Apparent Loophole Lets Backers of Term Limits Law Give Anonymously

Foes of the initiative to ease California’s term limits law are being outspent 10 to 1, but they have one advantage over the initiative’s supporters: They haven’t revealed the identities of contributors who have spent $1 million to defeat the measure.

And because of loopholes in campaign laws, they evidently don’t need to do so.

The No-on-45 campaign received $1.03 million on Valentine’s Day from a group called Americans for Limited Terms, located in Spring Green, Wis. But the identities of the group’s individual donors are cloaked thanks to a combination of state and federal laws that shield the contributors to nonprofit organizations.

“There is a loophole in disclosure laws that allows nonprofits to contribute to campaigns without disclosing to the public where they raise their funds,” said Alfie Charles, spokesman for Secretary of State Bill Jones.

“It is another piece of the complex campaign finance laws that needs to be resolved so voters know who is giving how much to whom,” Charles said.

Attorney Joseph Remcho, who specializes in political law, noted that state law says political organizations must disclose who bankrolls them if they donate for or against candidates or ballot measures--but only if they know in advance that their money will be used for a political campaign. So if the group gives a second time to the effort to defeat Proposition 45, its donors likely would become public.

“They may very well not have to disclose under the current state of the law,” said Remcho, who has done work for the pro-45 campaign. “That is repulsive to everything we’ve tried to do in California.”

Americans for Limited Terms’ donors also are protected under federal law, which allows financial backers of issue-oriented activities, including the attack on Proposition 45, to remain anonymous. And state and federal tax laws do not require public disclosure of donors to nonprofit corporations, including those that engage in political activities.

California lawmakers could pass a statute requiring that such groups disclose their donors. Senate President Pro Tem John Burton (D-San Francisco), a major proponent of Proposition 45, said he may propose such legislation. However, pointing to U.S. Supreme Court decisions that permit nonprofit corporations to keep their donors secret, Remcho called it “an open question” whether such a state law could pass constitutional scrutiny in a court test.

Eric O’Keefe, president of Americans for Limited Terms, described his financial backers as “idealistic supporters of term limits,” who have little or no business before the California Legislature.

“It would be confusing for us to list donors who have no axes to grind,” O’Keefe said.