatrick.
    Mr. FITZPATRICK. Thank you, Mr. Chairman.
    Thank you all for being here today. During my time in the 
FBI, one of my roles that I had was serving as national 
director of the Bureau's Campaign Finance and Election Crimes 
Enforcement program. And my job, and those that worked with us, 
was to ensure that the American people could rely on their 
government institutions having unshakable integrity, especially 
our electoral systems.
    Foreign individuals, foreign entities have no business 
interfering or influencing our elections in any way, shape, or 
form at any level of government. And Congress certainly has a 
responsibility to improve the security of our elections and to 
restore faith and confidence in our institutions. So I want to 
commend the chairman for holding this hearing today.
    Mr. Chung, if I could start with you, currently there is no 
requirement for tax-exempt organizations to report whether a 
contributor is, in fact, a foreign individual or foreign 
organization. Sir, in your research and in your experience, is 
there any way of estimating where certain contributors to 
501(c)(3)s and (c)(4)s are making their donations from?
    Or better put, are there--there are certain nations, such 
as our strategic competitors and adversaries, which have 
individuals or entities that are donating heavily to tax-exempt 
organizations. Have you seen that in your experience?
    Mr. CHUNG. So let me describe what the Schedule B of the 
Form 990 requires. It does depend on the type of 501(c) [sic] 
organization you are talking about.
    So 501(c)(4)s do not have to disclose their donor 
information, meaning the names and addresses of their 
substantial donors. They simply need to disclose the dollar 
amount. Whereas, for 501(c)(3)s, they are required by the 
statute to disclose the names and addresses of their 
substantial contributors. So the amount of information that law 
enforcement agencies would be able to get from the Schedule B 
depends on what type of 501 organizations we are talking about. 
So it depends.
    Mr. FITZPATRICK. Mr. Walter, specifically zooming in on 
state ballot initiative and referendums, have you seen any 
evidence of foreign involvement, either overtly or covertly, in 
the ballot initiative, particularly at the state and local 
level?
    Mr. WALTER. Thank you for the question, Congressman. The 
ballot initiatives have an unusual part in our political 
process, because it is a case where 501(c)(3)s, as well as 
(c)(4)s, are allowed to play in ballot initiative elections. 
And therefore, yes, you do see a great deal of (c)(4) and 
(c)(3) money going into that. And we know that there are cases 
like Mr. Wyss's, where there are foreign dollars going into 
that. And that, by the way, is another policy change that has 
been argued, that you could change the law to forbid foreign 
money for ballot initiatives.
    Mr. FITZPATRICK. Do any of the others wish to comment on 
that?
    For reference, there is a piece of legislation, the Stop 
Foreign Funds in Elections Act, authored by yours truly, that 
just passed the House Committee on Administration. I encourage 
all my colleagues on both sides of the aisle to join that 
legislation.
    I yield back, Mr. Chairman.
    Chairman SCHWEIKERT. Thank you, Mr. Fitzpatrick.
    Mr. Steube.
    Mr. STEUBE. Thank you, Mr. Chairman.
    It is undeniable that the growth of the tax-exempt sector 
has had a significant effect on the American political 
landscape. Many of these groups help provide a voice for 
millions of Americans to effectively communicate important 
political messages across the ideological spectrum. 
Unfortunately, other non-profit entities have abused the system 
to pursue more nefarious goals.
    In the 2020 election Facebook founder Mark Zuckerberg 
funneled nearly $350 million through a non-profit called the 
Center for Tech and Civic Life, or CTCL, to 2,500 election 
departments across 47 states. These Zuckerbucks, a term used to 
describe private entities donating money to fund the official 
government vote counts, were distributed by CTCL, which was run 
by a former Obama Foundation fellow.
    As conservatives have been decrying for years now, and as 
Mr. Whitson notes in his testimony, there was massive disparity 
in the amount of funds allocated to red counties versus blue 
counties. The flooding of cash by private leftist activities 
into our election systems and structures went uncriticized by 
the left in the mainstream media, but it helped their side.
    As both sides decry the other for use of dark money funding 
campaigns, I want to focus on the use of private money injected 
into the government itself to advance candidates in the 
Democratic Party. In Mr. Whitson's testimony, I would like to 
quote a line that he said: ``It appears that CTCL, a 501(c)(3) 
organization, used Zuckerbucks to hijack and transform the 
government itself into a partisan, get-out-the-vote tool.'' 
That is very troubling.
    The Constitution makes explicitly clear in Article I, 
section 4 that individual states have the primary role in 
establishing election law and administering our elections. Yet 
that did not stop President Biden from issuing Executive Order 
14019, which tramples on states' rights and enables Federal 
agencies like the GSA to engage in voter registration and share 
election information. This is simply not the role of the 
Federal Government, and taxpayers should not be paying for it.
    Allowing private individuals and companies to fund official 
election practices opens the door to corruption and the 
weaponization of non-partisan civic institutions for political 
gain. The abuse of non-profits to manipulate the functions of 
government for partisan purposes must stop. I am glad that more 
than half of the states in the union have passed legislation to 
stop this. We need every state legislature in the country to 
pass legislation to prohibit state and local election officials 
from accepting private donations to fund election-related 
expenses.
    Mr. Whitson, I will start with you, since I quoted some of 
your testimony. You point out these Zuckerbucks were focused on 
certain jurisdictions favorable to candidates of the Democratic 
Party. And I heard your exchange with the chairman about doling 
out the funding based on geographic area. But if you could 
expound on that, I would appreciate it.
    Mr. WHITSON. Yes, thank you for that question, Congressman.
