Michigan Senate: Make it a crime for political nonprofits to disclose donors

Jonathan Oosting
The Detroit News
Sen. Mike Shirkey.

Lansing — Michigan’s Republican-led Senate on Thursday approved legislation that would make it a misdemeanor crime for a public official to require non-profit charities and politically active groups to disclose their donors for government review.

Supporters say the “personal protection privacy act” would protect donors from retaliation by political opponents, but critics say it would restrict the government from investigating fraudulent non-profits and further shield money used to influence elections. 

“A better name, or just as appropriate name for this bill, could be the dark money protection act,” Craig Mauger of the Michigan Campaign Finance Network told lawmakers this week in a Senate committee.

While non-profits are not currently required to publicly disclose donors, sponsoring state Sen. Mike Shirkey, R-Clarklake, said his bill would provide “affirmative protection” against actions by government officials. 

California’s attorney general in 2013 required non-profits to disclose donors to the state, citing enforcement purposes but prompting an ongoing legal challenge involving the Americans for Prosperity Foundation, a group linked to libertarian billionaire brother Charles and David Koch. 

Michigan Republican Attorney General Bill Schuette backed Americans for Prosperity in the case, signing on to a brief arguing that California’s collection of donor names and addresses “increases the possibility that unscrupulous public officials could target donors for various kinds of retaliatory actions.”

A U.S. Court of Appeals panel upheld the California disclosure requirement in September, but a non-profit law group is asking the full court to rehear the case.

Democratic Attorney General-elect Dana Nessel blasted the Michigan legislation in a social media statement, calling it a “ham-handed” maneuver to shield dark money and limit her office’s ability to protect residents from charities that scam residents, including disabled military veterans. 

“Our state Legislature is working feverishly to pass laws which limit my ability to protect Michigan residents and veterans against such illegal and unethical conduct,” she said. “This is shameful.”

The Senate approved the legislation in a 25-12 vote without debate during a busy lame-duck session, sending the measure to the House for further consideration. Sen. Tory Rocca of Sterling Heights was the lone Republican to vote against the bill, which was opposed by all 11 Democrats.

Shirkey’s legislation, as amended this week, specifies that it will not affect Michigan’s campaign finance laws. And it “does not in any fundamental way disrupt the status quo,” said Zac Morgan of the Institute for Free Speech, a non-profit based in Virginia.

“Rather, it will prevent public agencies from acting without legislative authorization to demand donor information,” he said Wednesday in committee. 

Mauger, a watchdog who tracks political spending, criticized the legislation for making no distinction between non-profit charity groups and “social welfare organizations” that have spent big bucks in recent Michigan elections but are not required to disclose donors.

Non-profits spent more than $3 million on state Senate races this year alone, Mauger told lawmakers. A non-profit based in Washington, D.C., spent $5.5 million supporting ballot Proposal 2 to create a citizen redistricting commission. 

“Where did the money really come from? It’s impossible to tell,” Mauger said. The legislation “would apparently criminalize future efforts by the secretary of state, attorney general, governor or local governments … to do anything about the anonymous money in our politics.”

Supporters contend non-profit giving is a form of free speech and association guaranteed by the U.S. Constitution. 

The proposal would prohibit harassment and keep protected donor information “off government servers, vulnerable to hacking by nefarious or foreign actors or misuses by government officials,” Morgan said.

Court have knocked down limits on political spending but have generally favored “narrowly tailored measures” to promote transparency in political spending, Mauger said.

The proposal “treats charitable giving, tithing to your local church, the same way it treats political donors giving to a non-profit set up by a state lawmaker who uses the non-profit to help with his or her personal ambitions,” he said.