Nonprofits Cloak Donors to Governor
Tax-exempt groups provide millions from sources not made public. Ethics watchdogs say the practice avoids state disclosure laws.
By Robert Salladay and Peter Nicholas, Times Staff Writers
SACRAMENTO — Gov. Arnold Schwarzenegger is benefiting from millions of dollars raised by a network of tax-exempt groups without revealing that the money comes from major corporations with business before his office.
The groups are run by Schwarzenegger's closest political allies, who also represent some of California's biggest interest groups. Unlike the governor's many campaign funds, the nonprofits are not required to disclose their contributors and can accept unlimited amounts.
One group controlled by a powerful corporate consultant pays the $6,000-a-month rent on a Sacramento hotel suite used by the governor, who is a multimillionaire. Others have funded media events and political rallies featuring Schwarzenegger and helped pay for his foreign travel. So far, five tax-exempt groups aiding Schwarzenegger have collected $3 million.
Other elected officials also raise money through nonprofit groups. But Schwarzenegger campaigned on creating an open government answerable to the public. His use of the nonprofit groups has the opposite effect, ethics watchdogs said.
State and federal laws allow groups performing a broadly defined "public benefit" to operate tax exempt. But the lack of disclosure requirements means potential conflicts of interests between the governor and his contributors remain hidden, allowing powerful donors to curry favor with Schwarzenegger behind the scenes, they said....
http://www.latimes.com/news/local/la-me-nonprofits24aug24,0,6693036,full.story?coll=la-home-headlines
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