Bill to protect ‘dark money’ groups in Michigan passes House

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A Republican-sponsored bill that would make it harder for the state to monitor millions of dollars in campaign contributions from nonprofit political advocacy groups passed the state House Tuesday 58-51. It will now go to Gov. Rick Snyder. 

SB 1176 would bar state agencies from requiring nonprofits to disclose the identities of their donors or members to the agency. The bill would include all nonprofits under section 501(c) of the federal tax code — that includes charities (501(c)3s) as well as the “social welfare” (501(c)4s) and business advocacy (501(c)6s) organizations that are more likely to be involved in political advocacy.

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501(c)4s and 501(c)6s can receive unlimited donations from individuals, corporations and unions. According to data tracked by the nonpartisan Michigan Campaign Finance Network, nonprofits spent more than $7 million in the 2018 governor’s race alone. They spent another $3 million in state Senate races. A liberal nonprofit group also gave more than $5 million to the group behind the proposal to change the state’s redistricting system, $250,000 to the group behind voting rights reforms and more than $2 million to the group behind a paid sick leave proposal.

The bill sponsor, incoming Senate Majority Leader Mike Shirkey, told a House committee Tuesday morning that the bill is “belt and suspenders” legislation that simply protects the right to privacy and free speech for members of and donors to nonprofits of all kinds. He added that the legislation doesn’t bar public entities from requesting information if they have a warrant or as a part of discovery in a lawsuit.

“It just has to meet a legitimate legal hurdle,” Shirkey told the committee.

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Craig Mauger, executive director of the Michigan Campaign Finance Network, testified against the bill before the committee. He argued that if the intention of the bill is truly to protect the identities of donors to charities and not shield political actors, legislators could amend the bill to only apply to 501(c)3s (which he called “true” charitable organizations.)

“I believe sunlight is the best protection we have against political corruption,” Mauger said. The bill, he said, treats someone giving money to their church the same as someone giving money to influence lawmakers. 

Michigan’s nonprofits are not currently required to publicly disclose their donors, but the Attorney General can inspect nonprofit donations to police fraudulent charities. Secretary of State-election Jocelyn Benson pledged to increase campaign finance transparency, and Attorney General-elect Dana Nessel was backed by the End Citizens United PAC. Both incoming officials are Democrats, as is the new governor, Gretchen Whitmer.  

Five Democratic state representatives spoke against the legislation on the House floor. Many cited a 2015 study by the Center for Public Integrity that ranked Michigan last in the nation on transparency and accountability, in large part due to the amount of undisclosed so-called dark money that is allowed in state political campaigns.

“This bill is literally the opposite of the direction we need to be going,” said Rep. Jon Hoadley, D-Kalamazoo.

Five Republicans voted against the bill: Rep. Gary Howell of Deerfield Township, Rep. Martin Howrylak of Troy, Rep. David Maturen of Vicksburg, Rep. David Pagel of Oronoko Township and Rep. Jeff Yaroch of Richmond. No Republicans spoke for or against the bill.

David Guenthner, senior strategist for state affairs at the Mackinac Center for Public Policy, a free-market think tank, spoke before the committee in support of the bill. He said much of the information protected in the bill is already shielded at the federal level, and that it is important because “every American has the right to support causes they believe in.”

He said the identities of donors and members are being used by the federal and several state governments as “a bludgeon against citizens” to threaten the personal property and safety of those who disagree with them. He gave one example of the Texas Public Policy Foundation, his former employer, whose donor list he said was “illegally released by the IRS.” The group subsequently lost supporters because of the disclosure, he said.

The Michigan bill already passed the GOP-dominated Senate 25-12. It will now go to Snyder for final approval. Snyder has not said whether he intends to sign the bill.