    So what it appears from our research is that dollars were 
distributed into jurisdictions that were perceived as blue 
strongholds, primarily. And although the grant program was 
opened up to everyone, it appears that certain jurisdictions 
were probably targeted with communications and things like that 
to encourage them to apply for the grants. So some grants did 
go to red counties, but the vast, vast majority went to blue 
counties.
    And so I gave that example of Georgia, which you can look 
at it from the outside, and you can see this kind of looks like 
they found a swing state. They are pushing a disproportionate 
amount of money into this state, and it is only going into blue 
strongholds where Hillary Clinton won in 2016.
    But there is a lot of other examples. So another one is 
Pennsylvania. 25 million in Zuckerbucks were awarded, and more 
than 90 percent of the grant dollars went to counties that Joe 
Biden won. Michigan received $15 million in Zuckerbucks, and 
more than $7 million went to the City of Detroit alone, which 
is a known Democrat stronghold.
    Wisconsin, and here is an interesting one, because it goes 
beyond money, it is also the coaching aspect. In Wisconsin, 
10.1 million, of which 1 million was funneled into Green Bay, 
Wisconsin. To put it in perspective, Green Bay's election 
budget was $330,000, and so that increased their budget by a 
staggering 331 percent. And so, what makes Green Bay more 
troubling, too, is an employee from CTCL was put on the ground 
to help coach the election administrators there on how to run 
their program more efficiently.
    And again, going back to some of the comments we were 
saying earlier, it is not just about stopping fraud, but it is 
also the appearance of fraud. We want to inspire confidence in 
elections. And so when that kind of behavior takes place from a 
private organization, takes over the functioning of the 
election itself, that creates doubt. And that is problematic, 
no matter what side of the aisle you are on.
    Mr. STEUBE. And you go into detail about the Bidenbucks 
program that will result from the taxpayer-funded voter turnout 
program started by President Biden. And in my limited time 
left, if you could, just expound upon that.
    Mr. WHITSON. Yes. So that program is calling for every 
Federal agency to use those Federal agencies to basically 
conduct voter registration with these ``approved third-party 
groups.''
    And so what we know so far from Health and Human Services, 
more than 1,400 federally qualified health centers across the 
country are being turned into voter registration hubs. The 
Department of Labor is turning 2,300 American job centers into 
voter registration hubs. Housing and Urban Development sent 
guidance to more than 3,000 public housing authorities, who 
control over 1.2 million housing units, to use those as voter 
registration hubs. The Department of Education sent guidance to 
use work-study funds to pay students to work on and off campus 
to register people. So that is just a flavor of what is going 
on.
    Mr. STEUBE. Thank you guys for being here today. I yield 
back.
    Chairman SCHWEIKERT. Thank you, Mr. Steube.
    Ms. Moore.
    Ms. MOORE. Thank you very much, Mr. Chairman, and thank our 
witnesses for appearing today.
    I just maybe want to start with Mr. Chung, just seeking 
some clarification. What we are generally talking about is dark 
money. Is that fair? The testimony that we have heard today, 
they are talking about what they consider dark money in 
campaigns, 501(c)(4)--that activity.
    Mr. CHUNG. Thank you for the question.
    Ms. MOORE. It is from undisclosed funding sources. They can 
engage in political activity while not disclosing their donors, 
as long as this is not their primary activities, and that the 
definition of what activity that they can engage in?
    Mr. CHUNG. To the extent that dark money means a lack of--
--
    Ms. MOORE. It is a nickname for it. But, you know, we heard 
testimony here today, I believe, from Mr. Walter, about a 
couple of people in particular that are funneling money all 
over the country for get-out-the-vote efforts. But when we talk 
about dark money, isn't that a much broader category of very, 
very wealthy people, for the most part?
    I am thinking about running around with get-out-the-vote 
tee shirts on that are non-partisan, as compared to, after 
Citizens United, the Supreme Court decision in Citizens United, 
that this is much more of an avenue for political activity for 
wealthy people. Am I wrong about that when we look at concerns 
about dark money?
    Mr. CHUNG. [No response.]
    Ms. MOORE. So, Mr. Hackney, can you answer that for me?
    Mr. HACKNEY. Yes, ma'am, Representative Moore. It is 
primarily about wealthy individuals having the ability to put 
money into an election without their fingerprints upon it so 
you are not able to see where those dollars are coming from.
    Ms. MOORE. And these are 501(c)(4) organizations.
    Mr. HACKNEY. Dark money is primarily 501(c)(4), but can be 
501(c)(6) business leagues, as well. And both of those 
organizations do not have to report their donors.
    Ms. MOORE. Okay, and so we have heard a lot of complaints 
here today from our guests about, you know, these voter 
registration schemes. And what I am saying is that what we have 
said that campaigning is that money is speech. So, these are 
people--when we look at the demographics of about 64 percent of 
the people who are eligible to vote, this is the new American 
majority. They are young people, they are people of color, they 
are unmarried women. And so, outreach to them politically, not 
leading them toward a particular candidate, is this the speech 
that we are--we have talked about today that is supposed to be, 
you know, at the pinnacle of corruption?
    Mr. HACKNEY. Representative Moore, generally, the dark 
money concept absolutely is not about voter registration. That 
is more happening within (c)(3)s and has long been a part of 
it. In my opinion, the most important things we can do in a 
democracy is get our people to be registered to vote, and get 
out to vote. We should have everybody: red districts, blue 
districts, all across the nation. And to the extent charities 
can do that, I think they should.
    Ms. MOORE. I mean, this is a charitable social activity. 
