OP-ED: The Regulatory Creep of Grassroots Lobbying Public Disclosure Regimes

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Grass-greener

Watered lawn vs astroturf lawn / Cory Doctorow

Requiring public disclosure of an organization’s grassroots lobbying efforts may not be a new concept, but San Francisco’s recently adopted Proposition C is a reminder of the regulatory creep of lobbying disclosure regimes on nonprofit organizations across the nation. San Francisco is the latest of many jurisdictions demanding public disclosure of grassroots lobbying campaigns, and, despite the protestations of nonprofit organizations, these jurisdictions are routinely demanding disclosure regardless of the speakers’ means, methods, or modi operandi. In its haste to uncover the interests behind astroturf campaigns and to force disclosure on anyone who amplifies their voice with money’s assistance, government instead creates minefields of regulatory traps for the unwary and provides the public with almost uniformly useless information.

Few activities are more American than joining with a group of like-minded individuals and demanding that our elected and appointed officials take certain actions that we believe will improve our lives. This activity is so American that we include it in our Bill of Rights: the First Amendment right to petition the government for a redress of grievances—a powerful subset of which is grassroots lobbying. Perhaps the most famous example of grassroots lobbying is the 1963 civil rights March on Washington. Even the Boston Tea Party was, at its base, a grassroots lobbying effort.

The Constitution forbids the government from prohibiting grassroots lobbying activities. Instead, the government fights a proxy battle against lobbying by demanding extensive public disclosure of such activities—under threat of government prosecution—whenever money is involved. These days, lobbying often requires not just a powerful message and passionate individuals willing to carry that message, but also financial resources. As a general matter, tracking lobbying dollars is a reasonable public policy; it lets the public know when companies like Uber and Google or associations like the Western States Petroleum Association or the Sierra Club spend money on professional or grassroots lobbying. However, problems arise when the government casts such a large regulatory net that it catches most grassroots lobbying activities, and pollutes the public record with meaningless information.

Although distinguishable at the margins, San Francisco’s Proposition C is similar to most regimes in that any organization, including the smallest of nonprofits, must register within a few days of triggering a relatively low spending threshold on grassroots lobbying, pay a few hundred dollars in annual fees, and file regular and detailed public reports. Perhaps most challenging, nonprofits must include the amount they pay employees for planning, preparing, and executing a grassroots lobbying campaign—which adds up quickly—when determining the existence of any public disclosure obligations. Larger nonprofits tend to find regimes like Proposition C to be a nuisance, while the smaller and mid-sized nonprofits often find them to be a burden. Regardless of size, however, all organizations must be aware of the regulatory environment or risk facing the government’s wrath.

Indeed, like all lobby disclosure laws, Proposition C has teeth. Each missed registration and report is a violation, and each violation carries a maximum $5,000 fine (not to mention daily late fees for each report, which quickly add up). The maximum fines are often negotiated down for various mitigating circumstances—ignorance of the law, first-time offender, etc.—but the experience is never pleasant, always time-consuming, and never fails to lead to a monetary fine in the thousands or tens of thousands of dollars.

Surely the impetus for Proposition C was not the activities of bona fide nonprofits. Instead, the real motivation for Proposition C was special interest groups that effectively pay for grassroots lobbying campaigns; for instance, groups that pay individuals to appear at public hearings or to write letters to elected officials. For its part, prior to the November election, San Francisco’s nonprofit community voiced serious misgivings about Proposition C. Notably, Gabriel Metcalf—executive director of the San Francisco Planning and Urban Research Association (“SPUR”)—penned an op-ed in the San Francisco Chronicle on behalf of the nonprofit community warning of the “chilling effect” that Proposition C would have on nonprofits that participate in the “public process.” Mr. Metcalf opined that nonprofits were being unfairly caught up in a law meant for astroturf campaigns, not the activities of bona fide nonprofits. SPUR was joined in opposition to Proposition C by the Council of Community Housing Organizations, the Affordable Housing Alliance, and the San Francisco Labor Council, among several other groups. Despite the nonprofit community’s objections, Proposition C passed with an emphatic 75 percent of the vote, and will apply to nonprofits just the same as special interest groups.

