Charities Cheer Defeat of California Ballot Measure That Threatened Advocacy

A contentious California ballot measure that many non-profit officials feared would lead to restrictions on advocacy efforts by charities has been rejected by voters. It is the first of a handful of measures expected to come up at the state and federal levels in coming months that threaten to put curbs on advocacy work by non-profit groups.

The California measure, known as Proposition 226, was intended to force labor unions to get permission from their members before engaging in certain political activities, but it might also have inadvertently applied to charities that received money through donations deducted directly from employee paychecks. The measure was opposed by 53.5 per cent of voters.

“We’re ecstatic,” said Florence L. Green, executive director of the California Association of Nonprofits, which spearheaded a lobbying effort by charities to defeat the measure. “That 7 per cent that made a difference was probably the piece we brought to it.”

Because Proposition 226 was written broadly, there was widespread disagreement about whether it would have applied to charities. Proponents said they did not intend for the measure to apply to any organizations other than labor unions. However, last month a ruling by the Legislative Counsel of California, a non-partisan state office charged with analyzing legislation, concluded that Proposition 226 would indeed affect charitable contributions.

Under the counsel’s interpretation, any charity that received donations deducted directly from an employee’s paycheck would have to get that donor’s permission be fore using his or her money to participate in campaigns over ballot referenda. Non-profit groups are already prohibited by the Internal Revenue Code from advocating on behalf of candidates for political office.

Proponents of Proposition 226 say that non-profit groups were duped by the labor unions into believing that charitable contributions would be covered under the referendum — and they predicted that charities’ fund raising could now suffer as a result of their opposition to the measure.

“When you’re a charitable organization, you have to try to appeal to everyone,” said Ron Nehring, director of the “Yes on 226″ campaign. “Why go out there and alienate 47 per cent of the California electorate? That’s stupidity.”

Non-profit officials are now watching similar so-called paycheck-protection legislation in other states, as well as the debate over campaign-finance legislation taking place in the House of Representatives. In recent weeks, Rep. Roy D. Blunt, Republican of Montana, filed and then withdrew a proposed amendment to the campaign-finance bill that would have prohibited charities that receive federal grants from spending more than 5 per cent of their budgets on advocacy work.

Another potential amendment, drafted by Rep. David M. McIntosh, Republican of Indiana, would proclaim that charities, corporations, and other organizations that receive federal funds are covered under the “Hatch Act,” just like government workers. Employees of charities that received federal money would be prohibited from running for partisan political office or raising money in behalf of a candidate for partisan political office.

Colorado, which now has petitions circulating to put a measure on the November ballot similar to the one voted on in California, is expected to be the next battleground over restrictions on unions. What’s more, at least 26 state legislatures now have bills pending that would curb political activities by unions.

Some non-profit officials fear that charities will once again become entangled in those debates.

Rep. Bob Schaffer, a Colorado Republican who is sponsoring the ballot measure in his state, does not deny that his proposal could affect charities that receive donations deducted directly from employee paychecks. “If a charity is engaging in politics,” he said, “quite frankly I’m not opposed to having donors be aware of that up front.”

Because of the contentiousness of Proposition 226, with Republican Gov. Pete Wilson as its chief proponent and labor unions spending about $20-million in opposition, charities often found themselves caught in the middle during the debate. The United Way of America sent out a legislative alert warning of the consequences of Proposition 226, but then repudiated the statement after being pressured by Governor Wilson and corporate donors, according to various non-profit officials.

Three local chapters of the Leukemia Society of America signed a letter circulated by the California Association of Nonprofits in opposition to Proposition 226, but then asked to have their names removed when the national office decided that it was best not to take sides. And several charities, including the Western States Affiliate of the American Heart Association, said they had received calls from people who said they were contributors and who threatened to cut off support for the groups if they continued to oppose the anti-labor measure. Charity officials question whether all of the callers were really donors or simply supporters of Proposition 226 attempting to intimidate the groups.

“There was enormous pressure put on charities from Governor Wilson and corporate contributors,” said Gary D. Bass, executive director of OMB Watch, a Washington public-policy group. “And many charities withstood that pressure, which is hard to do.”

The controversy made it difficult for the California Association of Nonprofits and its allies to mount an effective opposition campaign. The group formed a committee — Nonprofits Concerned About 226 — and had hoped to raise as much as $250,000 with which to pay for radio and newspaper ads, among other things.

But in the four weeks between the Legislative Counsel’s ruling and the June 2 election, Nonprofits Concerned About 226 was able to raise only $32,150. About half of that money went to pay lawyers who had helped prepare legal challenges to Proposition 226 that would have been filed if the measure had passed. Nonprofits Concerned about 226 also circulated sample letters to the editor for people to send to their local newspapers and made appearances on local talk-radio programs.

“This is the first time that such a broad array of non-profits were threatened by a ballot measure,” Ms. Green said. “What we did was absolutely amazing in a very short period of time.” “Why go out there and alienate 47 per cent of the California electorate? That’s stupidity.”