As often happens when Washington seems paralyzed, action has moved to the state and local level. In the last couple of years, states like California, Maryland and New York have passed new laws and regulations to tackle dark money.
California broke new ground in May 2014 by enacting a law that requires any organization that spends $50,000 in a California election to rapidly report all funding and spending. This law is a breakthrough and a potential model for other states because for the first time it covers nonprofit social welfare groups as well as political committees.
Until now, “social welfare” groups have avoided disclosure by contending that their primary mission is not politics. The California law erases the legal distinction between political committees and 501C’s. It treats them all as “multi-purpose” organizations and requires them all to report political expenditures and all donors.
As the 2016 campaign moved into high gear, wealthy Republican real estate attorney John Cox proposed taking transparency a giant step further – requiring California politicians to wear the corporate logos of their ten top campaign donors on their clothes, like race-car drivers. With voter antipathy to politicians running strongly, Cox moved to put the issue before California voters in November 2016 and pledged $1 million to help pay for gathering 376,880 signatures needed to qualify for the ballot.
A new Maryland law taking effect in 2015 also moves to force political nonprofits that claim 501 (c ) 4 status as well as other groups to report their election spending and five largest donors to the state if they spend more than $6,000 in a Maryland election or relay funds to other political groups operating inside Maryland.
In New York, Attorney General Eric Schneiderman issued a regulation in 2013 requiring nonprofits, including 501(c ) 4 organizations “to report the percentage of their expenditures that go to federal, state and local electioneering.” Although this will increase the disclosures of political nonprofits, disclosure is required only once a year – after the election – and the rules lack specifics.