The Texas legislature is currently considering regulation of so-called dark money, and those regulations could change how nonprofits with political agendas or interests do business. According to reports, the regulation may be approved by the Texas Ethics Commission by the end of the year.
The goal of the change is to understand the movement of dark money better. Dark money refers to donations by individuals and companies to nonprofit organizations, who don’t have to disclose certain information about donors. This isn’t the first time legislators have attempted to get information on donations — Governor Perry recently vetoed a bill with similar intent. That bill would have required nonprofits that are politically active to provide names of any contributor that donated $1,000 or more.
The new proposal requires the names of certain donors to be disclosed if a nonprofit’s spending is at least 25 percent politically motivated. The regulation would also require the disclosure of any donor name should that person or company represent more than a quarter of the nonprofit’s contributions annually.
Federal tax law currently allows donors to such nonprofits to remain secret. The nonprofits themselves are allowed to attempt to influence elections via ad campaigns and other tools, but they are not allowed to make any direct monetary contributions to a campaign.
According to reports, the commission is likely to vote on the regulation in October. If the regulation passes and becomes law, there are likely some tax law and other issues that could arise. It’s possible that nonprofit status for some organizations could be threatened, or that once donations are made public, individuals are more willing to claim them as such on tax returns. Keeping up with financial and political law helps understand tax law, and applying political and other changes to tax structure helps businesses and individuals reduce or manage tax burdens.
Source: Houston Chronicle, “Ethics Commission moves to regulate Texas dark money” David Saleh Rauf, Aug. 21, 2014