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California politicians raising money for charity face new rules from ethics panel

Anne Wernikoff

The state Fair Political Practices Commission is focusing on more public disclosure to address a growing trend of charitable donations serving as a conduit for interest groups seeking to influence politicians. Government watchdogs say that isn’t enough.

After more than 18 months of deliberation, California’s political ethics regulators voted today to approve new rules when elected officials raise money for charities that they or their family control.
More public disclosure of their ties to the group getting the payments? Yes.

Limits on money from interest groups that lobby the officials? Not at all.

The new rules fall far short of what government watchdogs say is necessary to rein in the growing trend of charitable donations serving as a conduit for interest groups that seek to influence politicians. Stronger rules would need legislative approval, and lawmakers made clear they’re not interested.

The new rules on so-called “behested payments” were crafted by the Fair Political Practices Commission following a CalMatters investigation that showed how politicians increasingly use charitable organizations to raise and spend money outside the limits of the state’s strict campaign finance laws.

The CalMatters report revealed that a dozen nonprofits run by state lawmakers and their staffs reported raising nearly $3 million in 2019 from interest groups that lobby the Legislature; that a nonprofit tied to the Legislature’s technology caucus was keeping its donations secret; and that a lawmaker — now Attorney General Rob Bonta — routinely asked interest groups to donate to his personal foundation as well as to nonprofits that employed his wife Mia Bonta, who is now an assemblymember.

Specifically, one new rule requires officials to report their ties to a nonprofit organization when they ask donors to give money to a group that employs, or is controlled by, the official, their staff or their family members.

“These are relationships with a potential for influence or self-dealing that the public would want to have disclosed,” says a staff report to the commission.

The rules also:

  • Require officials to disclose when they are involved in making a decision that impacts the donor from whom they’ve solicited a charitable donation. This rule does not apply to decisions on general state legislation. 
  • Require attempting to identify the original source of donations made at a politician’s request that come from “donor advised funds,” which, the Los Angeles Times reported, may be used to avoid scrutiny by donors trying to curry favor
  • Require officials to estimate the amount of money they raised for a nonprofit if they can’t get an exact amount within 30 days

“These are incredibly important changes for the benefit of transparency for the public, for the benefit of the media, for academics, for improving the understanding of the relationship between public officials and who’s making these payments, and who’s receiving these payments,” commission chairperson Richard Miadich said.

While the rules will give the public more information about some transactions that could influence politicians, they do not constitute the kind of sweeping reform that government watchdogs say is necessary.

“Increased disclosure is great but it’s only a first step to solving a larger problem,” said Jonathan Mehta Stein, executive director of California Common Cause.

“It seems like a no-brainer that really egregious instances of behested payments, like the ones being targeted by these regulations, ought to be prohibited.”

But that would have to be done by the Legislature, not the FPPC. The commission can change rules about how to apply California’s political ethics law, but it doesn’t have the power to change the law itself. And legislators who have that power are unlikely to change a law that serves their interests. They made that clear to the commission.

“The current statutes and regulations regarding behested payments work well and are not in need of major adjustments,” Lance Olson, an attorney representing the state Senate and Assembly, wrote in a letter to the FPPC when it began reviewing potential changes last year.

He concluded the letter by reminding the commission that its power is limited to adopting rules “interpreting the requirements of law.” Overhauling the law that allows politicians to solicit unlimited donations to charity, he wrote, “remains the role of the Legislature and Governor.”

Yet even within the rules it has the power to craft, the commission chose to limit the scope of disclosure for decisions that officials make that impact donors: It would not be required for general legislation that doesn’t impact a specific group. Disclosure would be required for bills that more narrowly affect a person or industry. However, even then, due to limits in state law, the requirement would not apply to bills concerning public employee unions.

Altogether, it means that even if the new rules had been in place earlier this year when lawmakers voted to give prison guards a $5,000 bonus and an 8% raise within months of the guards’ union donating $75,000 to nonprofits run by the Legislature’s Black and Latino caucuses, lawmakers would not have had to disclose that link.

Miadich, the commission chairperson, has said general legislation should be left out of the rule because of its broad reach. He wants the rule to help shine light on more specific decisions, such as a city council’s approval of a permit for a developer who donates to a charity at a council member’s request.

But a Los Angeles activist who monitors development deals in that city said the new disclosure rules “would make no difference whatsoever.” Kim Cooper said the ties between former city council member Jose Huizar, a nonprofit focused on refurbishing a historic park in his district and a developer who wanted to restore the park were well known before Huizar was indicted last year on charges of taking bribes from developers.

“It wasn’t a secret,” Cooper said.

The use of nonprofits in some political operations is “a big problem,” she added. “And it’s not going to be solved by making little nibbling changes to how it is disclosed.”

Commissioner Catharine Baker said the new rules set the stage for further action in the future by creating more data about the connections between donors, charities and politicians.

“This may not be the last we do,” she said. “Once we see how this reporting plays out, we may want to revisit this in a year.”

The FPPC drafted the proposed new rules before completing its investigation of Assemblyman Evan Low, launched after CalMatters reported that the Democrat from Silicon Valley had stopped reporting donations to the nonprofit affiliated with the Legislature’s technology caucus, which he leads.

The investigation remains ongoing more than a year and a half after it was launched, said FPPC spokesman Jay Wierenga. And, he noted, the commission doesn’t get any details on the investigation until it’s over.

“Investigations can take a variety of times to complete in order to be both timely and thorough. Both are equally important. There are a myriad of factors that go into any situation, such as availability of documents, witnesses, cooperation, conflicting testimony, and more,” Wierenga wrote in an email.

“There isn’t a game clock on it, the time needed is what’s necessary to get to completion.”

CalMatters is a nonprofit, nonpartisan media venture explaining California policies and politics.