Because I know that if you move around a lot, if you are poor, 
you may not know it is Election Day. And so we are--left to 
those people who could afford to do commercials on TV, buy 
radio time, you know, the regular people will not have any 
voice, so I just want to change the tone, Mr. Chairman, of 
this, and just remind people that if there are things we need 
to make sure of to keep foreign money out of the 501(c)(4) 
political activities, let's work on that.
    But let's not turn this into a corrupt view, as the 
chairman of the full committee said, of voter registration, I 
mean, why are we looking at a view of wanting more people to 
register to vote as something that is negative? We had a 66 
percent turnout in 2020. And are we really sitting here 
grieving over that at this point, and trying to legislate 
against people's ability to do this? I hope not.
    And Mr. Chairman, thank you for your indulgence with my 
little rant here, and I yield back.
    Chairman SCHWEIKERT. Thank you, Ms. Moore.
    Ms. Tenney.
    Ms. TENNEY. Thank you, Mr. Chairman, and I thank the 
witnesses for being here.
    I don't think it is any secret that I founded the Election 
Integrity Caucus after my quite, my very interesting election 
of 2020, where on Election Day I was winning by 28,422 votes--
and yes, we counted every vote--after 100 days. We even 
registered voters in January that counted in November of 2020. 
So I really appreciate the talking about this issue.
    In the Election Integrity Caucus, we have over 60 members. 
We have had some people retire. We are always looking to have 
Democrats. And of course, some of my Democrat friends from New 
York City, once they lost the primary, said, ``We need more 
election integrity,'' so I would love to have them join on as 
emeritus members.
    But I put in the End Zuckerbucks Act because, and 
thankfully, that lead was taken by a number of states around 
the country to end Zuckerbucks, and Mr. Walter, thank you so 
much for continuing to fight the election integrity issue, and 
thank you for the shoutout to Mr. Whitson for promoting the 
Free and Fair Elections Act to get rid of the Biden executive 
order that is really electioneering, and an attempt to, in a 
partisan way, use the government in place of what Zuckerbucks 
was out to do, using dark money. And the darkest of dark money 
is exactly as you cited, Mr. Walter, this newfound way to use 
(c)(4)s into (c)(3)s, and to hide the fact that these are 
partisan. And Zuckerbucks was a perfect example of how partisan 
these were.
    And I don't think it comes as any surprise to anyone that 
the 2020 election really came down to three states, and it was 
about 44,000 votes. Our entire U.S. election in 2020 was about 
44,000 votes, really just, you know, as you cited with Georgia, 
Arizona, and Wisconsin, very narrow margins and a huge amount 
of money coming from Zuckerbucks to really prime the pump and 
get out the vote. And yet the Democrats always say, ``Well, 
this widespread fraud,'' well, I don't know if that is what I 
would call it, but I would call it priming the pump and taking 
advantage of the use of these not-for-profits in a negative 
way.
    I worry, as Mr. Steube did, about this problem with what is 
happening with this new executive order in using our federal 
agencies without any oversight from taxpayers to be able to 
fund this. And I just wanted to first ask Mr. Walter if you 
could maybe give us a little bit of follow-up on what is going 
on with the Alliance for Election Excellence that was created 
by CTCL, and where that is taking the CTCL, and what we are 
seeing in response to Zuckerbucks.
    Mr. WALTER. Well, thank you for the question, Congresswoman 
Tenney, and thank you for your leadership on the issue.
    You are quite right. With the help of you and others 
bringing attention to the problem of Zuckbucks, the majority of 
American states have now banned such private funding in their 
elections. However, I give the Center for Tech and Civic Life 
credit. They have rebranded this effort into the Alliance for 
Election Excellence, and they have amazing schemes about this.
    So they will, in places where they are not able to simply 
write checks, they will say, oh, we are going to give you 
credits, or we are going to give you scholarships, and you can 
spend the credits at our partner organizations. And oh, by the 
way, we are going to come in and give you improvement plans for 
how you can better run your office.
    Ms. TENNEY. Let me ask you this, because this is highly 
partisan. And you referred to pop-up groups. It appears that, 
from your reporting, there are over 340 so-called pop-up groups 
that remain under the 990 purviews, our ability to look at 
where this dark money comes in. Can you explain how partisan 
these are, and why they are something that the IRS should be 
looking into, and they are not?
    Mr. WALTER. Well, the Arabella Advisors is the poster child 
for this sort of thing. They admit to having over 500 pop-up 
groups that they have created over the years, and these groups 
will pop up long enough to attack you in your election and 
disappear.
    And a pop-up group does not have to report. It doesn't have 
a board. It doesn't have to report any individual things that 
regular non-profits do, like how much they spend on 
fundraising, and all sorts of things like that. So they stay in 
the dark.
    Ms. TENNEY. So as Professor Hackney would say, talk about 
making dark money darker. I want to ask you a question, though.
    In Mollie Hemingway's book, ``Rigged,'' she goes into 
extensive discussion about the influence of the Zuckerbucks and 
the Mark Zuckerberg money. She even makes the conclusion that, 
had it not been for Zuckerbucks, the results of the 2020 
election would have been different. How do you feel about her 
conclusion on that?
    Mr. WALTER. Well, I am proud to say that if you check her 
footnotes, you will find a lot of our research there. And we 
studied every single battleground state and both the great 
disproportion, as my colleague here said, in the funding of 
Democrat areas is enormous. And the increase in Democrat 
turnout in the funded parts of those states is much greater 
than in the other part, the unfunded parts of those states. So 
I don't think it is unreasonable at all to believe that they 
made the difference in those states.
