Where's the money from? Federal Court rules in favor of advocacy groups shielding donors in runoff

Certain political groups no longer have to disclose their donors in Albuquerque’s municipal races thanks to a Wednesday court ruling that comes as runoff candidates sprint to the finish of election season.

The ruling could have “significant impacts” on the future of municipal races, said Brian Sanderoff, a longtime New Mexico political observer and president of Albuquerque-based Research & Polling Inc.

“These safeguards give voters clear information in elections where spending by candidates and outside groups can easily exceed $1 million,” City Clerk Ethan Watson said in a statement Thursday. “Albuquerque’s rules have helped bring that activity into the open for years, giving residents a clearer view of who is trying to influence local races. This temporary ruling opens the door for more dark-money spending and large outside donors to operate with less visibility, and we remain committed to protecting transparency for Albuquerque voters.”

Advocacy nonprofits, classified as 501(c)(4)s, no longer have to abide by the City’s Election Code requirement of disclosing their top five donors, some of those donors’ contributors and registering as measure finance committees — defined as any group that donates more than $250 to a candidate’s campaign, according to an opinion by U.S. District Judge James Browning.

The Election Code has been in place since 2012, but language was changed in February to “enhance clarity and transparency,” according to the City Clerk’s Office.

The rule change may open up municipal races to more anonymous donations, which Sanderoff said are often already seen in national and state races when multimillion-dollar organizations donate to a chain of smaller groups until it ends up in a campaign’s pocket with little public paper trail linking the two.

“There are 501(c)(4)s on both sides of the ideological fence,” Sanderoff said. “For sure, in future elections, other organizations will get involved on both sides of the ideological spectrum.”

The lawsuit was filed last week by three progressive advocacy groups, Center for Civic Action, ProgressNow New Mexico and Semilla Action, who have a collective annual budget of more than $2.5 million, according to court documents.

CEO of Center for Civic Action Oriana Sandoval said in a statement Thursday that the city’s Election Code’s disclosure requirements were “intrusive.”

“We support free, fair and transparent elections, provided transparency measures do not restrict our First Amendment right to inform voters about key issues and candidates,” Sandoval said.

Sara Berger, a lawyer representing CCA, called the city’s Election Code “archaic” and “unconstitutional.”

“That’s not transparency, that’s overreach,” Berger said of the code.

Judge Browning agreed, citing previous court precedent.

Browning ruled that the city’s election code violated the groups’ “right to free speech and free expression.”

In the lawsuit, the groups argued that listing their top donors may expose people whose funds were used for other aspects of the nonprofits’ operations, not electioneering. That requirement could discourage donations from people who prefer to keep their names out of the public eye, they said.

There are a lot of reasons political donors want to remain anonymous, Sanderoff said, and not making enemies with the opposing side is just one.

CCA’s lawyer, Berger, said that revealing the group’s donors and compelling those donors to share some of their contributors would make fundraising much more difficult.

“Imagine how chilling that would be to try to raise funds,” Berger said.

Local impacts

The groups planned to collectively spend $60,000 on a mix of advertising and campaign activities for the runoff election, such as canvassing, distributing literature and buying social media ads, according to court documents. The groups argued those funds were an “insubstantial” part of their budgets.

Now, those groups, and other 501(c)(4)s, are under no obligation to share where that money came from.

So far, CCA has spent $6,000 in the City Council runoff, supporting progressive political newcomers, Teresa Garcia running in District 3 and Stephanie Telles running in District 1, according to the latest finance disclosure statements.

If the pair successfully flip the seats — beating out a conservative challenger and incumbent Klarissa Peña, a moderate Democrat — the majority conservative City Council will be more progressive, balancing the council between the left and right.

Those donations amount to 33% of Garcia’s campaign contributions and 16% of Telles’.

CCA also supported mayoral candidate Alex Uballez’s campaign during the general election. None of the three groups have contributed to the mayoral runoff thus far.

Other groups, such as political action committees, will still have to register with the city clerk and disclose their donors under the City’s Election Code.

With little under two weeks before the start of early voting, it’s uncertain if there is enough time for other advocacy groups to get in on the action and sway the election with more funds and less requirements, Sanderoff said.

“We’ll have to wait and see,” Sanderoff said.