Donor Privacy TOOLKIT I I I I State Solutions. National Impact. Donor Privacy Toolkit TABLE OF CONTENTS Executive Summary 3 Introduction 4 5 Places to Look for Unconstitutional Efforts to Stifle Free Speech 7 5 Reasons to Protect Nonprofit Donor Privacy 8 What Lawmakers Can Do to Protect Nonprofit Donor Privacy 9 What Voters Think About Nonprofit Donor Privacy 10 True Stories of Harassment and Intimidation 12 Beware of Anti-Speech Ballot Measures By Tracie Sharp, president of State Policy Network, and Darcy Olsen, former president of the Goldwater Institute 14 Transparency Is for Government, Privacy Is for People By Jon Caldara, president of the Independence Institute 16 The Victims of “Dark Money” Disclosure 18 Video Resources 24 Who to Contact for Help 25 • By Jon Riches, director of national litigation at the Goldwater Institute Executive Summary Imagine being seated at your Rotary or Kiwanis the people and groups of our choosing. Requiring charities and Club—or your church—according to your be- causes to report their donor lists to the government would both liefs on controversial issues like gay marriage, violate principles and put people at risk—especially in today’s gun control, abortion, or climate change. Peo- highly-charged political climate. ple who support the issue on one side, people who oppose on the other. With everyone in the room knowing your private, personal political views. Think this sounds Orwellian? It’s closer to reality in some states than you might think. In Montana, Delaware, and a handful of other states, nonprofit groups that are working on these sensitive issues are required to report the names and addresses of their financial supporters to the government. In the past three years, dozens of other states have faced similar proposed laws to require nonprofit groups engaging Requiring charities and causes to report their donor lists to the government would both violate principles and put people at risk—especially in today’s highly-charged political climate. in public policy debates to report the names and addresses of their donors to the government. The types of groups that would be impacted by these laws range from charities like the Boys & Girls Club, nonprofit art museums, Sierra Club, NRA, This issue guide provides the legal background and philosoph- and other causes that advance the beliefs held by millions of ical underpinnings for allowing charities and causes to keep Americans. their donor lists private, explains what lawmakers need to know about the growing movement to force these private charitable Requiring political campaigns to report their donors is an entire- organizations to report their donors, and offers broad ideas for ly different matter than requiring charities and causes to report protecting nonprofit donor privacy. theirs. In the 1950s, the US Supreme Court affirmed that the supporter lists of charities and causes should be kept private Every American has the right to support causes he or she be- not only to protect people who support controversial issues and lieves in without fear of harassment or intimidation, and it’s up causes from retribution and intimidation, but also simply be- to nonprofit groups and policymakers to work together to pro- cause we have a First Amendment right to associate freely with tect this right. Donor Privacy Toolkit • 3 Introduction It’s no secret that conservative and libertari- One group bluntly told the New York Times they “planned to an-leaning organizations and their supporters confront donors to conservative groups, hoping to create a are under attack. There is an orchestrated ef- chilling effect that will dry up contributions” by exposing do- fort to harass and intimidate people who sup- nors to “legal trouble, public exposure, and watchdog groups port these causes. Part of this attack is to force digging through their lives.” charities and causes to report the names and addresses of their donors to the government, and then post those names and ad- What’s worse is that these groups have managed to turn the dresses on government websites for anyone to see. transparency concept on its head and are using it to recruit conservative and libertarian-leaning advocates to join their What the IRS could not accomplish by targeting free market ranks. In many cases, conservative state lawmakers are pro- groups, private groups are increasingly pressuring state legis- posing these disclosure measures. In 2014, Tallahassee voters latures and state attorneys general to do. And when they can’t adopted a city-level initiative that could force donor disclosure, get lawmakers to force donor disclosure, they go straight to co-sponsored by the local tea party group. Let’s be perfectly voters with misleading and deceptive ballot initiatives, such clear: transparency is for government; privacy is for people! as “anti-corruption” initiatives to promote “transparency,” like All of us will do well to understand this fundamental difference. those we’ve seen in proposed in Arizona, Arkansas, California, South Dakota, and at the city level. This is an affront to the deeply held values that are enshrined in the First Amendment. Every American has the right to sup- Those who advocate for conservative and libertarian ideas are port causes they believe in. To keep that right a reality, we must bullied to either conform or suffer retribution, such as public protect individual privacy. We must protect people’s ability to shaming or having their customer base antagonized. If you’re come together, to freely associate, in support of each other. outted for donating to what some would consider the “wrong We must protect the resources they need to make their voices side” of an issue, you may get fired, as we saw with Brendan heard. Eich of Mozilla for his support of traditional marriage. Or you may have your door bashed in with a battering ram in the mid- That’s why we must heed this growing effort in the states to dle of the night, as we know happened to people associated “ban dark money.” “Dark money” is a pejorative term for pri- with the Club for Growth in Wisconsin, in the infamous “John vate giving, and it was coined by a left-leaning organization af- Doe” cases. ter the Citizen’s United decision. But we need to stop and think about this term before we continue to use it ourselves. This well-coordinated, well-funded effort to require free market nonprofits to divulge the names and addresses of their do- Calling private donations “dark money” is like saying your right nors is all part of a plan to choke off their air supply of funding. to a private ballot is “dark voting.” Just as the right to pull the 4 • State Policy Network curtain closed behind us as we vote for our chosen candidates There is also an effort to redefine “coordination.” In the cam- is sacrosanct, so too is our right to support charities and inter- paign finance context, coordination means a nonprofit group est groups without the government standing over our shoulder can’t join up with a candidate campaign to try to skirt cam- and sharing the information with the wider world. paign contribution disclosure laws. But now the push is to broaden this definition to prevent two private organizations TRENDS IN THE STATES that share a mission from working together to advance an idea. In other words, they want to use the law to prevent free Since State Policy Network began tracking legislation around market groups from sharing information and resources, from the country to force charities and causes to report the names freely associating. and addresses of their donors to state governments, we’ve seen a wave of state legislation to force disclosure, state reg- Another disturbing trend is that some state regulators are tak- ulators taking unilateral action to force disclosure, and ballot ing on these issues unilaterally. Already in a handful of states measures to