Darker Money: Michigan Senate Passes Bill Making Dark Money Disclosure a Crime

The bill comes as Michigan’s Secretary of State-elect has pledged to increase transparency of dark money

Darker Money: Michigan Senate Passes Bill Making Dark Money Disclosure a Crime

By a vote of 25-12, the Republican-controlled Michigan Senate passed a bill on Nov. 29 that would make it a misdemeanor crime for public officials in Michigan to require nonprofit groups, including those that spend money on elections, to disclose their donors for government or public review.

Under the bill, which is sponsored by Republican Sen. Mike Shirkey, state and local agencies would no longer be allowed to request donor details from any 501(c) nonprofit without a warrant. In order to get a warrant, agencies would have to demonstrate “a compelling need” by providing clear and convincing evidence to the court. It would also ban agencies from requiring government contractors to disclose contributions they have made to nonprofits. Violations of the bill would be punishable by imprisonment for up to 90 days and/or a fine.

The bill was introduced in the lame-duck legislative session two days after the election of Secretary of State-elect Jocelyn Benson, who campaigned on increasing transparency of political money in Michigan.

“Our leaders in Lansing should champion reforms that will make government transparent and accountable to the people it serves, like requiring instant disclosure of all money spent to influence our elected officials,” she wrote in a 2017 op-ed.

Attorney General-elect Dana Nessel wrote on Facebook that the bill would limit her ability to protect Michigan residents from charities that commit fraud and scam the public.

Nonprofit groups registered as 501(c)(4) “social welfare” organizations and 501(c)(6) “business leagues” are to take donations of unlimited size and spend unlimited amounts of money on elections in Michigan without having to disclose their donors. At the federal level these groups can mask donors by funneling money through super PACs.

In the 2018 election cycle, non-disclosing nonprofit groups spent at least $3.1 million on influencing Michigan State Senate races, according to an analysis of TV ad tracking data by the Michigan Campaign Finance Network.

The groups spending dark money on the 2018 Michigan Senate elections include Michigan Citizens for Fiscal Responsibility, a 501(c)(4) that shares an address with a consultant that works with the Michigan Senate Republican Campaign Committee, and Citizens for Energizing Michigan’s Economy, a 501(c)(4) with ties to the gas and electric industries in Michigan.

In July, the IRS made it more difficult for their agency to conduct oversight of dark money groups by no longer requiring them to submit the identities of their donors in their annual filings. The rule change makes it nearly impossible for the government to enforce restrictions on foreign money flowing into U.S. election.

After passing the Senate, the Michigan bill was referred to the Michigan House of Representatives’ Michigan Competitiveness Committee, which is scheduled to meet tomorrow at 9 AM and could advance the bill to the full House for a vote. If it is passed, it would go to the desk of term-limited outgoing Republican Governor Rick Snyder for his signature.


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