    Ms. TENNEY. So you agree that it influenced greatly the 
outcome of the 2020 election?
    Mr. WALTER. Very much so, and all our data can be 
downloaded online, crunch the numbers yourself if you don't 
believe me.
    Ms. TENNEY. Thank you so much, I yield back.
    Thank you to the witnesses again.
    Chairman SCHWEIKERT. Thank you, Ms. Tenney.
    Mrs. Fischbach.
    Mrs. FISCHBACH. Always a challenge for me to reach the 
button. It is a challenge of being short.
    But Mr. Hackney, you know, I just wanted to walk through a 
little scenario with you, and then I am going to ask everybody 
for their opinion on it. But if a foreign national from a 
country that is an adversary of the United States wanted to 
donate millions of dollars to a 501(c)(3), is there any 
reporting requirement--I think you mentioned earlier--that 
would let Americans know that the American adversaries are 
funding a non-profit?
    Mr. HACKNEY. The government itself would get names and 
addresses on the Schedule B, because the Schedule B names and 
addresses have not yet been removed. There is a challenge to 
that. Buckeye Institute has a case challenging that. But right 
now, the government has that information, but the public does 
not. So the public does not have that information.
    Mrs. FISCHBACH. Could this non-profit then spend millions 
of dollars on issue advocacy campaigns to support policies that 
reduce, let's say, American's energy independence or any other 
they may come up with?
    Mr. HACKNEY. So let's be precise on issue advocacy. When we 
are talking about issue advocacy, it is a great question. Issue 
advocacy are commercials that go into a policy space, and many 
(c)(3)s will argue that they are able to engage in some of this 
space without violating the campaign intervention.
    If it moves----
    Mrs. FISCHBACH. But the money, if you are following the 
money, I mean, I understand----
    Mr. HACKNEY. You would not be able to see it.
    Mrs. FISCHBACH. You would not be able to see it. Could that 
same non-profit funded by American adversaries use the funds to 
conduct get-out-the-vote activities in targeted, or not 
targeted, but in places that maybe support a certain candidate?
    Mr. HACKNEY. Yes. So a charitable organization is able to 
carry out get-out-the-vote efforts, and there is nothing that 
stops that from taking place, no.
    Mrs. FISCHBACH. And then, could that same non-profit also 
send money to a 501(c)(4) organization that is able to donate 
to a super PAC which can run television and all of that?
    Mr. HACKNEY. Right, yes. So this is an interesting aspect.
    The Supreme Court itself in Regan versus Taxation with 
Representation found that the limitation on lobbying for 
charities, satisfied the First Amendment challenge because the 
(c)(3) can give money to a (c)(4), and in turn give it to a 
PAC. So under First Amendment principles, we have long accepted 
this as an aspect. But yes, you are correct, they can do that.
    Mrs. FISCHBACH. So yes, okay. I open it up to the rest of 
the panel if any of you would like to comment on that. You 
know, so those non-profits could impact American elections in 
all kinds of ways, but there is no way for Americans to even 
know how much of the money they received from foreign 
nationals. Is there any comments that you would like to make 
about kind of the scenario?
    Anyone? I have a few minutes. I didn't know if I would have 
minutes left, so I was trying to abbreviate things, but anyone 
wanted to comment on that, kind of following the money trail? 
Mr. Walter?
    Mr. WALTER. Well, I would just say that the examples I gave 
are the most egregious ones I know of, and they happen to be on 
the left with Democrats. But I certainly oppose foreign 
nationals helping anybody, and I would think that, again, 
across the aisle, this is something we could all agree on. We 
don't want Russian oligarchs contributing. We don't want 
Chinese communist princelings contributing. We don't want Arabs 
who may have old, very painful views of women and homosexuals 
interfering in our elections. There are no shortage of problems 
that could arise from this.
    And we heard talk earlier about campaign finance reform. No 
campaign finance laws ever touch (c)(3)s.
    Mrs. FISCHBACH. Thank you. Anyone else?
    With that, Mr. Chair, I will yield back. Thank you.
    Chairman SCHWEIKERT. Thank you, Mrs. Fischbach.
    Ms. Van Duyne.
    Ms. VAN DUYNE. Thank you very much, Mr. Chairman.
    Last month the committee held a hearing examining how 
unreported donations from foreign entities are influencing our 
colleges and our universities, and charitable donations through 
university endowments have grown astronomically to the tune of 
billions of dollars, while American universities have become 
hotbeds for left-wing indoctrination, often at the cost of 
student safety and well-being.
    The recent reports of violence against Jewish students on 
college campuses is just the most recent example. Last week, 
presidents of so-called elite universities could not answer 
simple questions about genocide. We continue to see 
opportunities for universities to say and do the right thing, 
yet when given the opportunity to do so they double down on 
their failed policies. University leadership's response, or 
lack thereof, raises serious concerns for the well-being of 
students, faculty, and staff, and calls into question the types 
of messages that these entities are promoting.
    The 501(c)(3) organizations are expected to abide by 
ethical standards that promote the public good. And I think we 
have got ample reason now to doubt whether or not they are 
meeting that standard. So Mr. Walter, in your research, have 
you seen instances where universities are using their 
endowments as a tool to support faculty positions and advance 
program missions that push some extreme political views?
    Mr. WALTER. Thank you for the question. Yes, we, as you 
say, we have seen this very vividly in recent weeks. And 
perhaps I would suggest you might consider entering into the 
record a superb Wall Street Journal op-ed on this problem by 
the brilliant philanthropy scholar, Les Lenkowsky, who wrote 
very clearly about this, and even raised the possibility that 
places like Harvard and the University of Pennsylvania may be 
endangering their tax exemptions by their actions.
