Minnesota Lawyer
“The Legislature set a clear standard for requiring disclosure for these campaign contributions. And the whole conversation today was essentially about ways to create loopholes in the disclosure law.” —Mike Dean, Common Cause Minnesota
In a meeting on Thursday the Minnesota Campaign Finance and Public Disclosure Board (CFPD) continued to refashion its advisory opinions concerning the fundraising and campaigning practices of ballot campaigns that will try to influence the outcome of next year’s ballot initiative concerning gay marriage.
The CFPD has been under pressure to pin down the do’s and don’ts that apply to the disclosure of contributors to ballot initiatives on periodic election-year campaign finance reports. With social conservative groups and government openness advocates following every word of the proceedings, the CFPD has also been pressed to explain what sorts of political speech fall in and outside the boundaries of expressly advocating for or against a constitutional amendment question.
At Thursday’s proceedings, CFPD officials modified their initial guidance, issued in June, regarding the definition of expenditures that are intended to influence that amendment vote.
Under the terms of the modification, which was approved by the six-member board on a unanimous voice vote, CFPD Executive Director Gary Goldsmith said state law does not permit disclosure requirements to be applied to any speech other than a specific pronouncement about the position voters should take in the election. Ads that address the issue of gay marriage without calling attention to the ballot initiative fall outside of the strictures of state campaign finance law, Goldsmith said, even if their timing isn’t coincidental.
“It may be that the Minnesota Legislature could craft a more expansive, yet constitutionally permitted, definition of ballot question expenditure,” the written guidance noted. “However, it has not done so. As a result, there is little support in Minnesota statutes to suggest that the Legislature intended the scope of expenditures to promote or defeat a ballot question to include communications beyond express advocacy or its functional equivalent.”
In addition to questions of political speech, the board came under criticism by social conservative groups when it rescinded a 1997 advisory opinion that said nonprofit corporations like 501(c) 3’s don’t have to disclose their donors when they make contributions to groups that are specifically trying to influence the outcome of the vote on the amendment.
Such disclosure is known in campaign finance parlance as “underlying source contributions.” The board issued advisory opinions on that subject at the request of two social conservative groups, the Minnesota Family Council and Minnesota for Marriage.
In a finding that has irked government transparency groups like Common Cause Minnesota, the CFPD is advising nonprofit corporations like the Family Council that they do not have disclose their underlying sources unless they make $5,000 or more in a calendar year in contributions to influence a ballot initiative. Once the $5,000 threshold is reached, those groups must follow a complicated set of steps for determining when they need to actually provide the names of individuals.
One approach is to calculate a “pro-rated” amount of the due or donations received by the nonprofit and disclose the identities of people who paid $1,000 or more to the nonprofit. The other method, known as “pick and choose,” allows nonprofits to allocate the amount of money it contributes to a ballot initiative from among a select group of contributors. Contributors who give less than $999 do not have to be named in the itemized reports.
“Under either method of identifying sources, it is possible that all or most of the nonprofit corporation’s contribution to [Minnesota for Marriage] will result from sources that are not required to be itemized. If that is the case, the donor corporation must indicate the amount of the contribution to MFM that is attributed to nonitemized underlying sources,” according to the advisory opinion.
In the 2010 election cycle, most political committees supporting candidates for elected office did not need to itemize when disclosing their underlying sources. In some cases, like the pro-DFL organization WIN Minnesota that made independent expenditures on behalf of DFL gubernatorial candidate Mark Dayton’s campaign, groups received large donations and needed to itemize, said Goldsmith at Thursday’s CFPD meeting.
Under the new guidance, a group with many small donors will not have to disclose their identities, while groups with a small number of big-money contributors will need to list their names, Goldsmith said.
Mike Dean, executive director of Common Cause Minnesota, said he is concerned that Minnesotans will be “in the dark” about the sources of money that influence the ballot initiative.
“The Legislature set a clear standard for requiring disclosure for these campaign contributions,” Dean said. “And the whole conversation today was essentially about ways to create loopholes in the disclosure law.”
In particular, Dean is concerned that contributions made anonymously to a nonprofit corporation will not have to be disclosed.
“That’s a loophole a Mack truck could essentially drive through in terms of a way for groups to funnel money into a campaign,” Dean said. “My concern is that we’re going to see very little money disclosed in the political campaign in 2012 because of what happened today.”
The issue of disclosure has been a hot topic in legal and legislative circles since the U.S. Supreme Court ruled that corporations could spend money out of their own treasuries to influence political campaigns. Minnesota lawmakers responded to the ruling in Citizens United by passing legislation in 2010 that enhanced the disclosure requirements. The legislation was challenged by the Family Council and the Taxpayers League of Minnesota, and an en banc panel of the 8th U.S. Circuit Court of Appeals heard arguments in the case on Sept. 21.
Although the Citizens United case dealt with contributions to candidates rather than ballot questions, the issue kindled a broader debate on disclosure requirements.
The Family Council and other groups maintain that the names of individual donors who make contributions for the purpose of influencing the outcome of next year’s ballot initiative should not be disclosed. Tom Prichard, president of the Minnesota Family Council, said the names of the underlying sources of the contributions should not be disclosed for privacy reasons. He said after the hearing that it’s too early to assess the implications of the new CFPD advisory opinions.
“They obviously came back with the answers,” Prichard said, “and now we need to sort through that and see what the full impact is, and we’ll go from there.”
