California ethics panel approves new rules for charitable donations

On Oct. 21, 2021, the California Fair Political Practices Commission (FPPC) voted unanimously to adopt new disclosure requirements for charitable contributions made on behalf of politicians in a practice known as behested payments. The new rules will go into effect 30 days after they are filed with the California Secretary of State’s office. 

The FPPC is a five-member independent, non-partisan commission charged with the administration of California’s Political Reform Act. The governor appoints the chair and one other member. The state controller, secretary of state, and attorney general appoint the other members. While the commission can enact rules concerning the application of state law, it cannot change the law itself. 

California law currently requires an elected official disclose charitable donations of $5,000 or more that the elected officials or their representatives requested. According to the Los Angeles Times, the requests are often”attributed to the nonprofit foundations and for-profit investment firms where the accounts were held.”

Under the new rules, elected officials must report the name of the person directing a behested payment through a donor-advised fund. If the contribution is made anonymously, the elected official must report that in disclosure reports. Officials will also be required to report when they are involved in making a decision that could potentially affect a donor, but this rule does not apply to general state legislation.

The commission’s ruling comes after the July U.S. Supreme Court decision in Americans for Prosperity Foundation v. Bonta, which struck down a California policy that required nonprofits to disclose their donors’ identities to the state’s attorney general. It is unclear how this ruling will affect the FPPC’s new rules.

Reactions

Commission chair Richard Miadich said the new rules will increase transparency. “These are incredibly important changes for the benefit of transparency for the public, for the benefit of the media, for academics, for improving the understanding of the relationship between public officials and who’s making these payments, and who’s receiving these payments,” Miadich said. Bob Stern, a co-author of the state’s Fair Political Practices Act, said,“It’s a start, but we will have to see how many of these things end up being reported as anonymous. We have to wait and see.” 

In a letter to the commission, Lance Olson, an attorney representing the California state legislature, said existing regulations were sufficient. “The current statutes and regulations regarding behested payments work well and are not in need of major adjustments,” Olson said. Los Angeles activist Kim Cooper said the new rules “would make no difference whatsoever” and the use of charity funds for political purposes is “not going to be solved by making little nibbling changes to how it is disclosed.”

The big picture

Number of relevant bills by state: We’re currently tracking 41 pieces of legislation dealing with donor disclosure and privacy. 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

For complete information on all of the bills we are tracking, click here. 

• California SB686: This bill would require a limited liability company that qualifies as a committee or a sponsor of a committee under the state’s campaign finance laws to file a statement of members with the secretary of state. The statement of members must include a list of all persons who have a membership interest in the limited liability company of at least 10% or who made a cumulative capital contribution of at least $1,000 to the company after it qualified as a committee or sponsor of a committee, or within the two calendar years before it qualified.
  • Primary emphasis: Disclosure
  • Democratic sponsorship
  • Gov. Gavin Newsom (D) signed the bill into law on Sept. 27, 2021.  

• Florida S0294: This bill would create an exemption from public records requirements for personal identifying information of a donor or prospective donor to the direct-support organization of the Statewide Council on Human Trafficking who desires to remain anonymous and provide an exemption from notice requirements for specified meetings. It provides for future legislative review and repeal of the exemption under the Open Government Sunset Review Act.
  • Primary emphasis: Privacy
  • Republican sponsorship
  • This bill was referred to committee on Oct. 13, 2021.

• Michigan HB5375: This bill would require campaign finance reports to be publically available no later than three days after they are filed. If a committee that received more than $50,000 in an election cycle files a statement of organization, that statement must be preserved for 15 years after the official date of the committee’s dissolution. Any other statement or report filed under the Michigan campaign finance act must be preserved for five years.
  • Primary emphasis: Disclosure
  • Republican sponsorship
  • This bill was referred to committee on Oct. 6, 2021.

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