    Ms. VAN DUYNE. I appreciate that. The 501(c)(4)s are held 
to a standard where 51 percent of activity must be educational, 
and cannot spend a majority of time on lobbying, and yet 
universities are not held to this standard. Correct?
    Mr. WALTER. That is correct, nor do they have a minimum 
payout requirement on their endowment.
    Ms. VAN DUYNE. Do you have any concerns about, right now, 
some of the dollars, where they are flowing from into these 
universities?
    Mr. WALTER. Well, that has been massively documented, 
especially from Chinese sources. There is a deeply disturbing 
amount of foreign dollars going into universities.
    Ms. VAN DUYNE. Are there any particular universities that 
you think we should be looking at?
    Mr. WALTER. There are so many that I hesitate to name them. 
I mean, the Confucius Institute is probably the single most 
egregious example, but that is in many universities.
    Ms. VAN DUYNE. Mr. Walter, do you see an issue where 
universities are hiding behind the title of education, yet are 
actively indoctrinating students and pushing a liberal agenda?
    Mr. WALTER. Yes. In fact, I quoted a friend who, when he 
went to visit a campus with his son to consider it, they were 
bragging. The professor was bragging about how he turned 
students into social activists. I don't think that is a proper 
role for universities, especially given their tax exemptions.
    Ms. VAN DUYNE. I appreciate that. I am a graduate from 
Cornell University, and we had a university professor there, a 
history professor, Russell Rickford, who recently was talking 
about the Hamas atrocities on October 7 in Israel and the Gaza 
Strip, and he called them, we won't use the words that he used, 
because I don't want to give him that much credit, but it was 
horrible for me to see that happening at my university, my alma 
mater, and not to have him fired immediately. Instead, he has 
been placed on leave after there was a tremendous amount of 
pressure. But he is still getting paid.
    Mr. WALTER. Yes. May I add, too, this shows you a real 
example of how donor disclosure is such a threat. I do not want 
to see Jewish donors harassed because they have been forced by 
the government into the spotlight because of their giving to 
support non-profits that support Israel.
    Ms. VAN DUYNE. I appreciate that.
    While the IRS has shown in the past that they cannot 
enforce laws on this unbiasedly, how can Congress change the 
laws to ensure that these requirements are being properly 
enforced?
    Mr. WALTER. Well, that is a tall order, and I don't know 
that there is a way to make it all better.
    As I said, I think a lot of the worst abuses come up either 
because there is no law, like there is no law against foreign 
nationals contributing to non-profits, or because the law is 
extremely murky, like the law governing (c)(3)s and voter 
registration. So clarifying the laws will often improve things 
considerably.
    Ms. VAN DUYNE. Mr. Whitson, do you have anything to add to 
that?
    Mr. WHITSON. The only thing is whenever there is an 
instance where the focus can be on the adversary versus the 
501(c)(3), (c)(4), that should be the instinct. And so, if the 
adversary is China, and there are things we can do to monitor 
Chinese funding before it comes in, things like that, in my 
mind, would be the first focus. And then, where you find areas 
where you can't, then you can explore other avenues. But I 
would always start with that in mind.
    Ms. VAN DUYNE. Thank you very much, and I yield back.
    Chairman SCHWEIKERT. Thank you, Ms. Van Duyne.
    Mr. Feenstra.
    Mr. FEENSTRA. Thank you, Mr. Chair.
    And thank you for all of your testimonies. You hear a 
reoccurring theme that we have problems, and we have a lack of 
information. This is being seen through all agencies and what 
we do, especially when it comes to waste and fraud. So, I am 
trying to look for solutions. What can we do to resolve our 
problems that we have here?
    We met with the folks at CAO, and the Federal data is in 
such a poor state that the ability to investigate fraud is 
severely limited. We have reached out to the CRS and IRS on 
total utilization of a tax credit. They can't provide any 
information on this. It is tough to operate Federal programs 
when you can't get data and you can't then create the solution 
to the problem. And that is what we are having here. So that is 
what I want to talk about.
    Mr. Chung, we have heard concerns from witnesses today 
about the money from foreign nationals coming into our 
political system through the non-profit sector. But I would 
also like to know what tax-exempt organizations need to report 
in terms of their activity outside the United States, including 
grants, fundraising activity, investments, and stuff like that.
    So if you look on the Schedule F of the Form 990, is there 
anything that we can change on this form or that you look at it 
and say, all right, this is what we have to report, and this is 
what we should be reporting?
    Mr. CHUNG. Yes, thank you for the question. CRS is a non-
partisan organization, so I can't say what should and shouldn't 
be changed about the form, the schedule of the Form 990. I can 
generally describe what is available in that form. And it is, 
as you mentioned, it is supposed to report foreign activities 
of a tax-exempt organization. And they report it by region.
    Mr. FEENSTRA. Yes, that is a problem, isn't it?
    I mean, you think about reporting by geographic regions as 
opposed to an organization in totality. Do you see that as a 
problem?
    Mr. CHUNG. Well, I can't, respectfully, I can't say if it 
is a problem or not, but there certainly isn't information 
about the organization that those grants may be going to.
    Mr. FEENSTRA. Right, right, right. Well, Mr. Chung, if you 
just take a step back, and I know that you can't talk about 
some of these things, but would you say one of the key issues 
is the lack of information that we currently are getting?
    Mr. CHUNG. Yes, thank you for the question again. So there 
is varying levels of information that is required to be 
disclosed by a tax-exempt organization, and it is going to 
depend on the type of organizations we have.
