The Newport Beach Chamber of Commerce separated the finances of its general membership from its political action committee this month, after complaints that the two were intermingled.
Chamber President and Chief Executive Richard Luehrs said the organization stopped collecting the political donations in the beginning of the year, after at least one activist pressured city officials.
"If we were going to accept money from the city, they wanted assurances that the chamber was not using that money for political purposes," Luehrs said.
The council pledged nearly $40,000 this fiscal year for the Taste of Newport and the Christmas Boat Parade, popular community events produced by the chamber. Also, the city waived fees for the business group in previous years; fee waivers are counted as funding.
"The money is being diverted for political purposes," council critic Bob Rush said in an interview last week.
Rush has complained at council meetings and sent letters to city officials. He requested that the political action committee, or PAC, show how much each individual contributes.
Instead, the PAC reports lump-sum contributions from the Chamber of Commerce, which had been passing on money from businesses and individuals.
Chamber members previously paid dues and contributed to the PAC in a single transaction. But now Luehrs says they will be unrelated.
This past year was the first that the chamber qualified for unlimited city funds. When the City Council allocated money for the events in June, then-Councilwoman Nancy Gardner — who is now mayor — asked the chamber to explain the separation.
Luehrs said that the political funds were diverted into a separate account.
But city officials were under pressure from Rush and they sought stricter accounting, Luehrs said.
City spokeswoman Tara Finnigan did not respond to a request for comment.
Councilwoman Leslie Daigle said the chamber was being extra cautious.
"It doesn't mean anything nefarious is going on," she said. "They just want to be transparent."
Daigle and other current council members have either received election funding from the PAC, or benefited from the group's endorsement and publicity.
"They work in unison. They want to reelect each other," said Rush, who filed a complaint with the state Franchise Tax Board last week.
The chamber's nonprofit status prohibits it from contributing to political candidates.