In the wake of a flood of untraceable 501(c)4 funds pouring into 527 political groups such as the Western Tradition Partnership in this month’s general election, state Sen. Morgan Carroll, D-Aurora, said she is working to make Colorado the first state in the nation to compel the nonprofit “social welfare” groups to disclose political donations to 527s.
“What has happened is they have basically been able to cloak the identity of who is really driving [a 527],” Carroll said. “One of the worst actors has been the Western Tradition Partnership, which was bad enough to land themselves an indictment in Montana. [Colorado Secretary of State-elect] Scott Gessler was connected with that very organization, and to just get basic transparency behind them is a problem.”
Western Tradition Partnership (WTP) is a conservative 527 group registered by Mario Nicholais, a lawyer in Gessler’s firm. Montana’s state commissioner of political practices recently ruled that WTP broke campaign finance laws by failing to disclose its donors and campaign expenditures in that state. The organization, which has lodged a counter-suit, may face similar charges here in Colorado for failing to register its political activities. Those include attack mailers against Colorado state Sen. Gail Schwartz, D-Snowmass.
According to Carroll, Gessler’s history of fighting disclosure laws for partisan causes and his opposition to HB 1074 in 2007, which forced 527 groups to disclose donors and expenditures on the Secretary of State’s website, makes campaign ethics and finance reform imperative this legislative session.
“Gessler was associated with Trailhead, he was associated with Western Tradition Partnership, which did that disgusting piece on Gail Schwartz where they merged it with Donald Trump,” Carroll said. “The most vile, vicious partisan attacks done by non-transparent organizations are tied to Scott Gessler.”
Gessler told the Colorado Independent in a previous interview that he feels disclosure laws in some cases are used by politicians to levy retribution on those who contribute to issues committees. He said ultimately it was the small 527s that suffer.
Carroll said the purpose of HB 1047 was to allow the public to see who’s funding political ads and ballot issues, and that the law is being circumvented by 527 and 501(c)(4) groups colluding in an effort to “launder” political money.
“[T]here were a lot of layers of C4’s that were created for purely political purposes and then the C4 would donate to a 527 … A good government C4 gives to this 527 and a limited government group gives to the 527.”
Groups registered under 501(c)(4) tax status are not required to disclose donors as they are designed to be “social welfare organizations” with a goal of promoting the public good. To the extent that they promote the public good they are allowed to lobby. However, the definition has been used by political forces on both sides of the aisle to hide the identities of donors and blur the definition of “social welfare organization.”
“I have been trying to figure out for years how within the first amendment do you get C4 political disclosures,” Carroll said. “I am pretty close to at least having an idea. If it is a mixed purpose C4, there is no legal theory where we can get it requiring donors and expenditures of non-political C4 activity. But to the extent that they are spending on a political or a donation that is earmarked for political, I think we can.”
Carroll said that the 501(c)(4) political disclosures are at the top of her list of over 30 campaign ethics issues she is working to prioritize for the next legislative session.
