State lawmakers are seriously considering legislation that would for the first time mandate 501(c)4 nonprofits that spend money trying to influence elections to disclose their donors, an idea that has garnered support from both Democratic and Republican leaders.
The move comes in the wake of unprecedented spending by nonprofit groups in Iowa and around the country. A recent report found that tax-exempt groups spent $132.5 million across the country in the last election cycle. In Iowa, the two most active groups were Des Moines-based American Future Fund (AFF) and its sister organization The Progress Project (formerly Iowa Future Fund and Iowa Progress Project). In addition to spending nearly $10 million supporting Republicans in Congressional races from Texas to Michigan, AFF spent more than $1 million trying to unseat U.S. Rep. Bruce Braley (D-Iowa). The Progress Project, which focuses on state-level races, launched ads attacking Democratic Attorney General Tom Miller and Gov. Chet Culver.
Because both groups are registered as 501(c)4 nonprofits, they are not regulated by the Federal Elections Commission or the Iowa Ethics and Campaign Disclosure Board. And unlike other politically active organizations, they are also not mandated to disclose where they got their funding.
“The corrosive effect of secret money in Iowa elections this year undermines our democracy,” said state Sen. Joe Bolkcom (D-Iowa City). “I will be joining other legislators introducing legislation requiring disclosure of contributors to groups like American Future Fund.”
During a taping of Iowa Public Television’s “Iowa Press” last month, Senate Majority Leader Mike Gronstal (D-Council Bluffs) voiced his support for the idea as well.
“I think if you’re running ads that mention candidates by name, there ought to be disclosure,” Gronstal said. “The U.S. Supreme Court ruled that corporations are free to engage in this kind of activity. We ought to at least know if it’s big oil paying for the Republican ads. We ought to at least know if it’s big tobacco paying for the Democratic ads. We ought to disclose who the contributors are for these organizations. So that’s what I’d like to see in this. I think it’s pretty clear from the U.S. Supreme Court decision that we probably can’t get at restricting them. When they’re not involved in the — we probably can’t get there but we can at least find out who is financing this operation.”
The idea of tougher disclosure laws also gained the support of Republican Gov.-elect Terry Branstad. During a stop in Ames shortly before the election, Branstad said organizations that spend money attacking political candidates in Iowa should be forced to disclose their donors.
“The voters have a right to know who’s paying for these vicious and distorted attacks,” Branstad said. “I believe all of those groups should be required to disclose just like the candidates do. I believe you should have the right to contribute and support candidates, but it should all be disclosed, and it should be disclosed in a timely manner.”
Branstad was directly talking about 527 groups, which are required to disclose their donors but only on a strict schedule. During the Republican primary, Branstad was repeatedly attacked by a 527 group called Iowans for Responsible Government. A month after Branstad won the primary, the group had to file disclosures with the Internal Revenue Service that revealed 100 percent of the funding came from the Democratic Governors Association.
Branstad spokesman Tim Albrecht told The Iowa Independent last week that the governor will examine this issue and “welcomes ideas on how to make campaign disclosures more open and transparent for the voting public.”
Speaker-elect Kraig Paulsen (R-Hiawatha) appeared to support tougher disclosure laws during his “Iowa Press” appearance with Gronstal, and House Minority Leader Kevin McCarthy (D-Des Moines) said he supports caps on all contributions from political action committees and lobbyists, as well as “tougher disclosure laws on not-for-profit political organizations that use secret contributions to try and influence voters.”
So far, no legislation has been crafted that pertains to strengthening disclosure laws for political nonprofits, which makes it difficult to gauge its impact, said Jeff Patch, communications director for the Center for Competitive Politics, a DC-based organization critical of campaign finance regulations.
“Frankly, it’s hard to comment without seeing the specific legislation, because everyone supports disclosure and disclaimer requirements for political ads at some level,” Patch said. “The questions are how much disclosure and disclosure of what?”
