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Chairman Smith Opening Statement – Hearing on Tax-Exempt Charities Influencing the Political Process

December 13, 2023

“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.”

“Thank you Chairman Schweikert, Ranking Member Pascrell.

“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 are almost three times the number of charities in the United States compared to thirty years ago.

“In the last 15 years, employment by nonprofits has increased by a third. By comparison, jobs in the private sector overall only increased by nine percent in that 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 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 backdoor. 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’m 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.”