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When does a charitable donation become a bribe?

San Francisco's Ethics Commission has recommended new legislation to the Board of Supervisors in an effort to answer the question, as part of a new Anti-Corruption Ordinance. It promises to be the strictest regulations in the state overseeing behested payments – donations made by third parties, at the request of a public official, to a government project or charitable organization.

That concerns advocates for non-profit groups, anxious over whether the new legislation could go too far and hamstring grassroots campaigns. Meanwhile, deliberations over the legislation have given further exposure to the Commission’s often dysfunctional culture.

According to transparency advocates, behested payments represent a potential loophole in current public integrity laws, where interest groups can still solicit political goodwill with cold, hard cash. These arranged donations have become common throughout state and local politics in California – for example, a recent article in the San Jose Mercury News described Governor Jerry Brown as "a master of the practice." Los Angeles Mayor Eric Garcetti has also come under scrutiny for it, as well as San Francisco officials like Supervisor Sandra Fewer.

California currently doesn't limit behested payments, but requires disclosure to the Fair Political Practices Commission within 30 days of payments which equal or exceed $5000 in a single calendar year.  As of January 1, under legislation passed last year spearheaded by Supervisor Aaron Peskin, San Francisco now extends behested payment reporting requirements to appointed City Board and Commission members, with a lower threshold of $1000.

The extent to which behested payments may be intended to curry favor with politicians, as opposed to those officials simply leveraging allied interest groups in pursuit of a legislative agenda, is still an open question.

One example of behested payment abuse occurred in 2007, when newly elected Supervisor Ed Jew demanded thousands of dollars from a tapioca drink shop chain in order to expedite their permits. Jew claimed that at least half the money would go to a local nonprofit for renovating a neighborhood playground. The business then contacted the FBI, and they conducted a sting. Jew was eventually charged with federal extortion and fraud charges, and sentenced to prison. Meanwhile, the nonprofit returned the money once they learned of its source. Jew’s case also stood out in that he demanded to be the middleman for the payment.

Currently, advocates such as Friends of Ethics, the group headed by former Mayoral aide and activist Larry Bush, allege that behested payments are used by developers and other interests to grease the wheels of goodwill for their projects. To address this, and other issues, they've lobbied to restore certain provisions of ethics law which had been approved by voters in 2000, but then repealed by another ballot initiative in 2003.

Ethics Commission Chair Peter Keane, supported by Commissioners Quentin Kopp and Paul Renne, have worked to introduce more stringent regulations, including a ban on behested payments where a donor has business interests with the City official making the request.

That provision draws concern from a wide array of nonprofit service organizations over its potential to chill legitimate fundraising, or when combined with a “citizen suit” provision also in the legislative package, to be used as a tool for “lawfare” or political retaliation, according to a number of nonprofit representatives who testified during hearings on the bill.

During deliberations last September, Chair Keane became visibly agitated when hearing pushback against the ban. During the public comment period, Toren Lewis, counsel for the Alliance for Justice, a progressive advocacy group, noted that the ban represented “a novel and overly broad interpretation of conflict of interest.” This was met with a furious rebuke from Keane, who described Lewis's objection as "galling and disingenuous," and accused nonprofit representatives present at the hearing of defending corruption:

“We still have essentially the same group of nonprofit people at this point saying that it is okay with us… to have a corrupt public official put the arm on some individual who is seeking a favor in order to get that individual to give something… if it happens to be us, the nonprofits are the recipients of it. Now that is corruption, whether or not you're giving the money to Al Capone or you’re giving the money to crippled children, it's the same thing…You should be ashamed of yourselves, you're saying that that's okay.”

This behavior, according to observers, recalls other aspects of the Commission’s dysfunctional culture, which involves accusations that it violated one of the very laws it’s supposed to enforce.

Late last year, the Commission came under scrutiny from the Sunshine Ordinance Task Force and the District Attorney over a complaint filed by local housing activist Laura Clark,charging the Commission with violating the Brown Act, California’s open government law. The violation occurred when the Commission voted, without notice, to advise a Planning Commissioner to recuse herself from an issue. Clark's complaint got a majority of votes from Task Force members present at a September hearing, but failed to carry due to absences on the Commission that day. District Attorney George Gascon then stepped in, finding that the Ethics Commission had in fact violated the law.

At the Commission meeting in November, during a discussion initiated by Commissioner Kopp over whether to abolish the Sunshine Ordinance Task Force as part of future legislation, Chair Keane described it as a “hydra-headed creature” that was “pretty dreadful,” with an agenda that was “90% B.S” and “besieged by every screwball in San Francisco.”

In the end, the ban on behested payments failed to get the votes to be included in the legislation. The final version, approved in November after two more months of deliberations, would instead lower the reporting threshold to $1000 for all affected classes, and create further reporting requirements for donor committees which receive behested payments. But advocates for nonprofits and potential donors still have major concerns about the ordinance.

Anita Mayo, Special Counsel for San Francisco Political Law at the Pillsbury Law Firm, regularly offers advice to the Commission, and many of her recommendations have become law. She characterizes the legislation in its current form, with regard to behested payments, as imposing a burdensome regime which “goes much further than state law, will likely lead to confusion and inadvertent violations of the Ordinance, and negatively impact the amount made to charities and other nonprofit organizations.”

Debbie Lerman, Administrator at the San Francisco Human Services Network, describes the proposed reporting process as “still really extreme” and “draconian,” with the potential to disincentivize both potential donors, as well as nonprofit workers and volunteers, from being further involved in the public policy process, reiterating a memo she and others submitted to the Commission:

“We don't understand how such a broadened definition would enhance the goal of exposing quid pro quo, and we are concerned that its breadth will have a chilling impact not only on charitable giving, but also on the willingness of potential donors to speak out about public policy issues. This expanded definition beyond the clear nexus terms established in the Peskin behest legislation is of serious concern, and we suggest it remain consistent with the existing law...”

The legislation will be introduced at the Board of Supervisors on January 9. Meanwhile, the Sunshine Ordinance Task Force will reconsider the complaint against the Ethics Commission on January 16.

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