The Disclosure Digest: April 1, 2019
Explore the laws governing nonprofit donor disclosure with Ballotpedia. Each weekly edition of The Disclosure Digest will highlight noteworthy legislation, pending litigation, and major activities by advocacy groups.
Nonprofit organizations do not distribute surplus revenues as profits or dividends to shareholders. Instead, nonprofits use revenues for self-preservation or expansion. Tax-exempt nonprofits are regulated under Section 501 of the Internal Revenue Code. States may subject nonprofits to additional regulations beyond those imposed by the federal government. Under federal law, nonprofits are generally not required to disclose to the public information about their donors. State laws, however, may require such disclosure. Some say expanded donor disclosure provisions minimize the potential for fraud and establish public accountability. Meanwhile, others say that disclosing information about donors violates privacy rights and can inhibit charitable activity.
This week, we shine a spotlight on Arizona, where a state lawmaker has asked the attorney general to rule on the legality of Tempe's donor disclosure ordinance.
State spotlight: Arizona lawmaker asks attorney general to rule on local donor disclosure regulation
On March 11, state Sen. Vince Leach (R) formally requested that Attorney General Mark Brnovich (R) investigate and rule on the legality of Tempe Ordinance 01017.51. The ordinance requires all individuals and groups making local political expenditures totaling $1,000 or more per election cycle to disclose donor information. Any individual or entity meeting that threshold must disclose the name, address, and employer of any individual contributor donating $1,000 or more. The ordinance in question was approved by voters as a charter amendment in 2018.
- What is at issue? Leach says the Tempe ordinance violates a state law prohibiting cities from requiring section 501(a) nonprofits to disclose donor information.
- Leach said, "One thing is clear: the State of Arizona has the authority to protect the constitutional rights of its citizens, and no local ordinance may violate those rights. The U.S. Supreme Court has held that non-profit groups and their donors enjoy a First Amendment right [to] anonymity when those groups seek to effect change through the political process. … Local control ends where constitutional rights begin."
- In an op-ed for The Arizona Republic, columnist Laurie Roberts said, "The question is, should Leach’s not-so-humble opinion outweigh 91 percent of Tempe voters on an issue affecting only their city? Or the 87 percent of Phoenix voters who in November passed the same ordinance outlawing dark money in Phoenix city elections? What's astonishing here is that we even have to ask the question."
- What comes next? The attorney general must report within 30 days on whether the challenged ordinance violates state law.
- Ryan Anderson, a spokesman for the attorney general, said, "This is new and uncharted territory because the Tempe ordinance contains a voter-approved component. ... The broader, complex legal question is, what happens if an elected body refers a ballot measure to the people for a vote that hypothetically violates the law?"
- Federal legal context: Section 501(a) of the Internal Revenue Code establishes that entities organized under sections 501(c), 501(d), or 401(a) are exempt from federal income tax.
What we're reading
- East Valley Tribune, "AG asked to probe cities’ dark money regulations," March 31, 2019
- Politico, "Koch group won’t get broader appeals court review in donor secrecy fight," March 29, 2019
- The Star-Ledger, "Let’s expose ‘dark money’ without threatening free speech, advocates say," March 12, 2019
The big picture
Number of relevant bills by state: We're currently tracking 73 pieces of legislation dealing with donor disclosure. On the map below, a darker shade of green indicates a greater number of relevant bills. Click here for a complete list of all the bills we're tracking.
Number of relevant bills by current legislative status
Number of relevant bills by partisan status of sponsor(s)
Recent legislative actions
Below is a complete list of legislative actions taken on relevant bills in the past week. Bills are listed in alphabetical order, first by state then by bill number. Know of any legislation we're missing? Please email us so we can include it on our tracking list.
- Georgia SB213: This bill would adjust contribution thresholds triggering disclosure requirements.
- Senate approved House-amended version of bill March 29.
- Idaho S1113: This bill would expand existing disclosure requirements to local elections and campaigns.
- Senate approved House-amended version of bill March 28.
- Illinois HB2608: This bill would adjust a variety of contribution and expenditure thresholds triggering disclosure requirements.
- Referred to Rules Committee March 29.
- Mississippi HB1205: This bill would prohibit public agencies from requiring or releasing certain personal information from entities organized under Section 501(c) of the Internal Revenue Code.
- Governor signed into law March 28.
- Montana SB134: This bill would revise the definitions of contributions, expenditures, and independent expenditures as they apply to electioneering communications.
- Scheduled for second reading in House April 1.
- New Hampshire SB156: This bill would require political contributions from limited liability companies be allocated to individual members in order to determine whether individuals have exceeded contribution limits.
- Senate approved March 28.
- Pennsylvania HB966: This bill would require nonprofit entities that expect to give $25,000 or more in a calendar year to political committees to file statements with the state.
- Referred to State Government Committee March 26.
- Washington HB1379: This bill would amend a state law requiring that entities producing political advertisements publicly disclose their top five donors.
- Considered in executive session of Senate State Government, Tribal Relations, and Elections Committee March 29.
- West Virginia SB622: This bill would make general revisions to the state's campaign finance disclosure laws.
- Governor signed into law March 27.
See also
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