The new thing for state politi­cians? Some sweet char­ity from non­prof­its

Times-Herald (Vallejo) - - LOCAL NEWS - By Lau­rel Rosen­hall CALmat­ters

The Cal­i­for­nia Leg­is­la­ture’s Latino Cau­cus re­cently cir­cu­lated a memo of­fer­ing a po­ten­tial perk for mem­bers: A trip to Cuba to learn about “cul­ture, his­tory and pos­si­bly gov­ern­ment struc­ture and pol­icy mak­ing.” The cau­cus’ non­profit foun­da­tion, the memo said, would help pick up the tab. A visit to Is­rael for the Jewish Cau­cus was sim­i­larly un­der­writ­ten, in part, by its non­profit. The non­profit Ir­ish Cau­cus has or­ga­nized three trips to Ire­land for leg­is­la­tors and lob­by­ist friends.

A non­profit run by a Cal­i­for­nia assem­bly­man has helped fund a lit­er­acy or­ga­ni­za­tion led by his wife, who, as CEO, was draw­ing a six-fig­ure salary. Non­prof­its run by law­mak­ers and their staff are host­ing fundrais­ers where lob­by­ists can min­gle at the Dis­ney­land Ho­tel with politi­cians, and pol­icy con­fer­ences where tech ex­ec­u­tives can dine in Sil­i­con Val­ley with leg­is­la­tors shap­ing Cal­i­for­nia’s laws on data pri­vacy and the gig econ­omy.

These or­ga­ni­za­tions also un­der­write char­i­ta­ble work — schol­ar­ships, cul­tural cel­e­bra­tions, com­mu­nity film screen­ings — and let pub­lic of­fi­cials help the state or ad­vance causes they care about with­out tap­ping tax­payer money. But un­like cam­paign ac­counts, they of­ten of­fer a tax break and can raise un­lim­ited sums from pow­er­ful spe­cial in­ter­ests, with fewer dis­clo­sure re­quire­ments.

In Cal­i­for­nia, their num­bers, as well as their dona­tions, are surg­ing. Ac­cord­ing to a CalMat­ters anal­y­sis, the num­ber of non­prof­its af­fil­i­ated with Cal­i­for­nia leg­is­la­tors or cau­cuses grew from at least three in 2010 to at least 12 last year, with to­tal rev­enue of about $2.9 mil­lion.

Much of the money has come from cor­po­ra­tions and unions with busi­ness be­fore the Leg­is­la­ture, in­clud­ing oil, tobacco and other lob­bies whose po­lit­i­cal con­tri­bu­tions are of­fi­cially or unof­fi­cially shunned by the mem­ber’s party. The up­shot, ex­perts say, is a mon­e­tary backchan­nel that, while le­gal and even some­times ben­e­fi­cial, has also be­come an in­creas­ingly com­mon way for politi­cians to raise and spend money out­side the lim­its even of Cal­i­for­nia’s tough reg­u­la­tions.

“It pro­vides an­other way for the law­maker to wield in­flu­ence as well as a way for those who seek to in­flu­ence the leg­is­la­tor to curry fa­vor,” said Rick Hasen, a pro­fes­sor of law and po­lit­i­cal sci­ence at the Univer­sity of Cal­i­for­nia, Irvine. “This gives a donor some po­ten­tial ex­tra in­flu­ence that they couldn’t buy through a cam­paign con­tri­bu­tion.”

“We have stricter cam­paign fi­nance laws than many states,” added Ellen Aprill, a pro­fes­sor at Loy­ola Law School who spe­cial­izes in non­profit tax law. “And money will find an out­let. If you can’t do it one way, they will do it an­other way.”

Na­tion­ally, eth­i­cal con­cerns have been raised about non­profit or­ga­ni­za­tions tied to Repub­li­can Pres­i­dent Don­ald Trump and his 2016 ri­val, Demo­crat Hil­lary Clin­ton. Trump re­cently paid $2 mil­lion to set­tle a law­suit by the New York at­tor­ney gen­eral and ad­mit­ted mis­us­ing Trump Foun­da­tion funds. Clin­ton faced years of scru­tiny over whether dona­tions to the Clin­ton Foun­da­tion con­flicted with her work as Sec­re­tary of State; an in­ves­ti­ga­tion, which found no wrong­do­ing, just wrapped up.

A 2018 re­port by the non­par­ti­san Bren­nan Cen­ter for Jus­tice at New York Univer­sity School of Law named pres­i­dents, gover­nors, mem­bers of Con­gress and prom­i­nent may­ors from both ma­jor par­ties who had used non­prof­its to raise mil­lions of dol­lars. Among them: Trump, Barack Obama, Sen. Bernie San­ders, New York Gov. An­drew Cuomo and, in Cal­i­for­nia, Los Angeles Mayor Eric Garcetti. The re­port found, in par­tic­u­lar, that “spend­ing by non­prof­its that co­or­di­nate with elected of­fi­cials af­ter they take of­fice goes al­most en­tirely unchecked.”

