May 21, 1998 | Read Time: 9 minutes
California ballot measure to limit how labor unions use funds deducted from paychecks could ensnare other non-profit groups
Charities that receive donations through on-the-job fund-raising drives could face new restrictions on their lobbying, if California voters approve a measure on the June ballot that is primarily intended to limit the political activities of labor unions.
The vote is expected to be the first of numerous state attempts to curb union politicking-and that could apply to charities.
Under the June 2 referendum, known as Proposition 226, labor unions in California would be required to obtain explicit written permission from their members before spending any money deducted from employee paychecks on political activities. But a ruling earlier this month by the Legislative Counsel of California, a non-partisan state office charged with analyzing legislation, confirmed charity fears that the measure is written so broadly that it applies not only to union dues, but also to charitable contributions.
Under the counsel’s interpretation, any charity that receives donations deducted directly from an employee’s paycheck would have to get that donor’s permission before campaigning for or against a ballot measure in California. For example, if a California soup kitchen receives money through the local United Way, the group would have to get consent from the donors who supported it through through payroll deduction before getting involved in the referendum campaigning.
Non-profit officials fear that the amount of paperwork required under Proposition 226 would lead corporations to stop running on-the-job donation programs. Under the measure, donors would be required to sign a consent form stating in “at least 24-point bold type, `Request for Political Payroll Deductions.’ ” Political activities is defined as any work intended to sway an election or a ballot measure.
“We’re very concerned about the chilling effect this measure will have on giving through payroll deduction,’’ says Florence L. Green, executive director of the California Association of Nonprofits. “It creates immense, complicated bureaucracy and paperwork that as far as we can see has absolutely no public benefit.’’
The California measure is just the beginning of a tide of “paycheck-protection’’ legislation expected in coming months. In at least 26 state legislatures, bills that would force labor unions to receive explicit permission before spending membership dues on politics have been introduced. Six states, in addition to California, may place similar measures on the ballots later this year for voters to decide on.
In April, the House of Representatives defeated campaign-finance legislation that just moments before it came up for a vote included a provision that would have required all organizations classified under Section 501 of the Internal Revenue Code to get permission from their members annually if they wished to conduct “political activities.’’ The bill defined political activities as any work intended to influence federal legislation, regulations, or elections. But Speaker Newt Gingrich has said that he hopes to revisit campaign finance after seeing how the vote in California turns out, and non-profit groups fear they could again be covered by proposals to limit lobbying.
The California vote “is part of a much bigger picture,’’ Gary D. Bass, executive director of Watch, told representatives of national non-profit organizations at a briefing on Proposition 226 in Washington. “It is a coordinated effort that is going on and will continue to go on.’’
He added that, “many, many people believe the steam will be taken out of this effort if we defeat it in California.’’
Non-profit groups have a tremendous education campaign ahead of them if they hope to defeat Proposition 226 because the measure has so far enjoyed considerable support in California. Some early polls showed that more than 70 per cent of likely voters were in favort of it. In recent weeks, the level of support has shrunk to just over 50 per cent, and non-profit officials are hoping that their opposition will be decisive in defeating the measure.
The California Association of Nonprofits and the Public Media Center, a non-profit group in San Francisco that helps charities with advertising campaigns, have registered a committee-Nonprofits Concerned About 226-to help defeat the paycheck measure. (Any organization that plans to spend more than $1,000 in opposition or support of a ballot measure must register with the State of California.) Nonprofits Concerned About 226 hopes to raise more than $250,000 in time to sway votes for the June 2 election. Funds will be used to pay for full-page advertisements in newspapers as well as radio spots. The association is also sending a letter by fax and e-mail to more than 50,000 California non-profit groups and is encouraging them to sign it to demonstrate their opposition to the measure. And Nonprofits Concerned About 226 is courting various big-city mayors in the state in hopes that they will publicly oppose the measure.
Most supporters of Proposition 226 say that this flurry of opposition from non-profit groups is needless hysteria, and that the measure does not in any way affect charities. “A payment to a charity now is not a political contribution and it won’t become one on June 3 after Proposition 226 is enacted,’’ says Thomas W. Hiltachk, a lawyer for Californians for Paycheck Protection, the group sponsoring Proposition 226.