    So generally, 501(c)(4) organizations have less disclosure 
requirements.
    Mr. FEENSTRA. Very little disclosure requirements.
    Mr. Walter, can you answer some of these questions?
    I mean, what is your thought in this area?
    I mean, I just look at it and say, all right, we are the 
taxing body here. I mean, we have to have the information to 
make good decisions and create solutions.
    Mr. WALTER. Well, I do worry that there is a lack of 
information provided about foreign activities by U.S. exempt 
organizations. There is--the concern, of course, sometimes they 
are operating in a dangerous part of the world, in which case 
it can be touchy to be revealing that. On the other hand, we 
have a whole report on how the Soros philanthropies have almost 
certainly violated U.S. law by meddling in European elections.
    Mr. FEENSTRA. Right, right. And I am not talking about 
private information. I am talking about the quality of 
information. To me, it is the quality of information of what we 
are getting that we can make decisions, and that is where we 
can go after some of these bad actors.
    The bottom line is we have bad actors in what is happening. 
Mr. Whitson, can you comment on any of this?
    Mr. WHITSON. Congressman, nothing more to add, other than 
kind of what I alluded to earlier. If there is a way to target 
the foreign adversary or the person we are worried about 
instead of the 501(c)(3) or (c)(4), I think that is the first 
place to start, and then to take it from there.
    Mr. FEENSTRA. Exactly right. And again, I just think there 
has got to be protocols from the IRS and CRS to say, hey, this 
is the information we need. That is part of this body's job, I 
think, is to start going down that path and say, what are the 
data that we want?
    And I get it, there is private data that we don't want to 
collect, but there is also the quality of data that we should 
collect, and that we could do something with, and then follow 
the law.
    Thank you, and I yield back.
    Chairman SCHWEIKERT. Thank you, Mr. Feenstra.
    Ms. Malliotakis.
    Ms. MALLIOTAKIS. Thank you very much. I appreciate everyone 
being here today to talk about the role that the tax-exempt 
sector has played positively in our economy, but also some of 
the issues that certainly need oversight. As we know, bad 
apples can spoil the bunch.
    As you all know, we are currently fighting an unprecedented 
number of migrants coming through our southern border, and it 
is firmly believed that assistance is being provided to 
thousands of these individuals before they even set foot in the 
U.S., from being told what to say and some even having the 
business cards of non-profits and immigration attorneys in 
their possession.
    We know that individuals crossing our border through the 
southern border, quite frankly, every single one of those 
individuals is paying the drug cartels to get here. That is the 
reality. That is how the drug cartels are making billions of 
dollars every month that then they in turn use to traffic drugs 
into this country and kill young Americans. We saw 100,000 
deaths. So it is all connected. I mean, that is the bottom line 
here.
    And we have non-profit organizations that are helping in 
this trafficking of individuals that end up profiting these 
drug cartels poisoning Americans. So I guess my question is, we 
know of some larger names. Catholic Charities has come up. 
Salvation Army. I mean, one of my local news affiliates, they 
said that the Salvation Army even provided migrants with a 
plane ticket and a note directing the TSA to allow the 
individuals through airport screening and to board the plane, 
like that piece of paper is supposed to be their identification 
to get on the plane. I mean, this act alone should be grounds 
for swift action.
    But we also know that Catholic Charities in San Antonio has 
arranged more than 4,000 flights to cities like Chicago and 
Denver and New York.
    My city is dealing with a crisis now because of the 
President's open border policy, and we have local institutions 
who are helping. They are getting tens of millions of dollars 
in contracts to house these individuals. They are taking away 
an assisted living facility from seniors in my district to put 
these individuals who just cross into our country from the 
border. And after just residing in 30 days, Bill DeBlasio tried 
to pass a law that says they can actually register to vote if 
they have work authorization, which is just outrageous.
    And then you have these groups, Legal Aid Society, for 
example, in New York City, that is pushing the mayor to 
continue to house these individuals, saying that the New York 
City Right to Shelter law actually applies to citizens of other 
countries. It was meant for New Yorkers, not citizens of other 
countries.
    So you have all these non-profits, local and national, that 
are playing a role in this illegal immigration, okay, and we 
have to figure out a way to stop it. And so my question for Mr. 
Walter, to start, would be, you know, considering these, the 
role that these 501(c)(3) organizations are playing, they are 
relying on taxpayer-funded grants from the Biden Administration 
or elsewhere to do this. They are receiving private funds, they 
are receiving foreign funds, they are receiving all sorts of 
government funding to continue this madness that my mayor says 
is going to destroy New York City. And we see what is happening 
all across, completely.
    What can we do about this? Should taxpayers be concerned 
about these 501(c)(3) entities that directly undermine our 
efforts to secure the border and help relocate unvetted 
individuals to communities all over the country?
    And what can we do about it as an oversight committee?
    Mr. WALTER. Well, thank you for the question. Government 
funding of non-profits is always a problematic issue. The great 
Senator Daniel Patrick Moynihan, a Democrat, from New York, 
famously was disturbed deeply as he saw a growing percentage of 
non-profits, who should really be supported by private 
citizens, become more and more supported by the government, 
because it creates precisely this problem that you say. On the 
one hand, I believe the non-profits do care about the 
sufferings of immigrants. But at the same time, they are given 
this enormous financial incentive to increase the number of 
immigrants precisely to increase the amount of government 
dollars coming into themselves. And I think charities dominated 
by government dollars are not going to be as effective as 
charities supported by private citizens.
    Ms. MALLIOTAKIS. No, it is actually, it is very true, what 
you are saying. And I think what can we do about this?