By approving Proposition C, San Francisco added itself to the ever-growing list of cities—from San Diego to New York City to San Jose—and states—from California to New York to Washington—that compel public disclosure of grassroots lobbying activity, complete with implications for nonprofit organizations that interact with or attempt to influence governments at any level. Governments claim they are shedding light on astroturf campaigns and other nefarious governmental influences. Even against the backdrop of such lofty goals, these regimes make conducting grassroots lobbying campaigns all the more challenging for nonprofits, and do so without any real proof that they are necessary or accomplish anything of value.

At a practical level, nonprofits must be ever vigilant and educated about the regulatory regimes in effect in the cities and states in which they operate because the consequences of non-compliance range from annoying to debilitating. Knowledge of the regulatory environment allows groups to avoid the costly regulatory traps inherent in these regimes, and affords associations of like-minded individuals with more freedom to exercise their First Amendment rights free from government intrusion, just like they were meant to do.

With so many choices, it is a challenge to determine what is most frustrating for nonprofits under these regimes: the offensive notion that a nonprofit should be subject to the same laws as astroturf campaigns; the voluminous record-keeping a nonprofit must maintain to ensure compliance with the law; the government forcing nonprofits to publically disclose the purpose of their grassroots lobbying campaigns when most organizations blare exactly that through social media anyways. It’s a toss-up, and for its efforts, the government provides the public with information that is rarely of any value to anyone except the government’s prosecutors. Taken together, this is quintessential regulatory creep.

  • Rita Ulrich

    Have these local ordinances been challenged in the courts? Over regulating in this case could have the same effect as limiting people’s ability to exercise their 1st amendment rights. Sounds like something that needs to be challenged.

  • I’m glad this issue is getting more attention. In San Francisco the Human Services Network — a coalition of nonprofits — actively opposed the bill and wrote the OpEd that is quoted in this article. Here is an excerpt from the well-presented piece that Debbi Lerman of HSN presented last week to the SF Ethics Commission:

    “The San Francisco Human Services Network (HSN) is an association of about 80 community-based health and human service nonprofits. HSN is a public policy organization dedicated to addressing issues critical to our sector and the people we serve. We provide a unique contribution to the City by educating service providers, elected officials and other policymakers, and the community on how policy decisions affect San Francisco’s comprehensive array of social and health programs.

    “HSN and our members believe that Proposition C is well intentioned but flawed in its application to nonprofits. We share deep concerns about the impact of Proposition C on the ability of community organizations to advocate for the needs of vulnerable populations in San Francisco. Unfortunately, the Ethics Commission brought Prop C to the ballot without conducting outreach to our sector, and we were completely unaware of this effort until the measure was already set in stone.

    “As the Commission takes up the task of drafting implementing regulations, we ask that you schedule a hearing on how Prop C impacts nonprofits, and consider an amendment to exempt nonprofits from Prop C’s requirements as per the process specified in the ballot measure. The reasons for this amendment include the following:

    “1) Prop C will harm city policy-making by chilling the participation of nonprofits.
    San Francisco nonprofits have a long history of successful grassroots public interest advocacy for significant social, environmental, economic and cultural changes to address community needs in the areas of civil rights, homeless and safety net programs, health care,
    and more. Our City benefits from nonprofits’ expertise, as well as from their
    role in ensuring a voice for the public, and particularly for low income and vulnerable
    populations who often lack the capacity to organize and advocate for themselves.

    “Nonprofits are already subject to complex federal and state lobbying rules, and misconceptions about nonprofits’ right to advocate are widespread. Experience has shown that the more detailed, duplicative, confusing and burdensome the rules, the more they deter nonprofits from engaging in any lobbying or advocacy. This is especially the case for
    smaller community-based, faith-based and neighborhood organizations that cannot afford access to legal counsel.

    “Ultimately, this additional burden will drive many nonprofits out of public policy debates, or lead them to reduce their participation to avoid reaching the very low $2500 threshold. Multiple layers of regulation become a trap for the unwary, with potential consequences
    including monetary fines, loss of foundation support due to restrictions on philanthropic funding of lobbying activity, and even jeopardizing their nonprofit status by triggering IRS scrutiny.

    . . .

    “In conclusion, the application of Proposition C to nonprofits creates a barrier to
    civic engagement and the ability of City officials to hear from all sides in public
    policy debates. We ask that the Commission reconsider its applicability to
    nonprofit organizations through the amendment process laid out in the ballot
    measure – via the votes of four Ethics Commissioners and two-thirds of the
    Board of Supervisors.”