force disclosure. nonprofits can be forced to hand over their list of top supporters before they can even do business in the state. The problem In at least two dozen states since 2015, lawmakers have con- with this is that once a document is given to a state agency, sidered bills written so broadly and vaguely that everyday ac- it can become subject to public records law. For example, if a tivities of charities and causes, like communicating with sup- charity or cause was forced to turn over its supporter list to the porters about proposed laws that impact their missions, would state of New York in order to fundraise there, and an opposing have been reclassified as “electioneering communications” group wanted to get that list, they could send a public records and the groups re-termed “political committees” and therefore request to the state attorney general who regulates charities, subject to donor disclosure requirements that are meant for and there is no mechanism in state law to decline the request. candidate campaign committees. This is a backdoor way to expose donors. We’re also witnessing state ethics commissions and campaign finance regulators unilaterally deciding certain groups must re- Calling private donations “dark money” is like saying your right to a private ballot is “dark voting.” veal their donors before they can testify at the state legislature or do other activities protected by the First Amendment. When activists supporting these laws can’t get lawmakers or regulators to force donor disclosure, they go straight to voters with misleading and deceptive ballot initiatives. These troubling trends must be confronted, and the consequences of forced disclosure must be shared. If we want to understand why publishing the names and addresses of people who support controversial issues is dangerous, we should ask We have also seen several “ethics” bills aimed at rooting out the victims of these laws. corruption among state officials, but instead of shining a light where it matters—on the elected officials themselves—the fo- Real people like Margie Christofferson, a waitress in California cus becomes forcing private organizations with a perspective who lost her job after her $100 donation to support tradition- on policy issues to report the names and addresses of their al marriage became public. The restaurant where she worked supporters to the government. was picketed by gay marriage advocates. Eventually the pro- Donor Privacy Toolkit • 5 tests took their toll on the business, and several people lost But it’s not just groups on the right who have something to fear. their jobs. In 2015, a man went to a Planned Parenthood clinic in Colorado Springs and went on a shooting rampage. He shot and tragi- Or Cindy Archer, whose house was trashed in a pre-dawn raid cally killed three people and wounded nine others because of by police in paramilitary gear. Her crime? She worked for a his views against abortion. If the law in Colorado required the group that supported Wisconsin Governor Scott Walker’s labor name and addresses of all donors to that Planned Parenthood union reforms. be made public, that man would have known where others who supported the organization lived in the community, and the tragedy could have been much worse. Free Speech Under Attack: States Where Forced Disclosure Laws Have Been Introduced 2015-2017 NH VT WA MT ME ND MN OR ID WY NV CA AZ PA IA IL CO KS TX VA NC AR SC AL GA LA FL HI Forced Disclosure Laws Introduced 2015-2017 6 • State Policy Network NJ DE WV TN MS AK OH KY MO OK NM IN RI CT MI NE UT NY WI SD MA MD 5 Places to Look for Unconstitutional Efforts to Stifle Free Speech Here are five places to look for unconstitutional 4. “Anti-corruption” legislation. Anti-corruption legislation requirements to force nonprofit charities and sounds appealing, but it can open the door to unconsti- causes to report the names and addresses of tutional regulation of speech and association. It could re- their supporters to the government or other- quire people who want to speak out on political issues to register with the government and share the names and wise restrict their free speech rights. addresses of their supporters before they testify before a 1. “Ethics” bills. Several states have grappled with legislation legislative committee. Needless to say, this heavy-handed aimed at giving lawmakers a new code of ethics that reg- suppression of ordinary citizens’ opinions does little to ad- ulates how they interact with their campaign supporters. dress corruption. While ethics standards are important, tucked into these bills have been provisions requiring nonprofits to disclose 5. Bills that redefine “electioneering communications” and their donors, even though current law already dictates “political committees.” More than a dozen states have that nonprofits can’t spend money on candidate cam- considered or passed legislation that changes the defini- paigns. Violating donor privacy raises more ethical con- tion of electioneering communications to include the ev- cerns than it solves. eryday activity of many nonprofit groups, such as issuing a non-partisan voter guide or sending a message to their 2. Bills that appoint an “Ethics Commissioner.” Like ethics email list about a bill being considered by the legislature. bills, some states have passed legislation that gives broad The definition of political committee has been similarly and sweeping power to an appointed government Ethics broadened and complicated to include any organization, Commissioner, allowing this unelected person to subpoe- business, group of people, and even individuals who speak na the names and addresses of a nonprofit’s supporters. out on political issues. How this person would be held accountable if he or she used the office to punish political opponents is a looming If you have questions about whether or not a bill would have an concern. impact on nonprofit groups, the Institute for Free Speech or the Goldwater Institute can help. 3. Bills that redefine “coordination.” Federal law prohibits nonprofit organizations from coordinating with candidate campaigns. The current legal definition is clear-cut which helps nonprofits remain compliant with the law. Several states have considered bills to more broadly define coordination to include two nonprofit groups with similar missions communicating with each other about policy issues. Muddying the definition will confuse and ensnare nonprof- Matt Nese, Institute for Free Speech mnese@ifs.org 703.894.6835 Jon Riches, Goldwater Institute jriches@goldwaterinstitute.org 602.633.8962 its and create a much greater compliance burden. Donor Privacy Toolkit • 7 5 Reasons to Protect Nonprofit Donor Privacy 1. Every American has the right to support 3. 73% of registered voters agree the government has no causes he or she believes in without fear of right to know what groups or causes they support. If law- harassment and intimidation. Privately sup- makers require nonprofit groups to report the names and porting causes, and the organizations advanc- addresses of their supporters to a government agency to ing those causes, is a fundamental freedom that be posted in an online database that will be available for is protected by the First Amendment. Our Founding Fa- anyone to see, they will be on the wrong side of public thers used pen names to encourage independence from opinion. England. Nearly 200 years later, the US Supreme Court blocked the state of Alabama from demanding the sup- 4. If we allow the government to create a database of the porter list of the National Association for the Advancement causes that individuals support, it’s only a matter of time of Colored People (NAACP), citing concerns about retribu- before someone gets hurt. In 2015, a man went on a tion against the group’s members and financial backers. shooting rampage at a Planned Parenthood clinic in Col- This protection is just as relevant today. orado Springs. He shot and tragically killed three people and wounded nine others because of his views against Planned Parenthood. If the law in Colorado required the Every American has the right to support causes he or she believes in without fear of harassment and intimidation. name and addresses of all donors to that Planned Parenthood be made public, that man would have known where others who supported the organization lived in the community, and the tragedy could have been much worse. No lawmaker wants to be responsible for creating a law that facilitates violence. 