[EL] NM donor disclosure bill

Wed Mar 29 06:14:55 PDT 2017

And anyone who read what I wrote will recognize that I did not claim Trevor had said “a disclosure law could not constitutionally reach a 501 c3’s candidate-related activity.” In fact, what I did was re-post Trevor’s exact language, which read:

“Contrary to assertions by dark money proponents, SB 96 does not threaten to regulate true charities. In fact, the federal tax code already prohibits charities from spending money to influence elections—and strictly limits the amount of lobbying they can conduct as well.”
My posting of the CLC language from their brief was aimed at how I read the second sentence alongside the first, i.e. that the two of them together were Trevor saying that charities don’t have to worry about this campaign finance stuff because they can’t influence elections anyways, an obviously false statement given II v. FEC. If Trevor has a different interpretation of how and why he chose to put those two sentences together, first stating that the bill in question will not reach charities an then immediately afterwards explaining that charities can’t engage in election activity, I’m all ears.

But the bigger point remains – Trevor is flat-out wrong. The “highly unusual factual circumstances” are pretty mundane and common. The language of SB 96<https://www.nmlegis.gov/Sessions/17%20Regular/bills/senate/SB0096JUS.pdf> reads:

“A person who makes an independent expenditure not otherwise required to be reported under the Campaign Reporting Act in an amount that exceeds one thousand dollars ($1,000), or in an amount that, when added to the aggregate amount of the independent expenditures made by the same person during the election cycle, exceeds one thousand dollars ($1,000), shall file a report with the secretary of state within three days of making an expenditure for which a report is required by this section…”

“Aggregate” being the key term here, of course. So while Trevor refers to “an advertisement” (singular), it’s actually the aggregate value of all communications made by an entity (which makes sense of course – otherwise you’d have a lot of $999 expenditures being made). In the 60 days prior to an election, most churches would have 10 Sunday services. Anybody on this list want to make a bet that it’s “highly unusual” for a church to spend $100 (inc. labor) to create and print any given week’s bulletin? My current church probably doesn’t (fairly small) but when I attend Catholic services it tends to be at larger congregations with multiple services, and in the past I’ve also attended what might be called “mega churches,” and those tend to have thousands of worshippers on any given week. I’d be shocked to learn some of those spent less than $100 on any given week’s church bulletin. And this isn’t even accounting for the inflation factor that David Keating raised. And this also doesn’t include the cost of converting the sermon to a podcast, live-streaming, etc., which is going to go into that aggregate total. So it’s a lot easier than Trevor imagines for a church to hit that $1,000 threshold.

Regarding the “membership” exemption Trevor references, my wife and I aren’t members of any Catholic church though we attend services on occasion, and I didn’t become a member of my current church until after attending for a few years. Nor was I a member of the large church I attended in Des Moines. On any given Sunday, about half the attendees at my current church aren’t members, and the pastor always recognizes this (“if your joining us today for the first time and are interested in knowing more about our church…” and the like). New Mexico’s nonprofit law does reference membership in nonprofits (53-8-11, here<http://www.sos.state.nm.us/uploads/files/Corporations/ch53Art8.pdf>), so I’d assume that would be controlling here. And here is the language of SB 96 concerning the definition of an “advertisement” as well as the “membership” exemption:

A. "advertisement" means a communication referring to a candidate or ballot measure that is published disseminated, distributed or displayed to the public by print, broadcast, satellite, cable or electronic media, including recorded phone messages, or by printed materials, including mailers, handbills, signs and billboards, but "advertisement" does not include:
(1) a communication by a membership organization or corporation to its current members, stockholders or executive or administrative personnel;

So, I find nothing to reassure me that Trevor’s initial claim that “Contrary to assertions by dark money proponents, SB 96 does not threaten to regulate true charities” is accurate, nor that his subsequent claim regarding “highly unusual factual circumstances” is accurate, nor that the “communication by a membership organization to its members” exemption he offers should provide much comfort.

