Amended in Assembly March 21, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 914


Introduced by Assembly Member Gordon

February 22, 2013


An actbegin insert to amend Section 12586 of, and to add Article 3.5 (commencing with Section 84350) to Chapter 4 of Title 9 of, the Government Code,end insert relating to the Political Reform Act of 1974.

LEGISLATIVE COUNSEL’S DIGEST

AB 914, as amended, Gordon. Political Reform Act of 1974begin insert: campaign disclosuresend insert.

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The

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begin insert(1)end insertbegin insertend insertbegin insertThe end insertPolitical Reform Act of 1974 imposes various reporting requirements with regard to contributions and independent expenditures, as defined, made for political purposes.begin insert The act establishes the Fair Political Practices Commission as the agency responsible for administering and enforcing the act.end insert

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This bill would require the Commission to develop a Nonprofit and Multipurpose Organization Disclosure Statement form. The bill would require that the form provide for the disclosure of specified information relating to contributions, expenditures, and independent expenditures made by, and donations made to, a nonprofit corporation. The bill would require a nonprofit corporation to file a Nonprofit and Multipurpose Organization Disclosure Statement, at a time prescribed by the Commission, in any year in which the nonprofit corporation makes combined contributions, expenditures, and independent expenditures in this state aggregating $50,000 or more during the nonprofit corporation’s fiscal year.

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The bill would require the Commission to make Nonprofit and Multipurpose Organization Disclosure Statements available to the public. The bill would authorize a nonprofit corporation or a donor to the nonprofit corporation to petition the Commission to maintain the confidentiality of information relating to donors and donations. The bill would require the Commission to grant a petition to maintain the confidentiality of donor and donation information if the petitioner establishes by clear and convincing evidence that the public disclosure of donor information will cause undue harm, threats, harassment, or reprisals to the donor, or that the donor did not know or have reason to know that his or her donation would be used to make a contribution, expenditure, or independent expenditure, as specified.

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(2) The Supervision of Trustees and Fundraisers for Charitable Purposes Act provides the Attorney General with enforcement and supervisory powers relating to certain entities, including charitable corporations, unincorporated associations, and trustees. Existing law requires these entities to file with the Attorney General periodic written reports, under oath, that set forth information as to the nature of the assets held for charitable purposes and the administration of these assets by the corporation or the trustee in accordance with rules and regulations of the Attorney General. These requirements do not apply to an entity that is a committee for purposes of the Political Reform Act of 1974 that is required to file specified campaign statements pursuant to that act.

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This bill would additionally require a charitable corporation, unincorporated association, or trustee that is required to file periodic written reports with the Attorney General to file a Nonprofit and Multipurpose Organization Disclosure Statement as an attachment to its periodic written reports if the entity made combined contributions, expenditures, or independent expenditures in this State aggregating $50,000 or more during the entity’s fiscal year, as specified.

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This bill would authorize an entity or its donors to petition the Attorney General to maintain the confidentiality of certain donor information in the same manner described above with respect to similar statements filed with the Commission, as specified.

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The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

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This bill would provide that no reimbursement is required by this act for a specified reason.

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The Political Reform Act of 1974, an initiative measure, provides that the Legislature may amend the act to further the act’s purposes upon a 23 vote of each house and compliance with specified procedural requirements.

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This bill would declare that it furthers the purposes of the act.

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This bill would declare the intent of the Legislature to enact legislation that would strengthen the act by requiring greater accountability and disclosure by multipurpose groups and nonprofit organizations that make campaign contributions and independent expenditures.

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Vote: begin deletemajority end deletebegin insert23end insert. Appropriation: no. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: begin deleteno end deletebegin insertyesend insert.

The people of the State of California do enact as follows:

P3    1begin insert

begin insertSECTION 1.end insert  

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begin insertSection 12586 of the end insertbegin insertGovernment Codeend insertbegin insert is
2amended to read:end insert

3

12586.  

(a) Except as otherwise provided and except corporate
4trusteesbegin delete whichend deletebegin insert thatend insert are subject to the jurisdiction of the
5Commissioner of Financial Institutions of the State of California
6under Division 1 (commencing with Section 99) of the Financial
7Code or to the Comptroller of the Currency of the United States,
8every charitable corporation, unincorporated association, and
9trustee subject to this article shall, in addition to filing copies of
10the instruments previously required, file with the Attorney General
11periodic written reports, under oath, setting forth information as
12to the nature of the assets held for charitable purposes and the
13administration thereof by the corporation, unincorporated
14association, or trustee, in accordance with rules and regulations of
15the Attorney General.