5. When political donations are made public, bad things can happen. Just imagine what will happen when charitable giving is also reported to the government. Margie Chris- 2. Calling private donations “dark money” is like saying your tofferson lost her job as a restaurant manager after her right to a private ballot is “dark voting.” Just as the right $100 donation to the campaign to ban gay marriage in Cal- to pull the curtain closed behind us as we vote for our ifornia became public and protesters picketed her work- chosen candidates is sacrosanct, so too is our right to sup- place. If charitable giving follows suit, the government will port charities and interest groups without the government have a database of people who support the NRA, pro-fam- standing over our shoulder and sharing the information ily groups, and even churches. Regular citizens could be with the wider world. Americans have a right to keep their targeted by activists based on their beliefs. political opinions private. 8 • State Policy Network What Lawmakers Can Do to Protect Nonprofit Donor Privacy any organization organized under Section 501(c) of the In- Lawmakers have several options available to protect the privacy of donors to nonprofit charities and causes. ternal Revenue Code (or any successor provisions of federal tax law) to file with this state or any agency or political subdivision of this state an unredacted version of the 501(c) entity’s Internal Revenue Schedule B Form (Form 990 or 990- 1. Ensure that campaign finance regulations do not apply EZ), any successor federal tax form, or any other document to 501(c)(3) groups. Because 501(c)(3) groups cannot that includes the names or addresses of the 501(c) entity’s engage in campaigns to support or oppose a candidate, donors or contributors. This section shall not be interpret- campaign finance regulations that are aimed at exposing ed as (a) superseding any reports required to be filed by donors to candidate campaigns should not apply to these political committees if a 501(c) entity (other than a 501(c) groups. This can be accomplished in law by a simple “not- (3) entity) otherwise meets the definition of a political com- withstanding” clause inserted into your state code section mittee, (b) or otherwise precluding any lawful warrant for dealing with campaign finance. information issued by a court of competent jurisdiction. Example: Notwithstanding any other provision of the law, (A) The documents, forms, and reports described in this any entity with a charitable tax exemption under Section section are not subject to public disclosure under this 501(c)(3) of the Internal Revenue Code (or any successor state’s public records laws. provision of federal tax law) shall not be a political committee and shall not be required to file any reports or follow reporting requirements set forth in this chapter. 3. Include donor privacy protections in ethics reform updates. If your state’s ethics regulations need a refresh, including protections for individual donors to nonprofit 2. Do not request copies of a charity or causes’ “Schedule charities and causes will keep the focus of the regulations B.” All nonprofit charities and causes are required to file a where it belongs: on lawmakers and their behavior. You form 990 with the IRS annually. Included in the 990 is a list can draw on federal ethics regulations for ideas and in- of the organization’s top supporters in the Schedule B sec- spiration, which are much stronger than most state-level tion of the form. The IRS protects these names from public ethics requirements. disclosure. States should not request copies of Schedule B’s as a precondition for doing business in a state. This can be accomplished in law by preventing regulatory agencies from requesting these documents. At the very least, states should exempt them from public records law. For additional ideas and model legislation, please contact Starlee Coleman at coleman@spn.org. Example: Notwithstanding any other law, this state and any agency or political subdivision of this state shall not require Donor Privacy Toolkit • 9 What Voters Think About Nonprofit Donor Privacy State Policy Network has conducted numerous scientific public opinion polls on donor privacy and these are some of the key results. Do you agree with the following statements? Total Progressive Conservative Every American has the right to support causes they believe in. 94% 91% 96% We must protect the ability of Americans to come together in support of each other and the causes they believe in. 93% 90% 96% Americans should be allowed to support specific groups or positions without fear or harassment or retaliation from the government. 92% 87% 96% We need to strengthen our democracy by protecting our right to free speech and personal privacy. 91% 89% 95% Making a donation to support an organization or group you believe in is a way to express your personal views and exercise your Constitutional right to freedom of speech. 89% 86% 93% The government has no business knowing what I support or make donations to. 73% 53% 85% More Opinions of Self-Identified Conservative Voters Do you agree with the following statements? Yes We must protect the ability to raise resources that like-minded Americans need to make their voices heard. 92% The privacy of Americans is being invaded, exposing them to harassment for what they believe. 79% The right of every American to support causes they believe in is under attack. 76% The government is restricting the ability of Americans to work together as a group. 72% Americans who support organizations are being intimidated and their voices silenced. 70% 10 • State Policy Network More Opinions of Self-Identified Progressive Voters Do you agree with the following statements? Yes Many of us fear the unfair influence of the wealthy and powerful and want laws to protect us. These concerns should be addressed, but not by compromising freedom of speech, personal privacy, and free will. 82% We expect transparency from government because government works for the people. But government doesn’t have any right to transparency into the lives of Americans or the right to invade their privacy. 79% While openness and transparency is desirable in our country, it cannot come at the cost of personal safety that may be threatened by making donors’ names and addresses public. 76% We live in a cruel world where people walk into churches, shoot and kill innocent people just because they don’t like the color of their skin. Imagine what a person who disagrees on an issue would do if they knew the names and address of the donors and supporters of the issue. 75% It is my right to keep my donations private. I vote privately, and I should be able to give privately. 75% If the law changes, and the names and addresses of donors to Planned Parenthood are forced to be made public, it is just a matter of time before someone gets hurt. 75% The size of a donation should not matter—everyone should be treated the same. Safety and privacy should be protected equally for everyone, rich or poor. 73% Making donors’ names and addresses public could really hurt organizations fighting for worthy causes. Many donors would simply stop donating if they were no longer anonymous. 