Hiding behind nonprofit rules

By Scott Mooneyham | May 13, 2013


RALEIGH -- For more than four years now, the North Carolina courts have been sorting through complex issues surrounding lobbying and public disclosure of clients.

Don Beason, once one of the most powerful lobbyists in Raleigh, was hit with a record $110,000 fine by Secretary of State Elaine Marshall for failing to disclose clients. Beason appealed the fine, saying that he was unaware of an arrangement between his disclosed client, a New Jersey steel and iron importer, and five other then-undisclosed companies that were also putting money into the lobbying effort.


Since then, the case has been bouncing between the trial and appellate courts, the decisions mostly favoring Beason.


Through it all, the purpose of Marshall's action have kind of gotten lost in the mix.


Whether right or wrong in this case, she is the person who enforces the state's lobbying laws (something that the legislature may decide to change). As such, Marshall must ensure that the public has a means of knowing who is behind efforts to change the laws of the state of North Carolina


That public disclosure is a major focus of lobbying laws that require lobbyists to register with the state, to disclose their clients, and for those clients to disclose how much money they are spending on lobbying.


But is the law really accomplishing that purpose these days?


For the bulk of players at the North Carolina General Assembly, it is.


Most companies with state policy interests either directly employ lobbyists, hire contract lobbyists, join trade associations which employ lobbyists, or do some combination thereof. In each case, those relationships are disclosed.


The same cannot be said for broader policy-focused nonprofit groups that employ lobbyists.


Weak donor disclosure rules from the Internal Revenue Service allow the nonprofits to keep their donors hidden.


Some don't. The liberal N.C. Center for Justice, for example, lists donors on its annual report, and provides some information indicating that the bulk of its money comes from big foundations and not individual donors.


Still, they don't show individual donor amounts.


Other groups, like the conservative John Locke Foundation and the state chapter of the Americans for Prosperity, do not publicly disclose their donors.


The Locke Foundation bills itself as a free market think tank, and nothing involving its agenda at the legislature would suggest that it does anything but promote ideas involving less government limits on the economy. Americans for Prosperity promotes itself as a grassroots organization that also wants less government and less taxes.


That's all fine.


But if these groups are, say, pursing legislation to block renewable energy development and receiving money from oil companies and their executives, why should they not be forced to disclose that information under lobbying laws?


North Carolina law has long recognized that government transparency extends beyond government, that it has to incorporate those who spend money to influence government.


Hiding behind nonprofit rules to avoid that disclosure circumvents the law.