16(b) The Attorney General shall make rules and regulations as
17to the time for filing reports, the contents thereof, and the manner
18of executing and filing them. The Attorney General may classify
19trusts and other relationships concerning property held for a
20charitable purpose as to purpose, nature of assets, duration of the
21trust or other relationship, amount of assets, amounts to be devoted
22to charitable purposes, nature of trustee, or otherwise, and may
23establish different rules for the different classes as to time and
24nature of the reports required to the ends (1) that he or she shall
P4    1receive reasonably current, periodic reports as to all charitable
2trusts or other relationships of a similar nature, which will enable
3him or her to ascertain whether they are being properly
4administered, and (2) that periodic reports shall not unreasonably
5add to the expense of the administration of charitable trusts and
6similar relationships. The Attorney General may suspend the filing
7of reports as to a particular charitable trust or relationship for a
8reasonable, specifically designated time upon written application
9of the trustee filed with the Attorney General and after the Attorney
10General has filed in the register of charitable trusts a written
11statement that the interests of the beneficiaries will not be
12prejudiced thereby and that periodic reports are not required for
13proper supervision by his or her office.

14(c) A copy of an account filed by the trustee in any court having
15jurisdiction of the trust or other relationship, if the account
16substantially complies with the rules and regulations of the
17Attorney General, may be filed as a report required by this section.

18(d) The first periodic written report, unless the filing thereof is
19suspended as herein provided, shall be filed not later than four
20months and 15 days following the close of the first calendar or
21fiscal year in which property is initially received. If any part of
22the income or principal of a trust previously established is
23authorized or required to be applied to a charitable purpose at the
24time this article takes effect, the first report shall be filed at the
25close of the calendar or fiscal year in which it was registered with
26the Attorney General or not later than four months and 15 days
27following the close of the calendar or fiscal period.

28(e) Every charitable corporation, unincorporated association,
29and trustee required to file reports with the Attorney General
30pursuant to this section that receives or accrues in any fiscal year
31gross revenue of two million dollars ($2,000,000) or more,
32exclusive of grants from, and contracts for services with,
33governmental entities for which the governmental entity requires
34an accounting of the funds received, shall dobegin insert all ofend insert the following:

35(1) Prepare annual financial statements using generally accepted
36accounting principles that are audited by an independent certified
37public accountant in conformity with generally accepted auditing
38standards. For any nonaudit services performed by the firm
39conducting the audit, the firm and its individual auditors shall
40adhere to the standards for auditor independence set forth in the
P5    1latest revision of the Government Auditing Standards, issued by
2the Comptroller General of the United States (the Yellow Book).
3The Attorney General may, by regulation, prescribe standards for
4auditor independence in the performance of nonaudit services,
5including standards different from those set forth in the Yellow
6Book. If a charitable corporation or unincorporated association
7that is required to prepare an annual financial statement pursuant
8to this subdivision is under the control of another organization,
9the controlling organization may prepare a consolidated financial
10statement. The audited financial statements shall be available for
11inspection by the Attorney General and by members of the public
12no later than nine months after the close of the fiscal year to which
13the statements relate. A charity shall make its annual audited
14financial statements available to the public in the same manner
15that is prescribed for IRS Form 990 by the latest revision of Section
166104(d) of the Internal Revenue Code and associated regulations.

17(2) If it is a corporation, have an audit committee appointed by
18the board of directors. The audit committee may include persons
19who are not members of the board of directors, but the member or
20members of the audit committee shall not include any members
21of the staff, including the president or chief executive officer and
22the treasurer or chief financial officer. If the corporation has a
23finance committee, it must be separate from the audit committee.
24Members of the finance committee may serve on the audit
25committee; however, the chairperson of the audit committee may
26not be a member of the finance committee and members of the
27finance committee shall constitute less than one-half of the
28membership of the audit committee. Members of the audit
29committee shall not receive any compensation from the corporation
30in excess of the compensation, if any, received by members of the
31board of directors for service on the board and shall not have a
32material financial interest in any entity doing business with the
33corporation. Subject to the supervision of the board of directors,
34the audit committee shall be responsible for recommending to the
35board of directors the retention and termination of the independent
36auditor and may negotiate the independent auditor’s compensationbegin delete,end delete
37 on behalf of the board of directors. The audit committee shall
38confer with the auditor to satisfy its members that the financial
39affairs of the corporation are in order, shall review and determine
40whether to accept the audit, shall assure that any nonaudit services
P6    1performed by the auditing firm conform with standards for auditor
2independence referred to in paragraph (1), and shall approve
3performance of nonaudit services by the auditing firm. If the
4charitable corporation that is required to have an audit committee
5pursuant to this subdivision is under the control of another
6corporation, the audit committee may be part of the board of
7directors of the controlling corporation.