73% The government has no business knowing what groups I support or make donations to. 65% Donor Privacy Toolkit • 11 True Stories of Harassment and Intimidation Cindy Archer Cindy Archer’s home was raided by state police in riot gear in the early morning hours. Her crime? She donated to an organization that supported Wisconsin Governor Scott Walker’s union reforms. After years of being investigated, Cindy was never charged with a crime. Ultimately, the Wisconsin Supreme Court ruled the investigation was ordered by an opponent of Governor Walker who wanted to punish people who supported the union reforms. But the damage was done: Cindy lost her job and her privacy—she couldn’t even let her dogs outside by themselves for fear they would be poisoned. Just imagine what could have happened if the partisan prosecutor would have had a list of every single person who donated to support the union reforms? How many people’s homes would have been raided? How many people would have lost their jobs? Catherine Englebrecht Catherine Englebrecht, a Texas mother and small business owner, wanted to start an organization to educate the public about voter fraud. After filing paperwork with the government, she was targeted and harassed by federal agencies. She was audited by the IRS twice; and the FBI, ATF, and OSHA showed up at her business and home demanding records and making it difficult to continue business operations. Catherine sued the IRS, and a judge ruled that the IRS must hand over records detailing how the agency targeted her and her family because of their beliefs. What if the government had a list of every donor to every group that opposes the president’s policies? Margie Christofferson Margie is a waitress in California. After she gave $100 to a group that supported Proposition 8, a proposal in 2008 to ban gay marriage, her name was made public, and the restaurant where she worked was boycotted and picketed by people who support gay marriage. Ultimately, the protests took their toll on the restaurant, and she lost her job. People who support candidates and ballot measures are already reported to the government. Do we want to open up people who support causes and organizations to this kind of harassment too? 12 • State Policy Network Darcy Olsen Darcy Olsen and her colleagues at the Goldwater Institute fought a taxpayer subsidy to a hockey team in Phoenix, Arizona. That put her in the crosshairs of angry hockey fans. Literally. Darcy began receiving death threats at work. Someone even followed her home. The next morning, she stepped onto her front porch and into a puddle of blood and the mutilated body of a rabbit at her feet. Darcy had to hire 24-hour security to protect her home and children. And the Institute had to have 24-hour police protection at their office. If all the organization’s financial supporters were posted on a public website, do you think the death threats would have stopped with Darcy and her colleagues? Planned Parenthood In 2015, a man went on a shooting rampage in a Planned Parenthood clinic in Colorado Springs. He shot and tragically killed three people and wounded nine others because of his views against Planned Parenthood. If the law in Colorado required the name and addresses of all donors to that Planned Parenthood be made public, that man would have known where others who supported the organization lived in the community, and the tragedy could have been much worse. Gigi Brienza Gigi Brienza’s home address was published on an online “target list” by a radical and violent animal rights group. Why was Gigi a target? Because she worked for a pharmaceutical company that tested some products on animals, even though Gigi’s job had nothing to do with animal testing. The leaders of this group—most of whom are now in jail—found her by combing through reports posted online of donors to political candidates and looking for people who worked for pharmaceutical companies. Gigi’s donation to Democratic Presidential candidate John Edwards made her a target for violence—and it was all possible because her name and home address were reported online. Just imagine what will happen when charitable donations are also posted online. Erious Johnson Erious Johnson, an Oregon attorney who heads the state Department of Justice Civil Rights Division, was put on a government watch list of potential threats to police for supporting the Black Lives Matter movement. They found him because he used the #BlackLivesMatter hashtag in a tweet. If the government had a list of every supporter of Black Lives Matter, they could have all been put on a government watch list. Donor Privacy Toolkit • 13 Beware of Anti-Speech Ballot Measures FORCING NONPROFITS TO SUBMIT DONOR LISTS TO GOVERNMENT OFFICIALS IS UNCONSTITUTIONAL state laws to require donors to charitable groups and nonprofits By Tracie Sharp and Darcy Olsen working on issues—not campaigns—to report the names and addresses of their donors to the government. Once collected, this information is posted on a public website When voters in Missouri, South Dakota, Washington, and Ore- for anyone to access. This might not sound like a big deal in to- gon go to the polls in November [2016], they will vote on ballot day’s era of living our lives online, but some historical context measures that are cleverly marketed as legislation aimed at re- is in order. ducing “big money” and “outside influence” in local elections. If passed, what these measures would really do is limit the ability of nonprofits like ours to weigh in on policy matters we care about. This is an infringement of our First Amendment rights. The South Dakota Government Accountability and Anti-Corruption Act is a good example. Also known as Measure 22, it would force nonprofit organizations to report the names and addresses of their donors to the state government, subjecting them to possible investigation by an unelected ethics board that is given the power to subpoena private documents and overrule decisions made by the state attorney general if the board disagrees. Nonprofit organizations—like the Sierra Club, Planned Parent- Do we want America to be a country where government keeps public lists of law-abiding citizens because they dare to support causes they believe in? hood, National Rifle Association, churches, Boys and Girls Clubs, and art museums—are legally allowed under federal law to take positions on legislative matters that impact their missions, as long as they do not financially or otherwise support candidates In the 1950s the state of Alabama tried to force the NAACP to for office. Because they are not engaging in candidate cam- turn over its membership list, with the result that segregation- paigns, they are allowed to protect the privacy of their financial ists could show up on the front lawns of those who supported supporters. The South Dakota measure and others like it would the civil-rights movement. In NAACP v. Alabama (1958) the US overrule these protections. Supreme Court recognized the physical dangers this invited, and the threat to the First Amendment, which guarantees our right The South Dakota legislation is part of a growing national trend. as Americans to express ourselves not only with words, but with Since 2013, 17 states have considered, and five have passed, actions and dollars as well. 14 • State Policy Network Things have certainly changed since then, but we know from at the Freedom Foundation in Washington state had their car personal experience that violence directed at people who sup- tires slashed; an attorney at the Mackinac Center in Michigan port controversial issues is still a real threat. was spat upon; the home of Illinois Policy Institute’s CEO was vandalized, and so on. In 2011 the Goldwater Institute was engaged in a high-profile public dispute with local officials and the National Hockey Non-conservatives are also targeted. Last