Other supporters of the measure concede that it could be construed to cover charitable donations subtracted from an employee’s paycheck, but that non-profit groups are overblowing the burden that Proposition 226 would impose. “It is a paper work burden, but by all measures it’s not a large one compared to all the other regulatory hoops and hurdles that employers are forced to jump through these days,’’ says D. Mark Wilson, a labor economist at the Heritage Foundation, a conservative Washington think tank. “It’s not going to be the end of charitable donations in this country.’’
Despite the lingering debate over how charities would be affected if Proposition 226 passes, nobody disputes that passage of the measure would make a profound difference to politics in California.
Charity leaders say they are especially concerned that the measure would restrict attempts to influence state referenda. California has been perhaps the most active state in letting citizens decide directly whether a piece of legislation should be enacted. In the June elections, voters will cast ballots on nine statewide referenda, as well as on numerous other county and city issues.
In recent years alone, charities have lobbied for or against a wide range of contentious ballot measures such as ending affirmative action in state contract decisions, legalizing marijuana for medical usage, and prohibiting illegal immigrants from obtain access to government programs, like the public schools. Charities also have had a hand in more innocuous ballot referenda: The Los Angeles Philharmonic Association has in recent years lobbied in behalf of local ballot measures that provided funds for the restoration of the Hollywood Bowl, where the group sometimes performs.
The United Way and other organizations that solicit through on-the-job drives are the charities that have the most to lose if Proposition 226 passes in California. In 1995, the most recent year for which data is available, local United Ways in California brought in about $194-million in donations-$97-million of which came through paycheck deductions. On a smaller scale, the Asian Pacific Community Fund, in Los Angeles, raised about $75,000 of the $100,000 it brought in last year through paycheck deductions.
“It would be a disaster for workplace-giving federations,’’ says Roccie Hill, executive director of Earth Share of California, which raises money for environmental groups.
The United Way has been more cautious in its public pronouncements on Proposition 226-largely out of fear of alienating conservative donors. The United Way of America sent its local members a “legislative alert’’ last month to its local offices, warning them of the potential impact of Proposition 226. Philip Jones, director of public relations at United Way of America, says that the alert was “sent out in error,’’ without the approval of the Board of Governors. “United Way of America has not taken a position on the matter of 226, nor will we be taking a position,’’ he says.
Even with this cautious approach, the United Way is already drawing fire from supporters of Proposition 226. Californians for Paycheck Protection derides United Way for meddling in politics and says the group collaborates too closely with the labor unions.
“It’s really kind of sad that the labor unions are using the United Way to push their agenda and I think in the long term hurting the United Way,’’ says Mitch Zak, campaign director for Californian’s for Paycheck Protection. “I’m offended that the United Way, an organization that I look to to be bipartisan would try to influence me in a political situation.’’
With the California election only a couple weeks away, non-profit groups have very little time to get the word out about their concerns. A voter guide went out to California residents just before the Legislative Counsel issued its opinion that charities would be included under Proposition 226, so voters were not informed of that ruling.
Backers of the measure say that charities’ opposition won’t influence voters and that their complaints will only hurt donations in the long run. “It will have a far greater impact on the charities themselves then it will on our campaign,’’ says Mr. Zak. “People who are used to seeing a separation of charities and politics will have a bad taste in their mouths.’’
Some non-profit officials worry that the California Association of Nonprofits and other charities made a mistake by waiting for the Legislative Counsel to rule on whether charities would be affected by the measure. “It was an excess of caution,’’ says Kirke P. Wilson, president of the Rosenberg Foundation in San Francisco.
But Ms. Green of the California Association of Nonprofits says that her group could not take a stand on the proposition without being assured that there was a legitimate threat to charities.
“We didn’t want to run around and say, `The sky is falling, the sky is falling,’ when it wasn’t,’’ she says. “So now the task in front of us is to see if we can convince voters that this is in fact a very damaging piece of legislation to the not-for-profit sector.’’
