Colorado lawmakers aim to enact guardrails for dark-money groups
A bipartisan effort to clarify how much money political nonprofits can spend supporting or opposing Colorado ballot measures before they have to disclose their donors would likely allow the so-called dark-money groups to keep their finances secret in most cases.
Two political nonprofits that often work against each other on Colorado ballot initiatives – the liberal-leaning Bell Policy Center and conservative-leaning Advance Colorado Action – are supporting Senate Bill 237, which passed the state Senate unanimously Thursday.
The bill, sponsored by Senate President Steve Fenberg, a Boulder Democrat, and Senate Minority Leader Chris Holbert, a Douglas County Republican, would require political nonprofits to disclose their donors only if their spending on two or more ballot measures exceeds 30% of their total spending over three years. If they’re spending on only one ballot measure, the spending can’t exceed 20% of their total expenditures for three years if they want to keep their donors secret.
Current state law requires disclosure if it’s determined that supporting or opposing ballot measures is a “major purpose” of a political nonprofit. But the catch is that the law doesn’t specify how that should be determined.
“There’s a lack of clarity right now on what (nonprofits) can do on ballot issues,” said Michael Fields, a senior adviser to Advance Colorado Action.
Holbert said the idea behind the measure is to set parameters for the Colorado Secretary of State’s Office when it comes to investigating campaign finance complaints around political nonprofits, often called dark-money groups because they generally don’t have to disclose their donors. The organizations are frequently the subject of complaints because of their deep pockets and outsized influence on political campaigns.
“This provides some clarity as to what the state should or shouldn’t do,” Holbert said. “I don’t think it allows the groups to do anything new or different.”
The bill would take effect Sept. 1, but Holbert said the measure would not affect any pending complaints or litigation around them.
Not everyone is happy with the bill. Secretary of State Jena Griswold, a Democrat, isn’t backing the measure.
“The Secretary of State’s Office does not support this legislation as drafted at this time,” emailed Annie Orloff, the agency’s spokeswoman.
But Orloff would not explain the office’s objections and neither Griswold nor one of her deputies tested at a Tuesday committee hearing on Senate Bill 237.
Pending campaign finance complaints
The measure comes as Advance Colorado Action’s predecessor, Unite for Colorado, another conservative dark-money nonprofit, contests a $ 40,000 fine from the Secretary of State’s Office and an order to disclose its donors after spending $ 4 million in 2020 to support or oppose three different ballot initiatives.
The spending ended up being about 23% of the $ 17.2 million the group spent in 2020, all of which went to conservative or Republican causes. The case is before a Denver District Court judge.
With the bill seeking to set the disclosure limit at 30% of three years of a group’s spending, it would be rare for dark-money nonprofits spending on ballot initiatives to trigger the requirement to register as an issue committee and disclose donors, based on a Colorado Sun examination of past tax documents of those groups.
Colorado isn’t the only state that struggles with defining when nonprofits spending on politics must disclose where their money comes from, said Ciara Torres-Spelliscy, a law professor at Stetson University in Florida who specializes in campaign finance.
“Depending on how you read the ‘major-purpose test,’ it excuses huge political spenders,” she said. “The good thing about having a bright line definition is it’s much clearer when the state tries to enforce the law. It puts the political actors in Colorado on notice when disclosure will kick in and when it won’t. ”
But she added that spreading the 30% over three years specification would also make it easy for groups that want to skirt disclosure by keeping their spending just below the limit.
“Our democracy doesn’t work without good disclosure of money in politics,” she said.
Dark-money groups are spending millions in Colorado
In 2019 and 2020, seven of the top 15 funders of statewide ballot measures in Colorado were nonprofit organizations. The $ 22 million from those seven nonprofits ruled to 28% of the $ 78.4 million total spending over the two years.
Sometimes that spending resulted in campaign finance complaints.
Two national nonprofits that often fund liberal ballot measures were the subject of complaints filed late last year that were ultimately dismissed because they weren’t filed within 180 days of when the complainants knew of the alleged violations.
North Fund, one of the subjects of the complaints, spent nearly $ 6.8 million on Colorado ballot initiatives in 2020, while Sixteen Thirty Fund, the other group complained about, spent $ 5.8 million.
But Senate Bill 237, had it been in effect at the time, would not have affected the cases against Sixteen Thirty Fund and North Fund, which spent $ 410 million and nearly $ 49 million in 2020 respectively.
Senate Bill 237 now moves to the House, where it also has bipartisan sponsorship.
Colorado Sun staff writer Jesse Paul contributed to this repot.