Thanksgiving, a man League over the legality of a multimillion-dollar subsidy to Ari- went on a shooting rampage in a Colorado Springs Planned Par- zona’s hockey team. During that fight, hockey fans used proper- enthood clinic, tragically killing three and wounding nine others. ty tax records to find the home address of the institute’s presi- What if the state had forced Planned Parenthood to post a list of dent, Ms. Olsen, and post it online. The next day a gutted rabbit its donors online? How much worse and widespread could that was found on her porch, and the animal’s blood smeared over tragedy have been? her house. Do we want America to be a country where government keeps In 2012, the Arlington, Va., office of Ms. Sharp’s nonprofit orga- public lists of law-abiding citizens because they dare to support nization, the State Policy Network, was broken into and trashed. causes they believe in? Every American has the right to support In 2013 the homes of our colleagues at the Wisconsin Club for a cause or a group without fear of harassment or intimidation. Growth were raided in pre-dawn, paramilitary-style assaults by Protecting donor privacy is essential to safeguarding that right. the police who were looking for evidence that the group was illegally coordinating with the campaign opposing the recall of Ms. Sharp is president of the State Policy Network. Ms. Olsen Governor Scott Walker. But the group had not run one ad in sup- is the former president of the Goldwater Institute. This article port of Mr. Walker, sent one piece of mail, or made any phone originally appeared in the September 23, 2016, print edition of calls; it simply spoke out in support of his union reforms. Staff the Wall Street Journal. Donor Privacy Toolkit • 15 Transparency Is for Government, Privacy Is for People sible, private. If segregationists could scare away the NAACP’s By Jon Caldara supporters by the threat of intimidation and violence, their operations would be ripped away at its root. In the mid-1950s the state government of Alabama hoped to in- On Nov. 27, 2015, Robert Lewis Dear Jr., a self-described “war- timidate and frighten away the NAACP by forcing them to make rior for the babies,” arrived at the  Colorado Springs Planned public their list of donors. The NAACP fought it all the way to Parenthood armed with a semi-automatic rifle. By the time the the US Supreme Court and won, letting them keep their donors police had him in custody, he had killed three and injured nine. private, and safe, and therefore keeping their movement alive. So, here’s a question worth pondering. How much worse could it have been if before this violent mad man decided to kill, he knew the names and addresses of the donors to the clinic? Is it possible that being able to anonymously support a cause, particularly a controversial one, saves lives? History shows it’s not a hypothetical question. The National Association for the Advancement of Colored People (NAACP) is one of the nation’s oldest civil rights organizations. Founded in 1909, they called for federal anti-lynching It doesn’t take a lot to imagine why the NAACP has always fought to keep its donors, those who make their very work possible, private. laws, set the case for the Brown v. Board of Education decision, and lobbied for the 1964 Civil Rights Act. They also have been targets of violent threats and attacks. Stories like that of Medgar Evers, the famed civil rights activist and Organizations across the political spectrum, including Planned field secretary for the NAACP who was murdered after his fight Parenthood, owe them for their bravery and the safety that has to desegregate the University of Mississippi, is just one of too grown out of it. many examples. You’d think this issue would be clear and settled by now, but It doesn’t take a lot to imagine why the NAACP has always there seems to be a basic misunderstanding of what transpar- fought to keep its donors, those who make their very work pos- ency is in a system like ours. 16 • State Policy Network Transparency is for government. Privacy is for people. senators, Mark Udall, happened to be on the ballot, campaign finance laws stopped us, even though we weren’t weighing in on For 18 years, I have run that beacon of political incorrectness, the election in the slightest. According to the McCain-Feingold the free-market-loving Independence Institute. And it is near Act, if we ran the ad, we’d have to disclose our donors. sinful how much fun we have working to make Colorado a place where we are free to make our own decisions. While I can’t No one’s right to speak should be subservient to a calendar. If imagine what groups like the NAACP went through, we too nev- we have a right to say something on Monday, without making er disclose our supporters, even though we’ve been brought to our supporters vulnerable, shouldn’t we have the same right to court several times by political foes who think they have a right say the same thing on Tuesday? So off to court we went. “get at” our donors. Sadly, the US Supreme Court recently refused to hear our case, From public school teachers who fear retribution from the that one empty seat on the court almost certainly being the teachers’ unions to businesspeople who need to survive their reason the court didn’t have the votes to consider it. Hopefully, dealings with Colorado’s 3,700 governments, we believe our with a full court, the issue will be resolved in the future. supporters should be guaranteed privacy. From Cato’s Letters to pamphlets written under pen names, We also feel that groups like ours shouldn’t lose our right to free anonymous speech played a key role in our nation’s birth. It is speech because of it. But sadly, that’s what campaign finance no less important today. laws do. Jon Caldara is president of the Independence Institute, a In 2014, we wanted to run a radio ad asking both of Colorado’s US free-market think tank in Denver and host of “Devil’s Advocate” senators to support a bill reforming federal sentencing laws. But on Colorado Public Television. This article originally ran in the because it was “too close” to the election, and one of those print version of The Denver Post on March 18, 2017. Donor Privacy Toolkit • 17 The Victims of “Dark Money” Disclosure The investigation began as a probe into the activities of Walker By Jon Riches and his staff, and it expanded to reach nonprofits nationwide that had made independent political expenditures in Wisconsin, including the League of American Voters, Americans for Prosperity, and the Republican Governors Association (Milwau- “Anonymity is a shield from the tyranny of the majority.” kee Journal Sentinel, Sept. 14, 2011). —McIntyre v. Ohio Elections Commission, 1995 This John Doe probe serves as a chilling example of one state’s The following cautionary tale is a true story. It reveals how en- attempt to criminalize political speech. It shows the danger to dangered political speech is in America. free speech when regulators use their authority to silence political expression with which they disagree. “Anne” was alarmed when she heard an early morning pounding on her front door. “It was so hard. I’d never heard anything The apparently politically motivated attempts to suppress like it. I thought someone was dying outside.” When she ran speech in Wisconsin and invade Anne’s privacy led her to pro- to open the door, armed police came pouring into every room test that this was not the America she recognized. Nor is it con- of the house, yelling orders, cornering her family, and seizing sistent with this country’s long tradition of respecting the right Anne’s private property. The police verbally abused Anne and to free association and private speech of all kinds. her family, instructing them not to contact a lawyer or tell anyone about the early morning raid. Indeed, when Americans were debating whether