Closer to Sacra­mento, a politi­cian’s non­profit played a role in the cor­rup­tion case that hit the Cal­i­for­nia Capi­tol

in 2013. An un­der­cover FBI agent pos­ing as a film pro­ducer bribed then-Sen. Ron Calderon of Mon­te­bello to ad­vance leg­is­la­tion in part by pay­ing $25,000 to a non­profit run by his brother, for­mer assem­bly­man Tom Calderon.

Wire­taps cap­tured the sen­a­tor say­ing, es­sen­tially, that the char­ity could be fat­tened in the short term and then tapped to gen­er­ate a pay­check af­ter he was out of pub­lic of­fice. Both brothers wound up in prison. The non­profit dis­solved in 2015.

De­spite the high-pro­file scan­dal, non­prof­its with ties to the state Capi­tol have mush­roomed over the last decade. The strat­egy isn’t limited to law­mak­ers with shared her­itage. Oak­land Assem­bly­man Rob Bonta, for ex­am­ple, cre­ated his own epony­mous non­profit foun­da­tion in 2017, and a group of leg­is­la­tors from Los Angeles County cre­ated one in 2019. Sylvia Ru­bio, the sis­ter of two state law­mak­ers who is her­self a can­di­date for Assem­bly this year, cre­ated a non­profit Ru­bio Foun­da­tion last year as well.

The trend un­der­scores the ex­pand­ing role of money in pol­i­tics since re­stric­tions on po­lit­i­cal spend­ing by cor­po­ra­tions, in­clud­ing non­prof­its, were lifted by the U.S. Supreme Court’s 2010 Cit­i­zens United de­ci­sion. While Cal­i­for­nia law caps the amount donors can con­trib­ute to politi­cians’ cam­paigns, dona­tions to non­prof­its are not limited.

“Supreme Court de­ci­sions that have opened the flood­gates for cor­po­rate spend­ing have knocked against state laws that have at­tempted to limit di­rect con­tri­bu­tions to leg­is­la­tors and can­di­dates in or­der to avoid cor­rup­tion,” said Kathay Feng of Com­mon Cause, a gov­ern­ment watch­dog or­ga­ni­za­tion.

“There are a lot of spe­cial in­ter­ests that have cre­atively found one loop­hole, which is to di­rect those cor­po­rate or union dol­lars to non­prof­its. What leg­is­la­tors have fig­ured out is that if they can con­trol those non­prof­its, it be­comes a handy backdoor to con­tinue re­ceiv­ing dona­tions from spe­cial in­ter­ests.”

Where the money comes from

Non­profit en­ti­ties of­fer politi­cians enor­mous flex­i­bil­ity in how much they tell the pub­lic about who’s giv­ing them money. Fed­eral law gen­er­ally does not re­quire that non­prof­its dis­close their donors to the pub­lic.

State law does re­quire Cal­i­for­nia politi­cians to pub­licly re­port pay­ments of $5,000 or more made to a group at the politi­cian’s re­quest for a leg­isla­tive, gov­ern­men­tal or char­i­ta­ble pur­pose — a trans­ac­tion called a “be­hested pay­ment.” Most of the non­prof­its af­fil­i­ated with Cal­i­for­nia law­mak­ers re­port the bulk of the dona­tions they re­ceive as be­hests to the state’s Fair Po­lit­i­cal Prac­tices Com­mis­sion. The amount of money law­mak­ers re­ported rais­ing as “be­hested pay­ments” for their non­prof­its grew from $105,000 in 2011 to $2.9 mil­lion in 2019, for a to­tal of nearly $13.3 mil­lion over the nine years.

Much of it comes from in­dus­tries that rou­tinely have busi­ness be­fore the Demo­crat-dom­i­nated Leg­is­la­ture and are con­sis­tently big spenders on state pol­i­tics. La­bor unions gave law­mak­ers’ non­prof­its more than $1.9 mil­lion be­tween 2011 and 2019, while health care or­ga­ni­za­tions gave $1.4 mil­lion and tele­com/ca­ble com­pa­nies gave $1.6 mil­lion, ac­cord­ing to state data on be­hests.

But Demo­cratic law­mak­ers are also us­ing their non­prof­its to so­licit dona­tions from busi­nesses their party has re­jected for be­ing anti-union or dam­ag­ing to the en­vi­ron­ment or pub­lic health. The Cal­i­for­nia Demo­cratic Party does not take money from oil or tobacco com­pa­nies, or Wal­mart. Yet oil com­pa­nies have given law­mak­ers’ non­prof­its $1.2 mil­lion over the last decade. Tobacco and eci­garette mak­ers have given $507,000. Wal­mart gave $95,000.

“We are not the party,” said Assem­bly­woman Shirley We­ber, a Demo­crat who chairs the Leg­is­la­ture’s Black Cau­cus.

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