I suppose I also ought to take this opportunity to ask Trevor (or anyone else who favors SB 96 and similar types of disclosure laws): Do you believe NAACP v. Alabama was incorrectly decided? Seems to be an important question when discussing the value of and limits (if any) on disclosure that might be part of the conversation.

Best,

Sean Parnell
Vice President for Public Policy, The Philanthropy Roundtable
1120 20th Street NW, Suite 550 South
Washington, DC  20036
(202) 600-7883 (direct)
(571) 289-1374 (mobile)
sparnell at philanthropyroundtable.org

From: Trevor Potter [mailto:tpotter at capdale.com]
Sent: Tuesday, March 28, 2017 4:59 PM
To: Sean Parnell <sparnell at philanthropyroundtable.org>; Election Law Listserv <law-election at uci.edu>
Subject: RE: NM donor disclosure bill

Anyone who reads what I wrote will readily recognized that my op ed did not say what Sean claims—I did not say that a disclosure law could not constitutionally reach a 501 c3’s candidate-related activity.

To the contrary,  Sean and I are in agreement on that point: “Independence Institute v. FEC upheld the determination that campaign finance laws can be applied to a 501(c)3 entity even though it is legally prohibited from campaign intervention.”  CLC agrees that the Supreme Court has never suggested that the constitutionality of a campaign finance disclosure law turns on the tax status of the groups subject to the law. As a policy matter, the public has an informational interest in learning who is financing a group’s electioneering communications regardless of whether that group is a 501(c)(3) or a 501(c)(4). These were likely among the factors animating the New Mexico legislature’s decision not to exempt 501c3s from SB 96’s coverage by virtue of their tax status.

Because the bill could apply to 501(c)(3)s, however, does not mean that there is a substantial likelihood that it in fact will adversely affect activities by 501(c)(3)s in New Mexico. In order to trigger coverage, a 501(c)(3) which mentions a candidate would have to spend over $1,000 for an “advertisement” that either contains express advocacy for such candidate, or its functional equivalent, or (a) refers to the candidate, (b) targets the candidate’s electorate, and (c) is publicly distributed during the 60/30 pre-election windows. A candidate-centric ad purposefully circulated in the immediate days before an election is almost always outside the organizational purview of charities, and the bill’s coverage is not aimed at such groups.  Notably, nonpartisan voter guides by 501c3 are exempted from the law.

Opponents’ attempts to argue that  SB 96 would require disclosure of speech about candidates by  501(c)(3)s causes them to conjure highly unusual factual circumstances. For example, to trigger disclosure under SB 96 in Sean’s hypothetical, livestreaming or republishing that portion of the pastor’s statement in a church bulletin would, as an initial matter, have to cost the church over $1,000. Even if it satisfied this element, the statement might  still be exempt from the definition of “advertisement” as a communication by a membership organization to its members.

The benefits of disclosure are not hypothetical. Disclosure requirements, like those in SB 96, give voters information about the real sources of funding behind advertisements designed to impact choices at the ballot. Like similar laws around the country, SB 96 is meant to foster informed choices about the policies and elected leaders that will impact New Mexicans on a daily basis. These publicly policy benefits of disclosure of the sources of funding of candidate –centric advertising were robustly lauded by the United States Supreme Court in the 8-1 portion of Citizens United.

As a postscript, Mark Scarberry also raises the question of whether SB 96 applies to ballot measure advocacy (which may be engaged in by 501 c 3s, as Barnaby Zall has noted in this discussion) .  It does.  The bill also requires disclosure from those who spend over $1,000 on advertisements expressly advocating for ballot measures, or that refer to specific ballot measure during the 60/30 pre-election windows.  Donor disclosure, however, is limited to those who earmark their donations for ballot measure advocacy or who give very significant amounts (over $5,000). As most will recall, the Supreme Court has also spoken approvingly of transparency in the financing of ballot measure advocacy, and CLC certainly agrees that “[i]dentification of the source of advertising may be required as a means of disclosure, so that the people will be able to evaluate the arguments to which they are being subjected.” First National Bank of Boston v. Bellotti, 435 U.S. 792 n.32 (1978); Citizens Against Rent Control v. City of Berkeley, 454 U.S. 290, 298 (1981).  It is unclear why this informational interest would be any less compelling in connection to advocacy by a 501c3 as opposed by a 501c4.