to ratify the US Constitution, much of the public discussion occurred Anne’s crime? She had supported Wisconsin’s Act 10—Gover- through anonymous essays and pamphlets. The most famous nor Scott Walker’s public union reform bill that passed in 2011. of these were the Federalist Papers, written with great secrecy Anne’s story is one of several incidents of harassment and in- under the pen name “Publius” by Alexander Hamilton, James timidation that occurred in Wisconsin’s “John Doe” investiga- Madison, and John Jay, in hopes of persuading citizens—espe- tions, so named because of the extraordinary powers granted cially in the critical state of New York—to ratify the Constitution. to law enforcement to maintain the secrecy of their investigations. The investigators didn’t have to reveal the names of It was years after ratification before the authors were revealed, their targets, and even when those targets, including Anne, had and the essays themselves are now universally acknowledged their homes publicly raided, they were put under gag orders as the greatest guide to our Constitution. The US Supreme and required not to reveal they were under investigation, even Court has cited the essays hundreds of times, from the land- as government agents compelled the targets to disclose their mark 1819 decision McCulloch v. Maryland down to the pres- personal information (Wall Street Journal, Nov. 18, 2013). ent day. Considering the personalities involved, regional rival- 18 • State Policy Network ries at the time, and the importance of focusing the debate on Funded largely by the Ford Foundation and radical left-wing the message rather than the messenger, it is unlikely that the philanthropist George Soros, the proponents of so-called “dark Federalist Papers would have been as effective had their au- money” disclosure have already swept today’s nonprofit orga- thors been forced to disclose their identities (see “Publius Was nizations into the ambit of laws designed to regulate candidate Not A PAC: Reconciling Anonymous Political Speech, the First campaign financing. Amendment, and Campaign Finance Disclosure,” 14 Wyoming Law Review 253). WHAT IS “DARK MONEY”? The wide use of the phrase “dark money” is itself a major propaganda victory for advocates of government reporting by private “ Anonymity is a shield from the tyranny of the majority.” —McIntyre v. Ohio Elections Commission, 1995 civic groups. The expression is, in essence, a political smear. Absurdly equating a lack of regulation—otherwise known as freedom—with sinister darkness, the phrase conjures images of shady political operatives greasing the palms of politicians in dark, smoked-filled rooms. But should the concept of “dark money” be applied to traditional political activities, like you and your neighbor contributing your time and money to civic and social activities that you support? Is that really a threat to democracy, or are those who seek to silence the voice of opposition and limit speech the real menace? So-called “dark money” generally refers to funds spent for political activities by businesses, unions, nonprofit groups, and individuals who are not required by law to disclose the iden- At the time of ratification, Alexander Hamilton in particular tities of their donors. Depending on where supporters of gov- was subject to personal attacks because of his foreign birth and ernment disclosure draw the inherently arbitrary line, “dark perceived links to the British Crown. Similarly, although a less money” could refer to donations made to the American Civil controversial character, James Madison’s Virginian roots would Liberties Union (ACLU) or to your local church or soup kitchen. have made New Yorkers suspicious of his arguments, had they been penned in his own name. Simply put, the Constitution Already, as a general rule, any spending which calls for the may never have been ratified had it not been for anonymous election or defeat of a political candidate constitutes what political speech. the law calls “electioneering communications” and requires some disclosure to the government. In fact, our laws today Yet, under some present-day state laws requiring disclosure of have more disclosure obligations than at any other time in individuals and groups speaking on political issues, Publius’s our nation’s history. (See http://www.ifs.org/wp-content/up- great essays would likely be considered publications authored loads/2013/12/2014-08-19_IFS-Policy-Primer_Disclosure.pdf.) by a “political committee,” which would then be forced to disclose its authors or cease its publications. Broad disclosure laws Nevertheless, some anti-speech activists claim the current laws now empower government to silence dissenting opinions. If the do not go far enough. They say certain charitable and social authors of the Federalist Papers had been subject to compul- welfare organizations, including those organized under section sory disclosure under current campaign finance laws, then so 501(c) of the federal tax code, should be forced to disclose the would other issue advocacy groups, including charitable organi- identities of their individual donors when those organizations zations established under section 501(c)(3) of the US tax code. engage in political activity, even if that is not their primary Donor Privacy Toolkit • 19 function. Those calling for the elimination of “dark money” are Another important distinction between (c)(3) groups and other thus attempting to dramatically extend the reach of govern- 501(c) organizations is that (c)(3) groups are prohibited from en- ment-mandated disclosure to a wide variety of organizations, gaging in any express political activity involving political candi- activities, and communications. dates. Other 501(c) organizations, notably 501(c)(4) social welfare groups, can advocate for the election or defeat of political Some government-disclosure advocates claim that so-called candidates, so long as those activities are not the organization’s “dark money” expenditures constitute a significant portion of primary activity. Organizations recognized under 501(c)(4) can political spending in the United States, but that assertion is also engage in unlimited lobbying to further the purpose of the false. In the 2014 election cycle, the Federal Elections Commis- organization. By contrast, 501(c)(3) public charities can only en- sion reported approximately $5.9 billion in total spending on gage in limited lobbying under certain circumstances. federal elections. Of that sum, roughly $173 million came from groups that are not required by law to disclose donors. Of course, the entire point of a public or social benefit organization is to advance an issue or set of issues through public This represents a mere 2.9 percent of all spending on federal dialogue, including political dialogue. According to government elections—hardly a significant portion. As the Institute for Free disclosure advocates, however, people should not be able to Speech observed from the 2012 election cycle, “Nearly all of donate privately to the charities of their choice if those entities the organizations that financed such independent expenditures engage in any political dialogue. What would this mean in prac- … were well-known entities, including the US Chamber of Com- tice? A donation to Planned Parenthood would cease to be your merce, the League of Conservation Voters, the National Rifle As- private business and become a public record. Member dues to sociation, Planned Parenthood, the National Association of Re- the NRA or Greenpeace would be reported to the government altors, the National Federation of Independent Business, NARAL and disclosed to the public. Even donors to a theater group that Pro-Choice America, and the Humane Society.” As a result, it is engaged in political activity on an issue affecting the arts would not a secret what