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States crack down on campaigning nonprofits

State regulators increase pressure on advocacy groups active in the election to disclose their donors. There is no such effort on the federal level.

November 26, 2012|By Matea Gold and Chris Megerian, Washington Bureau

Ann Ravel, chairwoman of the Fair Political Practices Commission, said the contribution may have violated a rule implemented in May to prevent donors from anonymously shuttling money through nonprofits with the intention of spending it on California campaigns. If found in violation, the nonprofits involved could face millions of dollars in fines.

The Small Business Action Committee could also be forced to pay $11 million to the state's general fund if authorities prove it knowingly failed to report the original source of its funds, Ravel said.

The committee and Americans for Responsible Leadership have denied breaking any rules.

State Sen. Leland Yee (D-San Francisco) said he planned to introduce legislation that would require more complete disclosure.

"How can anyone allow organizations of whatever kind to come into this state and not disclose the true source of money?" he said.

A similar fight is playing out in Montana, where a group called American Tradition Partnership has been locked in a battle with the agency that enforces the state's campaign finance rule.

In October 2010, Montana's commissioner of political practices concluded that the group's activities, which included sending mailers attacking Democratic and moderate Republican lawmakers, meant it had to file reports as a political committee. ATP sued, challenging the disclosure laws as unconstitutional and arguing that it is an educational group.

ATP has remained active in state politics, sending out a mock newspaper this fall that featured gubernatorial candidate Steve Bullock, the state's attorney general, in a photo array of sex offenders as part of an article that slammed his handling of the state's sex offender database.

The legal wrangling between state officials and ATP is ongoing, but has already pulled back the curtain on the group's contributors. Shortly before election day, the state judge hearing the case released a cache of the group's financial documents that state prosecutors had subpoenaed from Wells Fargo. The documents, which the PBS show "Frontline" and the investigative website ProPublica had requested, showed that ATP donors have included nonprofits linked to Republican activists in Colorado, as well as some major GOP donors.

In Maine, state ethics officials are investigating the National Organization for Marriage, which has refused to release the names of donors that financed its efforts to defeat a 2009 measure to legalize same-sex marriage.

The nonprofit groups under scrutiny say they are caught between conflicting state and federal regulations.

John Foster, the Boise-based lobbyist and political consultant behind Education Voters of Idaho, said he set it up as a 501(c)4 because its activities fall squarely within the IRS definition of a social welfare organization. Donors gave money for education reform, not earmarked for political campaigns, he said, so the group should not have to reveal names.

"We are very proud of our donors, and the prospect of releasing them publicly was never an issue for us," Foster said. "It was always about whether we get to decide who we are, or whether a state regulator gets to decide who we are."

"The rules are not entirely clear," he added. "This just highlights the continuing need for a realistic, constitutional approach to campaign finance reform in this country."

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