Trevor Potter
Campaign Legal Center

From: law-election-bounces at department-lists.uci.edu<mailto:law-election-bounces at department-lists.uci.edu> [mailto:law-election-bounces at department-lists.uci.edu] On Behalf Of Sean Parnell
Sent: Tuesday, March 28, 2017 12:03 PM
To: Election Law Listserv
Subject: [EL] NM donor disclosure bill

I ran across an op-ed from Trevor Potter today, concerning a donor disclosure bill in New Mexico that is apparently awaiting the governor’s signature or veto. http://www.santafenewmexican.com/opinion/my_view/looking-in-governor-should-sign-dark-money-bill/article_4164c35e-8267-577c-94a9-1287ecee677a.html

One section jumped out at me, concerning disclosure of donors to charities:

Contrary to assertions by dark money proponents, SB 96 does not threaten to regulate true charities. In fact, the federal tax code already prohibits charities from spending money to influence elections—and strictly limits the amount of lobbying they can conduct as well.

Concerns that SB 96 could impact such groups are entirely hypothetical. SB 96 will apply only to political communications and simply provides basic information to New Mexico’s voters about the real sources of money funding advertisements that support or oppose ballot measures or candidates
The first sentence is simply false. Independence Institute v. FEC upheld the determination that campaign finance laws can be applied to a 501(c)3 entity even though it is legally prohibited from campaign intervention. The Campaign Legal Center even filed 3 briefs in this case supporting the application of campaign finance laws to charities. Here is (in part) what it wrote concerning disclosure and 501(c)3 entities (p. 26 of brief<http://www.campaignlegalcenter.org/sites/default/files/CLC_D21_PC%20Amici%20Br.FINAL_.pdf> urging affirmance of district court ruling):

The Institute also argues that 501(c)(3) organizations should be exempted from disclosure because they are “barred, by federal law, from carrying out any candidate-centered electioneering.” Appellant Br. 43-44. To be sure, 501(c)(3) groups are prohibited from “intervening” in a “political campaign” under 26 U.S.C. §501(c)(3). But the IRS’s definition of campaign intervention, see, e.g., Rev. Rul. 2007-41, 2007-1 C.B. 1421, is used to determine whether a group meets the criteria for a tax status under Section 501(c)(3), not whether the group should be subject to disclosure under federal election law. The IRS’ definition is not—and was not intended to be—coterminous with the activity regulated under FECA. See, e.g., Shays, 337 F. Supp. 2d at 124-28 (criticizing FEC for deferring to the IRS standard because “the IRS in the past has not viewed Section 501(c)(3)’s ban on political activities to encompass activities that are... considered [to be political activities]” under federal campaign finance law). Moreover, that the Tax Code itself imposes more stringent limits on political activity by 501(c)(3) groups than by 501(c)(4) groups suggests, if anything, that section 501(c)(3) groups are entitled to less constitutional protection for their political activities.

As concerning “hypothetical” concerns, I daresay the supposed benefits of the law are hypothetical as well, in that it has yet to be enacted (and may not be, of course), and of course the application of campaign finance disclosure requirements to charities was hypothetical as well until it happened in Independence Institute v. FEC. And it’s difficult to accept the assertion about the law applying only to “political communications” that “support or oppose ballot measures or candidates” given the fact that the law is written in such a broad way as to encompass, for example, a church service where the pastor names specific elected officials and asks the congregants to pray for them (this was a weekly feature of my church in Des Moines), if that service is livestreamed or republished in a church bulletin or carried on the radio or converted to a podcast.

Best,

Sean Parnell
Vice President for Public Policy, The Philanthropy Roundtable
1120 20th Street NW, Suite 550 South
Washington, DC  20036
(202) 600-7883 (direct)
(571) 289-1374 (mobile)
sparnell at philanthropyroundtable.org<mailto:sparnell at philanthropyroundtable.org>

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