States Taking Political Donor Disclosure into Their Own Hands

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November 26, 2012; Source: Los Angeles Times

Despite a court ruling that the Federal Election Commission erred when it allowed 501(c)(4) and 501(c)(6) independent organizations to engage in political activities without revealing their donors, neither the Federal Election Commission (FEC) nor the Internal Revenue Service (IRS) has done anything to compel disclosure of the sources of their money. If it isn’t going to happen at the federal level, it looks like the states will have to take matters into their own hands.

That’s the situation with partisan political activities by independent organizations concerning federal races, but states are pushing ahead to develop or implement stricter campaign finance disclosure rules for “independent” groups trying to influence state races. For example, the Fair Political Practices Commission (FPPC) in California is leaving no stone unturned to figure out the original source of the $11 million spent on campaigns for two California ballot initiatives by an Arizona group, Americans for Responsible Leadership. The FPPC has traced the money back to a Virginia nonprofit, Americans for Job Security, that is a 501(c)(4) social welfare organization which has so far not agreed to reveal its donors, leaving the original source a mystery at this point.

Courts in Montana and Idaho have ruled that two nonprofits engaged in state campaigns have to reveal their contributors. In Montana, the group in question was the American Tradition Partnership, which the NPQ Newswire discussed as having had some close coordination with political candidates, which is typically not allowed of “independent” political committees.

The Idaho group was Education Voters of Idaho (EVI), which put more than $200,000 into ads about three ballot initiatives. Pursuant to a court order, EVI revealed that a good chunk of the secret money came from New York City’s billionaire Mayor Michael Bloomberg. Idaho’s Secretary of State, Ben Ysursa, explained, “The fact that federal campaign laws are deficient or you’ve got a deadlocked Federal Election Commission — that doesn’t mean the states are powerless.”

Of course, groups like Education Voters of Idaho are using their 501(c)(4) social welfare organization status to resist state calls for donor disclosure, but unlike the feckless, stalemated Federal Election Commission, its state-level counterparts appear to be ready for action, uncowed by the notion that donors to any 501(c) organization automatically merit ironclad protection from disclosure. Idaho, Montana, and California deserve plaudits for resisting the assumption of automatic secrecy. These states are saying that in political campaigns, the needs of transparency in democracy trump the value of non-disclosure. Let’s see if the message finds its way up the food chain to the FEC, the IRS, and the denizens of Capitol Hill who have so far squashed the DISCLOSE legislation.—Rick Cohen