Arizona Nonprofits Face Chaos Under “Dark Money” Law as 2024 Elections Near

January 4, 2024 | Luke Wachob

Arizona’s experiment in regulating nonprofits like political action committees is set to begin. No one is ready for it.

The Secretary of State’s office has not set up the online portal where groups are required to file their reports. The Citizens Clean Elections Commission (CCEC) has failed to answer numerous questions about the law’s meaning and implementation. And the federal lawsuit challenging the law as unconstitutional has yet to be heard.

Despite all of that, the law will cover ads starting in February, a full six months before the state holds primary elections in August.

Arizona officials had plenty of time to prepare for this moment. Voters approved Prop 211 over a year ago in November of 2022. Concerns over how the law would be implemented were voiced even before the election (including by People United for Privacy). Lawsuits challenging various aspects of the measure were filed soon after.

Most recently, a lawsuit from state Republican leaders concerning the law’s transfer of power from the Legislature to the CCEC seeking to block the law’s implementation was rejected in late December. Previously, several Arizona nonprofits challenged the law as invalid under the state constitution. Still to be heard is a federal lawsuit asserting that Prop 211 violates the First Amendment’s protections for freedom of association. The U.S. Supreme Court reiterated the importance of that right recently, in the 2021 case Americans for Prosperity Foundation v. Bonta.

Courts have long recognized that freedom of speech is threatened when states can force groups that speak about social or political issues to expose their supporters. Americans should not face harassment or retaliation at their homes and workplaces simply because they donated to a nonprofit that has angered a politician or activist. Donor privacy is protected so that every American is free to support the causes they believe in.

One exception to the general rule of privacy in association is when Americans donate to candidates, political parties, or other groups formed to influence elections. Arizona’s law seeks to stretch this exception to new frontiers. People United for Privacy urged the CCEC to delay issuing new regulations under Prop 211 until the legal disputes surrounding the law were resolved. Unfortunately, the Commission chose to move forward.

Prop 211 was advertised as a measure to disclose so-called “dark money” in campaigns. Yet its provisions have clear spillover effects on other forms of advocacy around public policy and government action. For instance, the law dramatically expands the scope of advertisements that trigger donor disclosure mandates, going far beyond ads that support or oppose candidates. It creates a new term in the law, “campaign media spending,” with a seven-part definition that prioritizes flexibility for regulators over clarity for regulated entities. The law also covers so-called “partisan voter registration” and “partisan get-out-the-vote activity” but doesn’t define what those terms mean.

Nonprofits have been left to scratch their heads and wonder if their own activities to inform and motivate citizens around issues in the state capitol might ensnare them in the law. National campaign finance experts have warned that could be the case. Former Federal Election Commission Chairman Lee Goodman went so far as to predict last summer that Arizonans “will not be able to get a clear definition” of the law’s inherently vague and subjective standards. On the eve of the law’s first election cycle, that prediction has aged well.

At best, nonprofits must now divert funds away from their missions to hire specialized attorneys to help them navigate an unclear law as best they can. At worst, many may be forced into silence due to the costs of compliance or concerns about blowback against their donors.

A “dark money” law that silences small nonprofits while leaving big-money campaigns and super PACs free to dominate the airwaves won’t do anything to make Arizona’s politics friendlier to the little guy. But the state is running out of time to avoid that fate. Considering where Prop 211 came from, maybe helping the little guy was never the point.