8(f) If, independent of the audit requirement set forth in paragraph
9(1) of subdivision (e), a charitable corporation, unincorporated
10association, or trustee required to file reports with the Attorney
11General pursuant to this section prepares financial statements that
12are audited by a certified public accountant, the audited financial
13statements shall be available for inspection by the Attorney General
14and shall be made available to members of the public in conformity
15with paragraph (1) of subdivision (e).

16(g) The board of directors of a charitable corporation or
17unincorporated association, or an authorized committee of the
18board, and the trustee or trustees of a charitable trust shall review
19and approve the compensation, including benefits, of the president
20or chief executive officer and the treasurer or chief financial officer
21to assure that it is just and reasonable. This review and approval
22shall occur initially upon the hiring of the officer, whenever the
23term of employment, if any, of the officer is renewed or extended,
24and whenever the officer’s compensation is modified. Separate
25review and approval shall not be required if a modification of
26compensation extends to substantially all employees. If a charitable
27corporation is affiliated with other charitable corporations, the
28requirements of this section shall be satisfied if review and approval
29is obtained from the board, or an authorized committee of the
30board, of the charitable corporation that makes retention and
31compensation decisions regarding a particular individual.

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32(h) (1) This subdivision applies only to a charitable corporation,
33unincorporated association, or trustee that is required to file
34reports with the Attorney General pursuant to this section and that
35makes combined contributions, expenditures, and independent
36expenditures in this state aggregating fifty thousand dollars
37($50,000) or more during the entity’s fiscal year.

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38(2) The Fair Political Practices Commission shall develop a
39Nonprofit and Multipurpose Organization Disclosure Statement
40form that an entity described in paragraph (1) shall file with the
P7    1Attorney General, as required by this subdivision. The form, which
2may be identical to the form created for nonprofit corporations
3pursuant to Section 84350, shall provide for the disclosure of all
4of the following information:

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5(A) The aggregate combined dollar amount of contributions,
6expenditures, and independent expenditures that are made during
7the reporting period.

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8(B) The amount of expenses attributable to contributions,
9expenditures, and independent expenditures as a percentage of
10the entity’s total expenses that are made during the reporting
11period.

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12(C) For purposes of an entity for which the combined amounts
13of contributions, expenditures, and independent expenditures made
14during the reporting period exceed 10 percent of the entity’s total
15expenses, each of the following with respect to contributions,
16expenditures, and independent expenditures made during that
17period:

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18(i) The amount of any funds, or the fair market value of any
19services or assets, that are provided in relation to a contribution,
20expenditure, or independent expenditure.

end insert
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21(ii) The amount or fair market value of any liabilities incurred
22in relation to a contribution, expenditure, or independent
23expenditure.

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24(iii) The date that the funds, services, or assets were provided
25or the liabilities were incurred.

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26(iv) The name and address of the recipient of the contribution,
27expenditure, or independent expenditure.

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28(v) A description of the contribution, expenditure, or independent
29expenditure and its purpose, including whether the contribution,
30expenditure, or independent expenditure was made in support of
31or opposition to a candidate, political party, ballot measure, or
32other question put before the voters in an election.

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33(vi) Information related to each donation received by the entity
34during the reporting period, including the name and address of
35each donor who made donations in an aggregate amount of ten
36thousand dollars ($10,000) or more during the reporting period,
37the name of the employer of each individual donor, if available,
38and the date and amount of each donation.

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39(3) (A) Except as otherwise provided in this paragraph, an
40entity described in paragraph (1) shall file a Nonprofit and
P8    1Multipurpose Organization Disclosure Statement as an attachment
2to its periodic written reports required by this section with the
3Attorney General for any year in which the entity meets the fifty
4thousand dollar ($50,000) threshold for combined aggregate
5contributions, expenditures, and independent expenditures made
6during a fiscal year. Except as provided in paragraph (4), the
7Attorney General shall make the filed Nonprofit and Multipurpose
8Organization Disclosure Statement available to the public through
9the Register of Charitable Corporations and Trustees established
10pursuant to Section 12584.