    Because, like, even in New York City we have an 
organization called Homes for the Homeless that was running an 
assisted living facility. They literally kicked out veterans 
and seniors, from the assisted living facility and then turned 
around and entered a contract with the city in which they are 
making $28 million over the next couple of years to house these 
migrants instead. I mean, that is horrible. So how do we 
disincentivize this, or how do we hold these municipalities 
accountable that are actually doing it?
    Mr. WALTER. Well, that is certainly a tall order. I mean, 
in the end, it is the border crisis itself that is the greatest 
single driver of this.
    Ms. MALLIOTAKIS. That is right. So President Biden should 
just do his job and secure the border, or Chuck Schumer should 
take up our Border Security Act. I completely agree with you. 
It would be nice if the Senate did something over there.
    I yield back.
    Chairman SCHWEIKERT. Thanks, Ms. Malliotakis.
    Mr. Smucker.
    Mr. SMUCKER. Thank you, Mr. Chairman.
    A few weeks ago, this subcommittee held a hearing on the 
use of 501(c)(3) tax structures by universities, and how 
foreign influence has been used to, in some cases, promote 
anti-Semitism on our college campuses. And a key takeaway from 
that hearing was the need for transparency. And I would like to 
build on what we learned on that day, and touch on how foreign 
money is also perhaps influencing journalism, and how U.S. 
citizens receive their news and information.
    All of us here are aware of the influence that media and 
news organizations have on public opinion, and we are learning 
that foreign money is permeating journalism sources, as well, 
perhaps being leveraged to spread patently false and biased 
information, as well as encourage anti-Semitism and anti-
Americanism.
    We are also aware of how foreign governments have used the 
media to sow distrust, discord, creating doubt in national 
institutions and in each other. An example, Qatar is a prime 
example of a country that, not always aligned with U.S. values, 
leveraging its ability to mask money to exert influence.
    Qatar funds the Al Jazeera Media network, which posts 
blatant lies about Israel's efforts to root out Hamas 
terrorists after the horrific attacks on October 7. And they, 
Al Jazeera, recently stood up a new entity called AJ+, which 
leverages apps such as TikTok to reach young viewers and spread 
not only biased disinformation, but also dangerous lies about 
Israel and propaganda in support of Hamas. Some of these videos 
include the celebration of radical criminals occupying the U.S. 
military ship attempting to deliver military arms and aid to 
Israel, as well as promoting divestment from Israel and Israeli 
companies.
    In 2020 the DoJ asked AJ+ to register as a foreign agent 
under the Foreign Agents Registration Act due to their funding 
from the Qatari Government, and as of today that has not yet 
occurred. They haven't registered.
    And just by way of comparison, Al Jazeera Media retains 136 
press credentials for the House gallery, while The New York 
Times only retains 86 such passes.
    We have heard today about the Arabella Advisors Group, and 
how they use their complicated organizational structure to 
peddle foreign dollars into our electoral system. Arabella 
Advisors, through its new venture fund, has also influenced 
U.S. media by funneling money to stand up new media websites 
such as the Capital Journal in Ohio; Courier Newsroom, which 
has established new sites across a variety of key presidential 
battleground states, including Arizona, Virginia, Wisconsin, 
Michigan, and Pennsylvania.
    I think transparency is needed into understanding these 
foreign sources and how they are funding these entities. So 
maybe to Mr. Walter, Mr. Whitson, should we be concerned about 
this?
    And we are--obviously, we want to protect First Amendment 
principles. A free press is absolutely critical. But I think so 
is transparency into, you know, who is funding our journalism 
and our news sources. I would like to get your thoughts on 
that. Is this an appropriate concern?
    Mr. WALTER. Thank you for your question, and especially for 
your concern about the crisis of anti-Semitism in America 
today, which is wrapped up in exactly what you are talking 
about.
    I spoke earlier about the possibility of adjusting the Form 
990 of the IRS so that fiscally sponsored projects would have 
to be reported more clearly. Some of those Arabella efforts you 
were talking about are fiscally sponsored projects that are 
completely opaque to the public and to you for oversight.
    I would also add that it is important to recognize that, I 
was talking about Mr. Wyss's work with Arabella. Well, I quoted 
The New York Times, which has done actually some very good 
reporting on what Wyss and Arabella have done. And one of the 
things that spurred them was that they managed to uncover it 
only because of WikiLeaks, a huge effort by Wyss, funded by 
Wyss, carried out by Arabella to have a whole hive of fake news 
sites around the----
    Mr. SMUCKER. Thank you.
    Mr. Whitson, anything to add here? Any suggestions?
    Mr. WHITSON. Nothing to add, other than I share your 
concern about trying to find a solution to this problem and 
then causing an even bigger problem.
    And so I think one thing, and I am sure you would agree, is 
just more speech is better. And so, if there are other outlets 
that are giving other sides of the information, is the Federal 
Government doing anything to make it harder? Are the Federal 
agencies going after Twitter and cutting off a source of 
information that gives people an alternate view?
    So those kinds of things, that would be the better way to 
attack this, I think, than--or, you know, maybe so.
    Mr. SMUCKER. Thank you, and I am out of time.
    Thank you, Mr. Chairman.
    Chairman SCHWEIKERT. Thank you, Mr. Smucker.
    Chairman's prerogative, I want to make sure I listened 
carefully, because it was one of the original points, 
particularly around the opening. So, Professor, can you play a 
game with me for a second?
    Professor, congratulations. You are a billionaire. Yay. And 
you decide to take a substantial portion of your wealth and 
give it to a 501(c)(3). You get a tax deduction, yes? If it is 
a non-profit----
    Mr. HACKNEY. It is complex, in terms of how much you can 
get, because it depends on how much income you have.
