Legislation shielding non-profit political donors heads to Snyder
Lansing — A bill that pits privacy against transparency is headed for Gov. Rick Snyder's desk after the Michigan House on Tuesday approved legislation that seeks to shield non-profit charities and politically active groups from disclosing their contributors.
In a 58-51 vote, the Michigan House approved the “personal protection privacy act” introduced by Republican Sen. Mike Shirkey of Clarklake, which would require a public official to be charged with a misdemeanor for requiring non-profit charities and politically active groups to disclose their donors for government review. The move would protect donors from retaliation for their political support, he said.
Opponents argued it would restrict officials from investigating fraudulent non-profits and shield from public disclosure money used to influence elections.
“Why would we want to enshrine into law, here in the state of Michigan, the ability to not provide transparency to individuals who put unlimited amounts of money into our political process?” asked Democratic Rep. Abdullah Hammoud of Dearborn.
The bill would protect donors' rights of association, while maintaining an avenue for disclosure through a warrant or subpoena, Shirkey said at a Tuesday House Competitiveness Committee meeting where the legislation was passed in a 6-3 vote.
“It just has to meet a legitimate legal hurdle,” said Shirkey, who on Jan. 1 becomes the Senate majority leader.
Michigan has a reputation for lagging other states for its transparency in campaign finance, among other issues. The state ranked worst in the nation in the Center for Public Integrity's 2015 assessment of state government accountability and transparency, including scoring an F for political financing rules.
The Shirkey bill is written in such broad terms that it calls into question who the language is seeking to protect, charities or the social welfare nonprofits shuttling money into the state’s political process, said Craig Mauger of the Michigan Campaign Finance Network.
“This bill treats people of faith who feel called to tithe to their church the same way it treats a company that wants a government contract giving corporate dollars to the personal nonprofit of a key lawmaker,” Mauger said.
As nonprofit spending on political ads becomes increasingly commonplace, transparency and disclosure provisions become more and more important, he said.
In the 2018 races for Michigan Senate, Mauger's group tracked at least $3 million from outside spending in those races, including money from two large donors in Ohio and one group in Virginia whose contributors remained anonymous. In the 2018 campaign for a successful redistricting proposal, a Washington, D.C., nonprofit spent $5.5 million in support of the plan, Mauger said.
“I’ve been told by multiple national experts that they know of no other state which has such a broad law against nonprofit disclosure,” he said.
Transparency vs. privacy
The issue has arisen before.
In November 2013, Secretary of State Ruth Johnson announced plans to create a rule requiring greater transparency for disclosing the sponsors of advocacy issue ads. But Johnson was circumvented by the Republican-led Legislature, which within a month passed a law blocking public disclosure of the names of contributors to issue advertising campaigns.
The disclosure plan had been requested by the State Bar of Michigan for a declaratory ruling for more disclosure of judicial campaign ad sponsors.
"In a country where free speech is protected, these ads are part of the political landscape and we can't stop them — but when they try to influence an election, we can make sure the public knows who is paying for them," the Holly Republican said in a statement five years ago.
But Sen. Arlan Meekhof, the Republican who is now Senate majority leader, argued that requiring disclosure of individual donors to groups sponsoring issue ads would violate free speech rights guaranteed by the U.S. Constitution.
During Tuesday's committee hearing, the free-market-oriented Mackinac Center for Public Policy supported the Shirkey bill, noting that it would protect political donors in an age in which controversial stances are earning increasingly punitive responses.
“It is only a matter of time before people get injured for supporting organizations or causes” that others find controversial, said the center’s David Guenthner, who compared the bill to NAACP v. Alabama, a 1958 case in which the courts ruled NAACP membership lists were protected from disclosure by the First Amendment.
Hammoud said the comparison to the NAACP case was "disturbing and downright offensive," arguing that those influencing the election are "not advocating for the same civil rights."
"You as the Mackinac Center come before committee and testify at nearly every committee I've been in," Hammoud said. "I have to bet there's some millionaires and billionaires that fund the Mackinac Center."
Groups advocating on either side of the abortion issue or either side of gay rights face the potential for the same type of threats the NAACP did and are entitled to the same protections, Guenthner said. Donors have lost jobs or faced ridicule and threats when word gets out of their support for a given cause, he said.
"The standard for what defines a controversial issue in 21st-century America has been unfortunately widely, widely broadened," Guenthner said, so even opinions on energy issues earn threats.
Facing public ridicule
Democratic Secretary of State-elect Jocelyn Benson responded Tuesday on social media by quoting a 2010 opinion authored by the late U.S. Supreme Court Justice Antonin Scalia, a noted conservative: “Requiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed.”
But if donors are targeted for their support of a given issue, so are lawmakers by the same nonprofits the bill seeks to defend.
After his defeat in the August primary, Republican Rep. Gary Glenn of Williams Township said dark money "monopoly utilities" were in part to blame for his loss. Glenn said the retaliation occurred through three nonprofits that spent at least $263,000 in his district after the Republican took a hard line on energy rules involving Michigan utilities such as DTE Energy Co. and Consumers Energy Co.
One of the nonprofits, Citizens for Energizing Michigan’s Economy, benefited from roughly $20 million in contributions from Consumers Energy “non-customer, shareholder dollars” in 2017, but the company denied being involved with the other nonprofits.
Despite mostly anonymous nonprofit spending in his unsuccessful race, Glenn voted in favor of the bill preventing nonprofit donor disclosure.
On Tuesday, Glenn said his issue with the spending in his campaign was premised on the belief that entities with a state-guaranteed monopoly, such as large utility companies, should be prohibited from contributing to campaigns, much the same way casinos are.
Glenn said he supported the bill because he sees it as “a free speech issue even if I might disagree with the speech that is taking place.”