Model legislation group wants Lee to veto disclosure rules for dark money spending

House Speaker Cameron Sexton (R-Crossville) presides over a floor session on Jan. 12, 2021. (Erik Schelzig, Tennessee Journal)

ALEC Action, the advocacy arm of the American Legislative Exchange Council, wants Gov. Bill Lee to veto a bill requiring 501(c)4 groups like itself to disclose spending meant to influence the outcome elections within 60 days of the vote.

ALEC Action in a letter to the governor claims legislation championed by House Speaker Cameron Sexton (R-Crossville) and his Senate counterpart, Randy McNally (R-Oak Ridge), could cause nonprofits to identify their donors. Sponsors were adamant during the debate over the measure that it would only require expenditures to be made public — not donors.

“If enacted, this legislation would implement an extremely broad, unclear, and dangerous state registry dragnet targeting non-profit organizations, many of which are currently engaged in standard issue advocacy,” according to Lisa Nelson, ALEC Action’s CEO.

Other conservative groups like the National Rifle Association, Americans for Prosperity, and the Beacon Center have spoken out against the measure. But the final version still passed on a vote of 85-3 in the House and 31-1 in the Senate.

Here’s the full letter:

Dear Governor Lee,

ALEC Action writes with strong concerns regarding S.B. 1005/H.B. 1201. Given the extremely ambiguous language, low thresholds for expenditure reporting, and what would likely be unconstitutional requirements of compelled donor identity disclosure, we strongly encourage you to veto this legislation.

This bill requires organizations designated as tax-exempt by federal law, including 501(c)(4)s, (5)s and (6)s, to report their expenditures to the Tennessee Registry of Election Finance after certain communication and financial thresholds are met. This non-profit reporting requirement is triggered after a financial threshold in the aggregate amount of only $5,000 is met and when spent towards certain communications 60 days before an election, however, this legislation fails to provide a clear definition of qualifying communications. If enacted, this legislation would implement an extremely broad, unclear, and dangerous state registry dragnet targeting non-profit organizations, many of which are currently engaged in standard issue advocacy. Further, it is unclear how Tennessee agencies and courts will interpret this law, creating a variety of issues for them, the tens of thousands of organizations spread across the political spectrum in Tennessee, and the donors who support them.

The right of philanthropists to keep their giving private is a longstanding constitutional protection that should be respected by states. It is for this reason that ALEC filed an amicus brief in support of a case where the United States Supreme Court upheld these very principles and privacy protections. Further, the proposals in S.B. 1005/H.B. 1201 are inconsistent with ALEC Action principles, such as the Statement of Principles on Philanthropic Freedom as well as the Resolution in Support of Nonprofit Donor Privacy. Referring to a candidate’s position on policy matters should never result in the disclosure of donor information from non-political groups, and legislation should not seek to classify such organizations as entities required to do so. Policy that seeks to address campaign finance issues simply by expanding legal thresholds and reporting requirement windows does not truly address election integrity matters, but instead burdens numerous organizations with onerous reporting requirements, while violating the privacy rights organizations and their supporters are entitled to.

S.B. 1005/H.B. 1201 is a drastic overreach that would encroach on the privacy rights of non-profit organizations and their donors, all while creating a chilling effect on free speech. Because of the consequences of such a proposal, along with its inconsistencies with limited government principles, ALEC Action encourages you to veto S.B. 1005/H.B. 1201.

Sincerely,

Lisa B. Nelson
Chief Executive Officer
ALEC Action