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California AG Becerra Hints at Crackdown on Nonprofit Political Activity

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.

© 2017 Covington & Burling LLP

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About this Author

Andrew D. Garrahan, White Collar Defense Attorney, Covington Burling Law Firm
Associate

Andrew Garrahan is an associate in the firm's Washington, DC office and a member of the White Collar Defense and Investigations and Election and Political Law Practice Groups. 

Mr. Garrahan is a member of the Virginia Bar. He is currently not admitted in the District of Columbia, but is supervised by principals of the firm.

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