    Chairman SCHWEIKERT. No, no, but----
    Mr. HACKNEY. You will get a deduction, right.
    Chairman SCHWEIKERT. You just--yes.
    Mr. HACKNEY. A deduction.
    Chairman SCHWEIKERT. Yes. And that (c)(3) could actually 
take some of that largesse and give it to (c)(4).
    Mr. HACKNEY. It depends if it is a private foundation or 
not. That creates some challenges with that.
    Chairman SCHWEIKERT. Yes, but if they were structured--and 
that is--they could use that (c)(3) money to cover all the 
expenses within that (c)(4), and maybe certain communication 
projects and voter education, maybe even voter registration. 
And the (c)(4) then could--because money is quite fungible, as, 
you know, in the Ways and Means Committee, that (c)(4) could 
also make direct contributions to a super PAC, as we call them.
    Mr. HACKNEY. The (c)(4) could be making that. We could not 
use (c)(3) money to accomplish that purpose, so you would have 
to be accounting for that explicitly.
    Chairman SCHWEIKERT. Yes, but----
    Mr. HACKNEY. But the (c)(4) potentially can give money to a 
super PAC, as well.
    Chairman SCHWEIKERT. Okay. I appreciate that. I understand 
there is a number of--we are concerned about foreign money, 
which is, just by policy, is not supposed to be in our 
elections.
    The other concern I have is also there had been a principle 
that in elections it is after-tax money, it is not pre-tax 
money. And if this is a way to drive resources, particularly 
those with, congratulations, you being a billionaire now, and 
trying to understand that, and is it something we would 
identify if we fixed the 990 forms, or is there something that 
is much more complex?
    Particularly as we get ready to do more tax policy, we have 
the debates amongst ourselves on the tax gap, but also the 
stunning amounts of resources now that are moving into our 
politics and trying to understand why. You know, what is the 
ultimate incentive when a medium-sized state like mine has a 
couple-hundred-million-dollar, you know, U.S. Senate races and 
those things?
    So we are not going to solve it here today, but your 
participation is truly appreciated because we are trying to get 
our heads around both what are the incentives, have we created 
gaps in our intention in the statutes, and how do we fix it?
    The last thing I will also say, if any of you have any 
brilliant ideas in your drafting of if you were ever to do a 
more universal 990, what it would look like, because that has 
been one of our collection projects this year.
    And with that, let's actually call ourselves to, oh, Mr. 
Davis, you snuck in. All right, get close to the microphone. I 
am going to give Mr. Davis five minutes.
    Thank you for joining us, Mr. Davis, you are up.
    Mr. DAVIS. Well, thank you. Even though I am not a member 
of this committee, I find the subject matter very interesting, 
and I had a question or two that I wanted to explore. Let me 
thank all of you for your expertise and the information that 
you have been sharing.
    Professor Hackney, let me just begin. I am proud to co-lead 
the Charitable Act with Representatives Blake Moore, Chris 
Pappas, and Michelle Steel that would create an above-the-line 
charitable deduction.
    And charitable giving is at the core of our American 
values. Although our tax code rewards charitable giving by 
itemizers, it leaves out the vast majority of taxpayers who do 
not itemize. We know that charitable giving failed in 2022, the 
largest year-over-year decline since tracking started. Yet we 
know that gifts increased when the temporary above-the-line 
charitable deduction existed in 2020 and 2021.
    Could you talk a little bit about how an above-the-line 
charitable deduction can help both non-itemizers and the 
charitable community, which creates a, I think, great 
opportunity for utilization of our tax system?
    Mr. HACKNEY. Absolutely, Representative Davis. Thanks for 
the question.
    Currently, some data a couple of years ago were suggesting 
that, as a result of the change in the 2017 Tax Act that 
significantly increased the standard deduction--up to 24,000, 
and it is around 27,000 this year--most people cannot itemize, 
and cannot deduct charitable contributions. Maybe nine percent. 
I haven't seen good data recently, but it is a very small 
minority of people. It is mainly very high-income individuals 
that are able to take this charitable contribution deduction. 
That has a problematic aspect, I think, on our charitable 
sector, because it is driven by high-income individuals, rather 
than everybody else.
    So I like the idea of expanding it to a wider range of 
audiences to encourage more giving. Currently, giving is not 
encouraged for most people, and you see that in the numbers. 
Data are down for non-profits, lots going to donor-advised 
funds, but it is coming from very wealthy individuals, rather 
than a broad democracy-enhancing charitable sector. So I think 
this would improve things for the non-profit sector by bringing 
more dollars in and improve the way they think about what they 
are doing to think more about the American people in a broad 
sense.
    I am very happy with the charitable sector in general, but 
I think having a more democracy aspect to it would be an 
improvement.
    Mr. DAVIS. Well, thank you very much for that.
    And Mr. Chairman, I don't have any further questions, but 
let me thank you again, and also ask unanimous consent to 
submit for the record a number of letters of charitable 
organizations advocating for this to become reality.
    Chairman SCHWEIKERT. So ordered.
    [The information follows:]
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    Chairman SCHWEIKERT. I would like to thank our witnesses 
for appearing today, and thank you, Mr. Davis, for joining us.
    Please be advised that members have two weeks to submit 
written questions to be answered later in writing. Those 
questions and your answers will be made part of the formal 
record of this hearing.
    Thank you for joining us. We are adjourned.
    [Whereupon, at 3:52 p.m., the subcommittee was adjourned.]
      

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