Latest Developments:
- The State of Washington Will Require More Disclosures From Grassroots Campaigns: Washington enacted HB 1317, and effective July 23, 2023, the new law expands the definition of a “sponsor” of a grassroots lobbying campaign, adjusts the deadlines for a sponsor’s required registration, requires the disclosure of the sponsor’s employer and the source of funding for the campaign of $25 or more, and also requires certain disclosures for advertising and mass communications produced as part of the grassroots campaign.
Reminders:
- The State of California Fair Political Practices Commission (FPPC) canceled its public hearing scheduled for May 18, 2023 and is now expected to consider regulatory proposals related to the implementation of SB 1439 and its expansion of California’s pay-to-play laws in June or July. Please contact your Nielsen Merksamer attorney if you have any questions about the potential impact of these proposed regulations.
In Case You Missed It:
- Philadelphia City Contractors Are Likely Adopting Internal Policies Prohibiting Donations to City Candidates: Law.com reports that Philadelphia’s restrictive pay-to-play law could explain why personnel from only five of eleven large law firms with city contracts made donations to mayoral candidates. A business’ campaign contributions must remain under certain limits to win and keep city contracts. When determining whether a business has reached a limit, unlike other major cities with pay-to-play laws, Philadelphia counts donations by a broad range of people, including but not limited to “any officer, director, controlling shareholder or partner.” Therefore, in Philadelphia, a business with a city contract can: (1) pay heavy compliance costs to ensure that their employees donate to races within limits that allow the business to keep its city contract, (2) allow employees to donate as they wish and risk losing its city contract, or (3) restrict or prohibit donations by employees. Some businesses are adopting internal policies that restrict donations, which can hurt candidates seeking to raise funds from friends and colleagues who are limited in how they can support campaigns.
- Long Beach Might Require Nonprofits To Register As Lobbyists: Long Beach Post reports that the Long Beach Ethics Commission is considering recommendations to change the city’s lobbying laws. In particular, the commission may recommend including “advocacy” as a form of lobbying, requiring certain nonprofits to register as lobbyists, reducing the thresholds that could trigger registration and mandating more frequent reports. The commission plans to have at least one more public meeting before it drafts a new proposal for the City Council’s consideration.
- Los Angeles Mayor Raises Money For Foundation Dedicated To Upkeep and Events at Her New Residence: The LA Times reports that Los Angeles mayor, Karen Bass, moved into the Getty House, which was donated to the city as an official mayoral residence. Since becoming mayor, she also raised at least $65,000 to the Getty House Foundation, a “nonprofit dedicated to upkeep and events” at the Getty House. Such behested donations are legal, but critics argue that “they can create the appearance of a pay-to-play system.” A spokesperson for the mayor said that Bass is working with the foundation “to revise internal policies related to contributions from lobbyists and developers” and that she plans to disclose all contributions monthly even though state law only requires disclosure of behested donations over $5,000.
- Nonprofits Are Not Disclosing Donors Who Fund and Attend Trips With California Legislators: CalMatters reports that a special law in California, adopted in 2015, requires certain nonprofits that organize and host travel for elected officials to file annual reports disclosing donors who gave more than $1,000 and accompanied elected officials on a trip. However, likely based on the ambiguous language of the law as to which nonprofits are required to file disclosures, these disclosures have only been filed for two events. In addition, the Fair Political Practices Commission has not investigated any nonprofits because a complaint for failure to comply with the law has never been lodged.
- To Support DeSantis’ Run for the Presidency, A Florida State PAC Plans To Transfer $86 Million To A Federal PAC: CNBC reports that to support Florida Governor Ron DeSantis’ presidential run, a Florida state PAC, which is allowed to accept unlimited contributions from donors, is planning to transfer $86 million to a pro-DeSantis federal super PAC. While “federal law bans the transfer of state-level political funds to a national election,” experts disagree as to whether such a state PAC to federal PAC transfer is illegal, and, in the past, the FEC has declined to bring an enforcement action against a similar move made for a Florida representative’s congressional race. In addition, the transfer for DeSantis apparently would not require approval from the original donors; however, the law around donor sign-off varies by jurisdiction and by the nature of the committees involved.
- Group of Nonprofits Used Robocalls to Raise Millions That Were Spent on More Robocalls: The Seattle Times reports a group of 527 organizations raised $89 million since 2014 by making robocalls to solicit small donations to supposedly “support police officers, veterans, and firefighters.” However, about 90% of the money raised was sent back to fundraising contractors “to feed a self-consuming loop where donations went to find more donors.” The group also paid three political consultants from Wisconsin, the hidden force behind the nonprofits, through shell companies. By intentionally minimizing their spending on candidates, the nonprofits avoided registration with the FEC and state agencies, falling solely under the purview of the IRS. The nonprofits are currently subject to tax exempt compliance examinations by the IRS, and a lawyer for the nonprofits shared that the IRS has indicated the nonprofits could “operate as-is.” Meanwhile, campaign finance and political law experts question whether these nonprofits’ operations are lawful. According to a law professor, “Indirect expenses have to support direct expenses… Why are you spending money fundraising, if you don’t have any candidate you’re going to use it for?”