causes and issues those groups support. be made public. Claims that “dark money” is distorting American politics are even more tenuous when leveled at 501(c)(3)s, considering that TRENDS these nonprofit organizations are prohibited from participating Advocates of greater government reporting have engaged in a in any partisan political activity. multi-pronged attack on anonymous speech to force more organizations, including 501(c)(3) nonprofits, to reveal their private WHAT ARE 501(C)(3) NONPROFITS? donors. After a federal disclosure bill failed by a single vote on a procedural motion in the US Senate, government reporting There are nearly one million tax-exempt charities in the United advocates have largely focused their attention on state legisla- States organized under section 501(c)(3) of the federal tax code. tures, where several proposals have recently passed or nearly These organizations include schools, churches, hospitals, art passed that would require a wide range of mandatory public centers, public radio stations, research foundations, and other disclosure. groups dedicated to a range of issues from improving the environment to providing legal services to the poor. These groups Worse, some anti-speech activists have put aside the need to run the entire political spectrum. The ACLU, the National Rifle trouble themselves with actually passing laws and instead have Association, Focus on the Family, and the Cato Institute, for ex- persuaded state regulators to demand private donor informa- ample, are all 501(c)(3) public charities. While all types of 501(c) tion as part of their oversight of charitable fundraising. Many groups are tax-exempt or “nonprofit,” meaning that they do not of these new mandates have been sweeping; for example, by normally owe taxes on their revenues, only contributions to the expanding the definition of an “electioneering communication” (c)(3)s are tax-deductible for donors. or a “political committee.” In many instances, these efforts 20 • State Policy Network have resulted in compelled disclosure of transactions by both America whose mission was to intimidate donors planning to private individuals and nonprofit entities whose purpose is not give money to conservative groups. Here is the group’s self-de- primarily political. scription from its website: The legislative proposals have generally come in one of two forms: dramatically expanding the definition of what constitutes either (1) a “political committee” or (2) an “electioneering communication.” Many of these efforts have direct implications for 501(c)(3) organizations, particularly those that engage in limited lobbying. Additionally, the broad sweep of these pro- “ The warning letter is intended as a first step, alerting donors who might posals and statutes have ensnared private citizens engaging in be considering giving to grassroots political activity. right-wing groups to a For example, in 2013, Nevada amended its campaign finance variety of potential dangers, laws to expand the definition of a “committee for political including legal trouble, public action,” so that any group that receives or spends more than $5,000 on an election or ballot question is deemed a political exposure, and watchdog committee, regardless of the overarching nature or purpose of groups digging through their the organization. Under this law, 501(c)(3) organizations that, lives,” the New York Times for example, support a ballot measure, would almost certainly have to disclose the identities of all their donors, even if that reported. organization by no means has political activity as its primary purpose. Such a broad definition of “political committee” even ensnared “Accountable America works to stop the outrageous a concerned individual in Arizona. In 2011, Dina Galassini op- policies of right-wing and special interests in Washing- posed a bond proposal set to appear on the Town of Fountain ton especially in the areas of economic policy, energy Hills’ November ballot. One month before the election, she policy, national security policy, and government reform. sent a personal email to 23 friends and neighbors asking them Our first project seeks to discourage groups and right- to join her in opposing the bond by writing letters and attend- wing donors trying to ‘swiftboat’ progressives.” ing a protest where they would hold signs on a street corner. Shortly after sending her email, town officials sent Galassini a Matzzie told the New York Times that he planned to send “warn- “cease and desist letter,” claiming that she must register as a ing letters” to big-money donors to the Republican Party. “The political committee. Galassini was frightened by the letter and warning letter is intended as a first step, alerting donors who cancelled her two planned protests. This is exactly what town might be considering giving to right-wing groups to a variety of officials were hoping for and a chilling example of how thor- potential dangers, including legal trouble, public exposure, and oughly anti-speech activists hope to muzzle even the simplest, watchdog groups digging through their lives,” the newspaper neighbor-to-neighbor engagement in public policy. reported. Some left-wing activist organizations take it further, engaging Imagine what these activist groups, who are more interested in in what community organizers euphemistically label “account- muscling their opponents than throwing sunlight on campaign ability” actions. Tom Matzzie, a former organizer for the liberal finance, might do if all “dark money” contributions were avail- pressure group MoveOn, created a group called Accountable able in the public square. Donor Privacy Toolkit • 21 The disclose-everything movement is making inroads at the California Registry of Charitable Trusts. As part of the registra- state level across the nation. State legislatures have been seek- tion process, 501(c)(3) nonprofits have historically submitted ing to expand the definition of “electioneering communication” a redacted IRS Form 990 to state regulators. That form exclud- to require 501(c)(3) nonprofits and other small groups to dis- ed names or other identifying information of donors. In 2014, close their donors simply for speaking about political issues. however, California Attorney General Kamala Harris (D) began For example, the Minnesota legislature recently considered demanding that 501(c)(3) nonprofits submit an unredacted IRS two bills that greatly expanded the definition of “electioneering Form 990 that includes the names, addresses, and contribu- communication” to include any communication that (1) refers to tion levels of donors (Wall Street Journal, Dec. 19, 2014). Even a candidate, (2) is distributed within 30 days of a primary elec- worse, once this donor information is turned over to the state tion or 60 days of a general election, and (3) “can be received government, California freedom of information laws arguably by more than 1,500 persons.” These bills would have forced the require government officials to make these records available to organization to turn over the “name, address, and amount at- anyone who makes a public records request. In other words, tributable to each person” who donated more than $1,000 used the chief law enforcement officer in the state of California in- for these so-called “electioneering communications.” Given the tends to unilaterally coerce private charities into disclosing their broad scope of this definition of “electioneering communica- private donors as a precondition to engage in constitutionally tions,” these bills would likely affect 501(c)(3) nonprofits, that protected speech and association. published a nonpartisan voter guide, for example, and require that such groups disclose their donors. New York Attorney General Eric Schneiderman has demanded the same information from 501(c)(3) nonprofits. He and his These provisions