While the state has the authority to regulate campaign finance law within the bounds of the First Amendment for state and local elections, new regulations would not impact the upcoming Iowa Caucus campaign or federal races, he said. And requiring the blanket disclosure of all donors to groups that run ads which merely refer to a state candidate would pose many constitutional problems.
“Any campaign finance regulation must be justified by a compelling governmental interest,” Patch said. “If Iowa policymakers decide to require the disclosure of donors to Iowa political groups, they should, at a minimum, narrowly tailor any law so that small donors are exempted and show through fact-finding in committee hearings why their disclosure proposal is justified by an anti-corruption interest.”
The American Civil Liberties Union has also expressed concern with completely eliminating donor anonymity. In a letter to members of the U.S. House regarding the federal DISCLOSE Act, the ACLU said “By compelling politically active organizations to disclose the names of donors giving as little as $600, [the DISCLOSE Act] both violates individual privacy and chills free speech on important issues.
“Anonymity is important to many supporters of organizations that advocate for both popular and controversial causes. This is the case for even a longstanding and well-known organization such as the ACLU, as it surely is for groups of many other viewpoints, sizes, and histories. The pursuit of anonymity is not merely a matter of preference or convenience for individuals who support controversial movements. The harassment and attacks on members of the civil rights movement, for example, show that anonymity can be a matter personal safety.”
The ACLU pointed to the U.S. Supreme Court decision in NAACP v. Alabama, where the court “sternly rebuked government-mandated membership disclosure regimes as thinly veiled attempts to intimidate activist organizations that worked by instilling a fear of retaliation among members of the activist group.”
Branstad ties to political nonprofits
Gov. Branstad won’t likely find many supporters of tougher disclosure laws among his closest advisers. In addition to Branstad serving as chairman of American Future Fund’s Lecture Series before re-entering politics, many members of his campaign team and his biggest financial contributors have some ties to either AFF or The Progress Project.
- Bruce Rastetter – ethanol businessman and co-chair of Branstad’s inaugural committee. He was the governor’s largest donor, and provided the seed money to start American Future Fund.
- Nick Ryan – a founder of AFF and founder and president of the Concordia Group LLC (AFF paid Concordia $300,000 in 2008). Ryan was also a major financial contributor to Branstad’s campaign.
- Sandy Greiner — president of AFF and leader of a political action committee that successfully worked late last year to encourage Branstad to jump back into politics. She won a seat in the state Senate last month.
- Nicole Schlinger — past president of AFF who led Branstad’s fundraising efforts.
- Tim Albrecht– Branstad’s communication director who previously served in the same position with AFF.
- Kathy Pearson – secretary of The Progress Project and a member of Branstad’s Linn County campaign committee.
- David Kochel – past president of The Progress Project and formerly deputy manager of Branstad’s 1994 gubernatorial campaign. He did some consulting for Branstad’s most recent campaign as well.
The connections to political nonprofits has drawn fire from many campaign finance reform advocates, most recently the progressive organization Iowa Citizens for Community Improvement, which voiced concern with Branstad’s choice of Rastetter as co-chair of his inaugural committee.
Adam Mason, an organizer with Iowa CCI, said his organization and its members are supportive of more transparency and disclosure – especially when it comes to out of state special interest groups trying to wield their big money influence.
“We need to know who is trying to influence legislators and how much they are spending to do it,” Mason said. “501(c)4 nonprofits that spent millions on our elections this year should be disclosing their donors. I think what we would see is a handful of big corporations and big money donors trying to maximize profit on their investments, all at the expense of everyday folks across Iowa.”
Mason also called on Branstad, Gronstal and other leaders to go beyond transparency and disclosure.
“If our elected officials are serious about reducing the influence of big money special interests, then they need to move forward with things like campaign contribution limits (to limit how much any one donor can give) and Voter Owned Iowa Clean Elections (VOICE) to give candidates a choice of how they fundraise,” he said. “Until we give elected officials a chance to stop dialing for dollars and start listening to their local constituents, we can expect the pay to play cycle to continue at the Iowa Statehouse.”Tags: 501c4, disclosure, Elections, Iowa, nonprofits, outside spending