Nonprofits that are active in California politics, already facing one of the most complex regulatory environments in the country, now have another thing to worry about: the state’s Attorney General.  In remarks Wednesday, Attorney General Xavier Becerra announced his intent to pursue nonprofit organizations that he believes “abuse” their nonprofit status for political purposes.  With the federal government long bogged down in how to handle these political nonprofits, California could become the leading antagonist of nonprofits that wade into politics.

Even before Becerra’s remarks, California has been a leader in states’ efforts to disclose (some would say discourage) nonprofit political activity.  The state’s Fair Political Practices Commission (“FPPC”) already has a complete regulatory regime dedicated to uncovering the political activity of what it calls “multipurpose organizations,” including 501(c)(3) charities, 501(c)(4) social welfare groups, and 501(c)(6) trade associations.  Under the regime, multipurpose organizations may have to publicly disclose their donors and their expenses to influence state elections.  Failure to comply with the state’s disclosure rules carries a steep price tag — the FPPC settled with a 501(c)(4) for $1 million in 2013 for failing to meet the state’s disclosure expectations.  Even some nonprofits that are not politically active must disclose their donors privately to the Attorney General.  Professional fundraisers may need to register as well.

If his course of action against allegedly fraudulent veterans’ charities is any indication, Becerra means business.  Last month, he sued a pair of charities that allegedly served the personal interests of its officers, seeking unspecified damages, penalties, and to have the organizations dissolved.  Becerra’s new focus on politically-active nonprofits, combined with his office’s role in policing nonprofit finances and the regulatory powers of the FPPC, means that organizations participating in California state politics would do well to reassess their compliance with the state’s political and charitable regulations.

Tags: 501(c)(4), California, campaign finance, disclosure, Fair Political Practices Commission, FPPC, nonprofits
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Photo of Andrew Garrahan Andrew Garrahan

Andrew Garrahan represents and counsels clients at the intersection of law and politics. He guides them through both regulatory compliance issues and government investigations on matters including state and federal campaign finance, ethics, lobbying, and corruption, as well as in congressional investigations.

Andrew’s…

Andrew Garrahan represents and counsels clients at the intersection of law and politics. He guides them through both regulatory compliance issues and government investigations on matters including state and federal campaign finance, ethics, lobbying, and corruption, as well as in congressional investigations.

Andrew’s prior career in political fundraising gives him a unique perspective on the challenges faced by his clients, which include corporations, candidates, government officials, political and nonprofit organizations, and private individuals.

Andrew’s counseling and advisory practice includes:

  • guiding clients on structuring of and compliance for their state and federal lobbying and grassroots advocacy campaigns;
  • representing campaigns, Super PACs, corporations, trade associations, and individuals on the applicability of the Federal Election Campaign Act (FECA) and state campaign finance law;
  • counseling on Foreign Agents Registration Act (FARA) registration and disclosure, and its interaction with the Lobbying Disclosure Act (LDA);
  • helping companies comply with state and federal ethics laws, particularly on gifts and conflicts of interests, and domestic anticorruption; and
  • auditing corporate political law compliance practices.

Andrew’s investigations and defense work includes:

  • representing clients in Congressional investigations, including responding to letter requests and subpoenas;
  • preparing company officers and other individuals for testimony in Congressional investigative hearings;
  • defending clients in Department of Justice matters related to campaign finance, lobbying, ethics, and public corruption; and
  • representing clients before the FEC and state campaign finance, lobbying, and ethics regulators.
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