The New York Attorney General proposed today a broad plan requiring nonprofit organizations involved in New York state elections to disclose the nonprofit’s donors and electoral advocacy activity.  This proposed rule comes on the heels of a new rule in New York requiring organizations that lobby to disclose certain donors.  The AG’s proposed rule, however, requires far more disclosure than the new lobbying rule, and represents a major step in the efforts to push for more disclosure by organizations active in elections, such as 501(c)(4) social welfare organizations.

Generally, the proposed rule requires organizations that make more than $10,000 in expenditures in New York elections to disclose on an annual financial report (1) those election-related expenditures, and (2) information about donors who gave $100 or more to the organization that year.

Election-related expenditures.  The proposed rule requires these covered organizations to disclose detailed information about communications that contain express advocacy as well as communications that contain “election targeted issue advocacy.”  The latter is similar to “electioneering communications” on the federal level, but covers communications that run 180 days before a NY election and refer to, or feature the image or voice of, a clearly identified candidate, or refer to a political party, constitutional amendment, or any other question put to the voters in that election.  The scope of this disclosure exceeds the federal electioneering rule in the time window before an election as well as the content triggers.

Donor Disclosure.  The proposed rule also requires covered organizations to disclose detailed information about donors who gave $100 or more to the organization during the year.   It is important to note that this requirement applies beyond those donors who gave for specific electoral efforts by the organization.  The language of the proposed rule applies to any contribution made to the organization “that is available to be used for a New York election related expenditure.”  This would appear to sweep into the disclosure requirement, for example, general donors to a 501(c)(4) that is active in New York state elections.

The potential reach of the proposed rule is unclear.  The pertinent statutes on which the AG relies regulate “charitable organizations.”  In an existing rule, but a rule that has apparently not been the subject of a serious challenge, the AG has interpreted the statutes to include 501(c)(4) social welfare organizations.  The AG’s own press release leaves open the possibility that the AG’s office will take the position that all non-profit organizations are covered. 

Ironically, the proposed rule only excludes true charities from its reach, for 501(c)(3) organizations are barred by federal tax law from engaging in the activity the AG seeks to regulate, and consequently are excluded from these proposed disclosure rules.  Depending on the reach of the proposed rule, however, the underlying question whether the AG’s office has legal authority to expand that office’s reach is far from clear.

There are four scheduled hearings on the proposed rule in January and February, and public comment will be received until March 6, 2013.  We will continue to monitor the comments and reaction to the proposed rule.