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Advocacy Blog
Wednesday, August 24, 2005
Nonprofits Cloak Donors to the Ahhhnold
From the L.A. Times:
Tax-exempt groups provide millions from sources not made public. Ethics watchdogs say the practice avoids state disclosure laws.
Gov. Arnold Schwarzenegger is benefiting from millions of dollars raised by a network of tax-exempt groups without revealing that the money comes from major corporations with business before his office.
The groups are run by Schwarzenegger's closest political allies, who also represent some of California's biggest interest groups. Unlike the governor's many campaign funds, the nonprofits are not required to disclose their contributors and can accept unlimited amounts.
One group controlled by a powerful corporate consultant pays the $6,000-a-month rent on a Sacramento hotel suite used by the governor, who is a multimillionaire. Others have funded media events and political rallies featuring Schwarzenegger and helped pay for his foreign travel. So far, five tax-exempt groups aiding Schwarzenegger have collected $3 million.
Other elected officials also raise money through nonprofit groups. But Schwarzenegger campaigned on creating an open government answerable to the public. His use of the nonprofit groups has the opposite effect, ethics watchdogs said.
State and federal laws allow groups performing a broadly defined "public benefit" to operate tax exempt. But the lack of disclosure requirements means potential conflicts of interests between the governor and his contributors remain hidden, allowing powerful donors to curry favor with Schwarzenegger behind the scenes, they said.
"This is an end run around the campaign finance laws," said Larry Noble, executive director of the Center for Responsive Politics in Washington. "It does away with the contribution limits and it avoids disclosure, and it's a way for the special interests who are supporting him to buy access and buy influence."
Rob Stutzman, the governor's communications director, said Schwarzenegger has asked the nonprofits directly helping him — such as the foundation paying his rent — to disclose their donors. In any case, he said the governor pays little attention to who donates to the nonprofits.
"He just never bothers himself with it," Stutzman said.
State law requires that politicians disclose contributions to nonprofits made at their "behest," but Schwarzenegger's attorneys say it does not apply to the donations at issue. Democrats disagree and have filed a formal complaint.
For more on this story.
Posted by Jennifer Lowe
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