N.Y. AG announces new nonprofit regulations

NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman has announced new regulations that would require nonprofit groups to report the percentage of their expenditures that go to electioneering.

The proposed new rules, which include 501(c)(4) social welfare organizations, would require that groups spending at least $10,000 to influence local and state elections in New York file itemized schedules of contributions and expenses. The disclosures would then be released to the public.

"More money is being spent on our elections, with less disclosure of where that money is coming from, than ever before," Schneiderman said Wednesday. "By shining a light on this dark corner of our political system, New York will serve as a model for other states, and for the federal government, to protect the integrity of nonprofits and our democracy. Requiring nonprofits to disclose the extent and nature of their electioneering activities will protect prospective donors from misleading solicitations, and give voters more information about who is behind many of the ads they are seeing."

The proposed rules come in wake of the Citizens United decision by the U.S. Supreme Court in 2010, which makes 501(c)(4) organizations into vehicles for political activity. The organizations can raise unlimited funds, conceal funding sources and avoid paying corporate taxes on donations. The court's decision allows deep pocketed interests to spend millions of dollars supporting or opposing candidates without disclosing their identities, potentially opening the door to corruption and conflicts of interest.

"When people spend money to try to influence our elections, the public needs to know where that money is coming from, and how it is being spent," Schneiderman said. "Nonprofits should not be used to subvert that basic principle. Simply put, transparency reduces the likelihood of corruption."

Schneiderman's office said that expanding reporting requirements for spending on electioneering will also empower donors to protect themselves from misleading solicitations and the abuse of charitable assets for electoral purposes.

The new regulations would require that registered nonprofits spending $10,000 or more in a year on local and state elections in New York submit an itemized schedule with information about each expenditure made in connection with the election and information about each contribution received by the organization of $100 or more, subject to certain exceptions for donor privacy. The information would be made available to the public.

Schneiderman's office submitted the regulations to be published in the state register on December 26. The public can comment on the proposed rules until March 6 or during one of four hearings in Long Island, Buffalo, Albany and New York City. Schneiderman's office plans to adopt the regulations in early 2013, subject to changes warranted by public comments. The rules would be in place for 2013 local elections in many cases and in all cases for New York state's elections in 2014.