‘Dark money’ bill heads to Snyder, who shut down NERD Fund in 2013

By: - December 18, 2018 9:44 pm

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Legislation shielding the personal information of donors to nonprofits, including political groups, is heading to the desk of Gov. Rick Snyder, who has had his own rankles with political nonprofit organizations.

Senate Bill 1176, which passed out of the Michigan House Tuesday afternoon, would make it illegal for a public official in Michigan to disclose personal information about donors to nonprofit groups given a 501(c) determination by the federal Internal Revenue Service (IRS), of which there are 29 different designations.

The bill sponsored by state Sen. Mike Shirkey (R-Clarklake), the incoming majority leader, has been dubbed the “Personal Privacy Protection Act” and would make it a misdemeanor to disclose donor information.  

Rick Snyder

The bill passed the House on Tuesday afternoon by a vote of 58-51, with five Republicans crossing over to vote against the measure. The bill moved out of the House Competitiveness Committee this morning.

It’s unclear where Snyder stands on the legislation. Spokesman Ari Adler said the Republican governor, who is term-limited, would review any legislation sent to him before deciding on whether or not to sign the bill.

In 2013 Snyder shut down his own political nonprofit — called the New Energy to Reinvent and Diversify (NERD) Fund — after facing questions about transparency. MLive reported at the time that Snyder said it was “appropriate” to wind down the fund, but declined to disclose donors.

Adler, in an email, did not address a question by the Advance about whether that past experience would influence Snyder’s decision on whether or not sign the bill.

Supporters argue SB 1176 will help to encourage charitable giving and further codifies existing regulations that bar certain kinds of donations to nonprofit groups from disclosure. Critics say it will only make it more difficult to shine light on “dark money” in the state’s politics, as the Advance has previously reported.

“We’re in a time where political nonprofits are very active — as active in some cases — as political organizations, that do require transparency,” Sarah Bryner, research director for the Center for Responsive Politics, a Washington D.C., watchdog group for money in politics, told The Advance on Tuesday afternoon. “Given that tricky situation, I’d say a limitation on disclosing donors to nonprofits could have grave consequences for citizens understanding money in their political system.”

While the GOP-backed legislation never mentions campaign finance, those who track money in politics say that because of the broad definition of “nonprofit,” the bill throws up even more hurdles to tracking anonymous money flowing to groups like political action committees (PACs).

Craig Mauger

“If you all truly want to protect the identities of donors to charitable causes, like churches or any other charitable entity … you can amend the bill and make it just cover just 501(c)3 charitable organizations,” Craig Mauger, executive director of the Michigan Campaign Finance Network, told House committee members in testimony this morning.

“These are true charitable organizations,” Mauger said. “The bill, as it’s currently written, covers all 501(c) organizations. That means that the bill groups together true charities with with 501(c)4 social welfare organizations that have become the most common vessel for shuttling anonymous money into our politics.”

Michigan has been ranked as the worst state in the nation for overall accountability and transparency by the Center for Public Integrity, receiving an “F” grade.

That ranking wasn’t lost on Democratic lawmakers, several of whom mentioned the report on the House floor this afternoon.

“I know you like better grades,” Rep. Jeremy Moss (D-Southfield), said during comments on the floor today. “‘F’ is really really bad.”

Mike Shirkey

Shirkey defended the legislation, however, saying that personal information would still be made public in the event of a “legitimate legal hurdle,” such as a warrant from law enforcement or in the discovery process during a lawsuit.

“This does not prohibit a public entity through proper securing of a warrant or a disclosure of a litigation suit to [disclose donors],” Shirkey said in his testimony. “That option is still available, but it just has to meet a legitimate legal hurdle.”

Shirkey’s office did not respond to a request for further comment.

The bill garnered support from business interest groups like the Michigan Chamber of Commerce and from philanthropic advocacy groups.

In an opinion piece for the Detroit News over the weekend, Sean Parnell, vice president of public policy for the Philanthropy Roundtable in Washington D.C., wrote that anonymous charitable giving has been a boon for Michigan and that the legislation would further encourage that.

“Michiganians are no stranger to anonymous giving, whether it’s the tens of millions of dollars given to support the Kalamazoo Promise or the numerous small anonymous gifts made through sites like GoFundMe.com,” Parnell wrote. “The Personal Privacy Protection Act ensures these and countless other acts of kindness can remain private if the giver wishes, while doing nothing to undermine Michigan’s laws regarding disclosure of campaign donations or punishing fraud by nonprofits.”

Michigan Capitol | Susan J. Demas

Parnell did not respond to a request for comment on whether the legislation should do more to distinguish between charitable and political giving.

Bryner with the Center for Responsive Politics noted that campaign finance and dark money aren’t partisan issues. She said that her organization actually tracked more mostly untraceable money from liberal groups in the 2018 election than conservative ones.

Given that dynamic, she said the Michigan GOP could have been short-sighted in its attempts to get the legislation passed.

“To some extent, I’d say, ‘Be careful what you wish for’,” Bryner said. “With a couple cycles, you see conservative groups spending more in that sort of form. [That] could be followed by your political opposition taking advantage of the very thing you’re trying to enshrine.”

Advance reporter Michael Gerstein contributed to this report.

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Nick Manes
Nick Manes

Nick Manes is a former Michigan Advance reporter, covering West Michigan, business and labor, health care and the safety net. He previously spent six years as a reporter at MiBiz covering commercial real estate, economic development and all manner of public policy at the local and state levels.