that would force private organizations to re- California counterpart are defending lawsuits against their de- port the names and addresses of their supporters to the govern- mands for information. ment are often tucked into bills that are billed as “ethics” legislation, “anti-corruption” measures, or laws aimed at creating more “transparency.” Who could oppose ethics, anti-corruption, THE DANGER OF DISCLOSURE or transparency laws? But these laws turn the concept of trans- Proponents of government-mandated disclosure make several parency on its head. Transparency laws are supposed to make arguments for compelling charitable organizations to disclose the government transparent to citizens, not to make citizens and their donors. Those arguments range from the wrong but per- our private political preferences transparent to the government. haps well-intentioned, to the nefarious. On the soft end of the spectrum are those who claim they are not seeking to prevent REGULATORY EFFORTS TO COMPEL DISCLOSURE speech, but only to inform the public of who is speaking. Daniel I. Weiner of the far-left Brennan Center for Justice is Government reporting advocates also have been using the pow- typical of this school of thought. He laments that the Citizens er of regulatory agencies to force nonprofit organizations to re- United decision and the economic freedom that flows from it veal their donors. These efforts attack the lifeblood of 501(c) are somehow unjust and empowering the rich at the expense (3) organizations—the ability to fundraise—giving nonprofit or- of everyone else. It is “deeply disheartening to Americans who ganizations the untenable choice between ceasing fundraising believe in transparency and think that all citizens, regardless of activities or invading the privacy of the organization’s donors. wealth, should be heard.” The most aggressive such efforts are underway in the cultural bellwethers of California and New York. On the hard end of the spectrum are partisan political operatives who wish to use disclosure mandates to silence opposing In order to solicit charitable contributions in California, non- views. As Arshad Hasan, executive director of ProgressNow put profits, including 501(c)(3) organizations, must register with the it, “The next step for us is to take down this network of [conser- 22 • State Policy Network vative and libertarian] institutions that are state-based in each CONCLUSION and every one of our states.” (Ricochet, July 22, 2014) Cloaked as advocates of greater information and transparency, the enemies of free speech are at the gate. Defenders of the One of the most significant challenges is protecting speakers First Amendment must be ready to identify the dangers of do- who choose to remain private, particularly when speaking truth nor disclosure and challenge efforts to compel government re- to power. Political actors have routinely sought the identities porting whenever they occur. of anonymous speakers with whom they disagree in order to harass, humiliate, and ultimately silence them. During the Civil Rights era, for example, the Alabama attorney general sought to compel the National Association for the Advancement of Col- Cloaked as advocates of ored People (NAACP) to turn over the names and addresses of greater information and all of its members to the state. Fortunately, this attempt at intimidation was rebuffed by the US Supreme Court as a violation of the First Amendment rights of the NAACP and its members. transparency, the enemies of free speech are at the gate. (NAACP v. Alabama ex rel. Patterson, 1958) Similar efforts to silence critics through forced disclosure continue today. These include threats from government bureaucrats, The nearly one million nonprofits—whose activities range from like we saw when Dina Galassini tried to organize some friends civil rights advocacy to equestrian therapy—should not fall vic- and neighbors to oppose a local bond measure in Arizona. They tim to politically-driven efforts to silence their views and curtail include threats from other citizens, such as when Margie Chris- their activities. All Americans have the right to support causes toffersen lost her job as a restaurant manager after her $100 they believe in. donation to support a California ballot initiative defining marriage as the union of one man and one woman became public At the same time, the disrespect shown for anonymity in politi- (“Prop. 8 Stance Upends Her Life,” Los Angeles Times, Dec. 14, cal dialogue and association disregards our nation’s rich history 2008). And perhaps most ominously, these include threats from and tradition of protecting these rights and demeans Americans those wielding law enforcement authority, like the controversial who cherish freedom of thought and speech. As the New York Arizona Sheriff, Joe Arpaio, who has jailed journalists critical of Supreme Court admonished in People v. Duryea, a First Amend- his office as well as political opponents. (“Maricopa County su- ment decision more 40 years ago: pervisors settle lawsuits filed by ‘New Times’ founders, Stapley,” Arizona Republic, Dec. 20, 2013) Do not underestimate the common man. People are intelligent enough to evaluate the source of an anon- In this sense, mandatory disclosure laws do what many govern- ymous writing. They can see it is anonymous. They ment reporting advocates want—they silence opposing views. In know it is anonymous. They can evaluate its anonym- his concurring opinion in Citizens United, Justice Clarence Thom- ity along with its message, as long as they are permit- as cited a New York Times article that described a new nonprofit ted, as they must be, to read that message. And then, group formed in the run-up to the 2008 elections that “plan[ned] once they have done so, it is for them to decide what to confront donors to conservative groups, hoping to create a is responsible, what is valuable, and what is truth. chilling effect that will dry up contributions … [by exposing donors to] legal trouble, public exposure, and watchdog groups dig- This essay was originally published by the Capital Research ging through their lives.” This organization’s leader described his Center in Organization Trends, September 2015. PDF here and donor disclosure efforts simply as “going for the jugular.” online text here: https://capitalresearch.org/article/the-victimsof-dark-money-disclosure/. Donor Privacy Toolkit • 23 Video Resources PEOPLE UNITED FOR PRIVACY SPN has produced several videos that are available to share on social media, in blog posts, and on websites. These videos help explain the consequences of donor disclosure and can all be found on PeopleUnitedforPrivacy.com/Videos PRAGERU VIDEOS PragerU also has tackled the importance of maintaining donor privacy in two videos, one featuring David French from National Review, and another featuring Kim Strassel from the Wall Street Journal. https://www.prageru.com/courses/political-science/ when-transparency-really-means-tyranny 24 • State Policy Network https://www.prageru.com/courses/political-science/ dark-art-political-intimidation LEARN LIBERTY For a video aimed at a younger audience, such as high school or college-aged students, we recommend this one from Learn Liberty. https://www.learnliberty.org/videos/anonymity-the-greatest-weapon-against-oppression/ Who to Contact for Help If you need help crafting a donor privacy policy for your state, analyzing a bill and its potential impact on donor privacy, or if you just want to talk through how to change the narrative on donor privacy, the following people can help: Starlee Coleman Matt Miller State Policy Network Goldwater Institute coleman@spn.org mmiller@goldwaterinstitute.org Shelby Emmett Matt Nese American Legislative Exchange Council Institute for Free Speech semmett@alec.org mnese@ifs.org Donor Privacy Toolkit • 25 State Solutions. National Impact.