Donors behind front groups would face new rules under attorney general's plan

Lifting veil of big givers

By Jimmy Vielkind

ALBANY — Hoping to prevent the spread of front groups in New York elections, Attorney General Eric Schneiderman will begin requiring some nonprofit groups that spend in state races to disclose their donors.
Since the Supreme Court's 2009 Citizens United ruling, elections at the state and federal levels have featured more spending by outside groups boosting or attacking candidates in television advertisements. The court said this spending, often fueled by wealthy individuals and corporations, couldn't be limited.
But various state entities and officials in New York and elsewhere have been hunting for ways to beef up disclosure requirements, hoping some donors would be more reluctant to give.
Schneiderman's spokesman, James Freedland, said the move would "bring much-needed transparency and accountability to protect the integrity of New York's democracy."
The attorney general is targeting 501-c-4 nonprofit groups, including federally active groups like Americans for Prosperity, which are already regulated by his office if they have substantial operations in the state. The first-term Democrat sent letters to several groups earlier this summer inquiring about their activities.
According to a proposed rule change filed Tuesday, the attorney general's office would expand annual filing requirements to include the amount of money used for elections, and what percentage of a organization's overall budget it represents.
Groups like AFP that are active in federal races already disclose their spending to the Federal Election Commission, and the new rule does not require that they reveal their donors.
A group spending over $10,000 in a given year on elections for state and local offices or on a local ballot issue, such as a constitutional amendment to legalize casino gambling or an override vote for a property tax cap would have to reveal anyone who gives more than $100.
The proposed rule also defines election spending more broadly than recent rules adopted by the State Board of Elections, which principally governs candidates and political committees, or the Joint Commission on Public Ethics, which covers lobbying activity.
The BOE only forces disclosure if 501-c-4 groups explicitly support or oppose a given candidate. A Virginia-based group called Common Sense Principles skirted this definition by spending thousands of dollars attacking Democratic candidates for the state Senate while avoiding so-called "magic words." The proposed rule would govern any advertising within six months of an election where a candidate, party or issue is clearly defined.
JCOPE's regulations, adopted last month, only apply to people who donated more than $5,000 a year. It oversees many 501-c-4 groups that principally spend money to support or oppose pending legislation.
The new rules could capture several organizations that may be active supporting or opposing the state's expansion of Las Vegas-style casino gambling, which if approved by the Legislature could end up on the ballot in November 2013. That includes the Committee to Save New York, an alliance of real estate and business groups as well as a private sector labor coalition formed in 2010 to support Gov. Andrew Cuomo, as well as other interests funded by casino developers or Indian tribes.
Michael McKeon, a CSNY spokesman, said his group would comply with the regulations but it was "too hypothetical" to say how it might affect its activities.
James Featherstonhaugh, a stalwart lobbyist and part owner of the Saratoga Casino, said he welcomed the new rules. They would not apply to his New York Gaming Association, which represents already-legal slot parlors and is pushing for the state to grant them expanded gaming.
"We like to know who's on the other side of the court," he said.
Schneiderman's proposal comes as Democrats, including Cuomo, push for reforms to state campaign finance laws. Several legislators held a news conference Tuesday to say these changes should include a system for taxpayer matching funds for campaigns. Republicans have opposed that idea, but a new bipartisan coalition poised to assume control of the state Senate has improved its political chances at the same time it has stoked fears that lawmakers might settle for a half-loaf measure without the public financing component.
"We've got to have a robust and comprehensive reform, and any partial reform is not going to change the way Albany operates," said Karen Scharff, executive director of Citizen Action, a left-leaning advocacy group.
Schneiderman's proposed rules will be officially published Dec. 26 and are subject to public comment through March. They do not require a vote of the Legislature, Schneiderman's aides contend, because they fall within the attorney general's existing regulatory authority.
Michael West, a legal adviser to the New York Council of Nonprofits, said the new rules were well-intentioned, but might end up hurting smaller organizations.
"If you're a little advocacy organization, you might not be thinking about every expenditure and whether it needs to be covered," he said. "And it borders on an abuse of privacy. ... I understand why you might want that information ... but there are donors out there who just happen to work for somebody, care about a cause and write a check — it makes me a bit uncomfortable."
Good-government groups, though, will likely embrace the measure.
"It basically prevents wealthy donors from hiding behind these placid names," said Common Cause Executive Director Susan Lerner.

To see the online article as well as images from the conference that took place Tue. Dec. 11 click here.