UPDATE: On April 29, 2014, Supervisor Chiu introduced a substitute bill which addressed many of AFJ’s concerns about the proposal legislation. In particular, the new version of the legislation now exempts officers or employees of all 501(c)(3) nonprofit organizations, those 501(c)(4) social welfare organizations “whose most recent tax filing included an IRS Form 990-N or an IRS Form 990-EZ” as well as employees of organizations fiscally sponsored by these categories of organizations. While this modification goes a long way to assuaging AFJ’s concerns, and we appreciate Supervisor Chiu’s recognition that increased disclosure should not hamper nonprofit speech, we hope that the Board of Supervisors will clarify a few outstanding points. For example, for organizations with affiliated c3s and c4s, which entity must register when they share employees who lobby on behalf of both entities; and when employees of covered organizations (i.e., larger c4s) that have a single busy quarter can terminate their status as lobbyists. The Government Audit & Oversight Committee is scheduled to consider the substitute legislation at its May 22 meeting. Check back for further updates!
San Francisco’s Board of Supervisors is considering a change to the lobbying disclosure laws in the City and County of San Francisco that may affect nonprofit organizations. We at Alliance for Justice are concerned that the proposed changes, if adopted in their current form, would have a chilling effect on the vital participation of the nonprofit sector in shaping public policy in San Francisco.
The proposal, authored by David Chiu, President of the San Francisco Board of Supervisors, would expand the definition of “lobbyist,” the list of reportable contacts, and training requirements for those who qualify as lobbyists. Under Supervisor Chiu’s current proposal, a “lobbyist” will include anyone who “makes five or more contacts in a calendar month” with a government official, including nonprofit staff.
Once deemed a lobbyist, such employees would have to file monthly reports with the City and County of San Francisco for an indefinite period of time, and the nonprofit who employs them would be jointly and severally liable for all violations of the new ordinance.
Increased reporting requirements burden grassroots groups
At Alliance for Justice, we believe that the role of the nonprofit sector in representing the voices of diverse communities in public policy decisions is vital and irreplaceable. Adding the burden of yet more registration and reporting onto nonprofits, even when well-intentioned, may have the effect of driving nonprofits out of public policy debates. The more complex the law, the more confusing the rules, the more likely that too many nonprofits will decide lobbying just is not worth it: not worth the cost of compliance and not worth the risk of failing to comply.
As a consequence, local policymakers will lose the valuable information and perspective provided by nonprofits regarding environmental, economic, social justice, and other important issues that protect and strengthen the public good. In a city facing an acute housing and affordability crisis, San Francisco cannot risk losing the voice of the public that the nonprofit sector so often represents. The benefits from increased lobbying disclosure are outweighed by the withdrawal from policy debates of nonprofits that cannot bear the costs of compliance with the new requirements.
The proposed reporting requirements would classify as lobbying many contacts that nonprofit staff routinely have with Supervisors in the course of explaining the impact of policy decisions on their clients. For example, Randy Shaw, Director of the Tenderloin Housing Clinic, noted in a piece published by PublicCEO.com, that such a definition would be mean “nonprofit employees pushing Supervisors to provide cost of doing business increases are deemed ‘lobbyists’ if they contact five Supervisors—a logical plan given the need for eight votes to pass a budget.”
Deterring nonprofits from engaging?
Nonprofits that engage in advocacy must comply with multiple laws—tax law, the California Political Reform Act (which mandates lobbying disclosure at the state level), and local lobbying laws in jurisdictions throughout California. All define lobbying differently, requiring reporting of different activities and expenses, on different schedules. Navigating these many overlapping yet distinct laws is confusing, especially for some smaller organizations, and may prove to be too complex to comply. To make matters worse, many nonprofits, particularly 501(c)(3) public charities, are constrained (by funders, public opinion, congressional opinion, watchdog groups, and workplace giving campaigns) regarding how much they can spend on administrative functions, such as internal training, tracking systems, and legal and accounting advice. This financial obstacle further compounds the added burdens of reporting.
Any proposals that would mandate yet more reporting for nonprofit organizations should carefully weigh the purported benefits against the likely risk: that the complexity of the new rules would deter nonprofits from engaging at all.
At the March 13 meeting of the Government Audit and Oversight Committee of the Board, Supervisor Chiu acknowledged on several occasions that the current proposal would “capture nonprofit organizations,” which he said was “not the intent of the legislation.” The Committee will take up the legislation again at an upcoming meeting. We urge Supervisor Chiu and his fellow Supervisors to carefully consider any legislation that would– through enhanced registration and reporting requirements–restrict the important voice of nonprofits and the communities they service in public policy debates.
