Nonprofit Privacy Legislation Could Hide Political Donors, Watchdog Group Says
A watchdog group says legislation presented by Gov. Kristi Noem as a nonprofit protection effort could hide political contributions.
Noem sent her lawyer, Mark Miller, to testify on the bill during legislative committee hearings.
“What is this bill about? It’s really about the American way of life,” Miller told a House committee.
Miller said privacy is a fundamentally democratic principle. He gave the example of Thomas Paine, who anonymously inspired American revolutionaries with his pamphlet called “Common Sense,” and several Founding Fathers, who wrote the Federalist Papers under the pen name “Publius.”
“They wanted their privacy, and even then, at the nation’s founding, they were entitled to it,” Miller said.
Miller said that founding ideal is now under attack. When people contribute to a nonprofit, including those with a political agenda, they can be exposed. Activists share documents and information about donors they disagree with, and that can result in harassment (it’s sometimes called “doxing”).
Miller said House Bill 1079 guards against that. The bill prohibits state officials from ordering nonprofits and charitable trusts to disclose anything more than state and federal laws require.
“It's also meant to return us to the traditional role of anonymity in support for certain causes that one believes in,” Miller said.
The bill’s prospects are good in the Republican-dominated Legislature. The House of Representatives has already approved it.
Related legislation endorsed by the Noem administration, Senate Bill 103, says anybody who supports a nonprofit has a right to privacy. That bill is just beginning its legislative journey.
Republicans in other states are proposing and passing similar bills. Austin Graham is tracking them. He’s a lawyer for the nonprofit, nonpartisan Campaign Legal Center in Washington, D.C.
Graham said backers of the legislation in other states have also invoked the Founders.
“They've got the messaging points down,” Graham said. “They like to pretend there's this grand constitutional tradition of total anonymity in political speech.”
Graham said the efforts have another purpose, which is to "help ensure that dark money stays dark.”
“Dark money” is a term for untraceable political contributions, which have pumped more than $1 billion into election spending nationwide in the past decade.
It can work like this: People give money to a nonprofit that keeps its donor list private. The nonprofit gives the money to a type of political action committee called a super PAC. The super PAC makes independent expenditures on political advertising to support or oppose candidates and ballot issues.
And no one can trace who donated the money.
The process also skirts campaign finance laws. Right now, the most a person may contribute to a federal candidate is supposed to be $2,900.
But donors can give nonprofits as much as they want. And there are no limits on how much super PACs can collect and spend, as long as they’re not coordinating with a candidate.
Graham, of the Campaign Legal Center, said Noem’s bill could help shield dark-money donors. He said that cheats voters out of vital information.
“When I have more information about who's funding a group or supporting a particular candidate, it helps inform my views and opinions on that candidate – what interests they’re likely to cater to if they actually do get elected, or are in office already,” Graham said.
There are a handful of lawmakers who oppose Noem’s bill. Democratic State Rep. Ryan Cwach, of Yankton, is one of them.
"We expect accountability and we expect transparency from our government,” Cwach said, “and so the idea that we want to try and keep how people are influencing our government anonymous goes against the whole bedrock of our society.”
SDPB asked Governor Noem’s spokesman, Ian Fury, for the administration’s response to the criticisms. He sent an email reiterating the very same points Noem’s general counsel Mark Miller made during testimony to lawmakers. That included saying the legislation would protect against harassment like the kind suffered by the National Association for the Advancement of Colored People in the 1950s, when white supremacists tried to expose and harass the group’s donors.
Regarding the dark-money concerns, Fury pointed to a state law that requires entities making independent political communications to list their top five donors. But that law did not require disclosure of the sources of $95,000 in dark money that Noem benefitted from in the 2018 governor's race.
Public records show an anonymous donor or donors gave the money to a nonprofit. The nonprofit gave the money to a super PAC. And the super PAC spent the money on ads during the last week of the campaign. The ads criticized Noem’s Democratic opponent, Billie Sutton.
More recently, a number of people with personal connections to Governor Noem formed a 501(c)4 nonprofit called Fight For Our Future. That 501(c)4 designation is for tax purposes and is often used for dark-money groups.
Venture capitalist and former lieutenant governor Steve Kirby is the current chairman of Noem’s official fundraising committee. He incorporated Fight For Our Future in 2019. Two other original board members for the nonprofit also have ties to Noem. One has been a business partner of Noem’s husband. The other worked for Noem when she was in Congress.
Noem’s spokesman, Fury, said in an email, “Governor Noem is not involved in the nonprofit that you named, and as such I can’t speak to their purpose.”
Noem’s bill to protect nonprofit information passed through a House committee, the House floor and a Senate committee by wide margins. The full Senate is next.
The man who testified on the bill for Noem – her general counsel, Mark Miller – started working for the governor in October. Prior to that, he worked in Florida for the Pacific Legal Foundation, which works to keep nonprofit donor information private.
South Dakota is among a number of states considering laws to shield nonprofit donor information, as the CLC has noted. Lawmakers in some other states, including Ohio and New Jersey, have done the opposite: proposed laws requiring disclosure of top nonprofit donors.
-Contact reporter Seth Tupper by email.