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11(B) An entity is not required to disclose the information
12described in subparagraph (C) of paragraph (2) if that information
13has been previously disclosed by the entity in any other campaign
14statement or report required by the Political Reform Act of 1974
15(Title 9 (commencing with Section 81000)).

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16(C) If an entity required to file a Nonprofit and Multipurpose
17Organization Disclosure Statement pursuant to this subdivision
18maintains one or more segregated bank accounts for the purpose
19of making election-related contributions, expenditures, or
20independent expenditures, and those accounts represent the
21exclusive source of the entity’s election-related contributions,
22expenditures, and independent expenditures in this state, the entity
23is only required to report information described in clause (vi) of
24subparagraph (C) of paragraph (2) with respect to donations
25deposited into the segregated election-related accounts.

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26(4) A charitable corporation, unincorporated association, or
27trustee that is subject to the reporting requirements of this
28subdivision, or a donor to any of these entities, may petition the
29Attorney General, no later than 45 days prior to the date on which
30the Nonprofit and Multipurpose Organization Disclosure Statement
31must be filed, to maintain the confidentiality of donor information
32that is disclosed on the statement. If a petitioner demonstrates by
33clear and convincing evidence that the public disclosure of donor
34information reported on the Nonprofit and Multipurpose
35Organization Disclosure Statement will cause undue harm, threats,
36harassment, or reprisals to the donor or that the donor did not
37know or have reason to know that his or her donation would be
38used to make a contribution, expenditure, or independent
39expenditure in this state, the Attorney General shall treat the donor
40and donation information as confidential and shall redact the
P9    1donor and donation information from any documents that are
2made available to the public. The Attorney General shall inform
3the petitioner, in writing, whether the petition to maintain the
4confidentiality of donor and donation information has been granted
5or denied. The Attorney General’s grant or denial determination
6shall include a statement of findings and conclusions, and the
7reasons or basis for the determination.

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8(5) The Attorney General shall immediately provide a copy of
9each filed Nonprofit and Multipurpose Organization Disclosure
10Statement to the Fair Political Practices Commission. If the
11Attorney General has approved a petition to maintain the
12confidentiality of donor and donation information disclosed on
13the Nonprofit and Multipurpose Organization Disclosure Statement
14pursuant to paragraph (4), the Fair Political Practices Commission
15shall also treat that information as confidential and shall not make
16that information publicly available.

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17(6) For purposes of this subdivision, the following terms have
18the following meanings:

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19(A) “Contribution” has the same meaning as set forth in Section
2082015.

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21(B) “Expenditure” has the same meaning as set forth in Section
2282025.

end insert
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23(C) “Independent expenditure” has the same meaning as set
24forth in Section 82031.

end insert
25begin insert

begin insertSEC. 2end insertbegin insert.end insert  

end insert

begin insertArticle 3.5 (commencing with Section 84350) is added
26to Chapter 4 of Title 9 of the end insert
begin insertGovernment Codeend insertbegin insert, to read:end insert

begin insert

27 

28Article begin insert3.5.end insert  Nonprofit and Multipurpose Organizations
29

 

30

begin insert84350.end insert  

(a) This section shall apply only to a nonprofit
31corporation, as defined in Section 501(c) of the Internal Revenue
32Code, that is not required to file periodic written reports with the
33Attorney General under the Supervision of Trustees and
34Fundraisers for Charitable Purposes Act (Article 7 (commencing
35with Section 12580) of Chapter 6 of Part 2 of Division 3 of Title
362) and that makes combined contributions, expenditures, and
37independent expenditures in this state aggregating fifty thousand
38dollars ($50,000) or more during the nonprofit corporation’s fiscal
39year.

P10   1(b) The Commission shall develop a Nonprofit and Multipurpose
2Organization Disclosure Statement form that provides for the
3disclosure of all of the following information:

4(1) The aggregate combined dollar amount of contributions,
5expenditures, and independent expenditures that are made during
6the reporting period.

7(2) The amount of expenses attributable to contributions,
8expenditures, and independent expenditures as a percentage of
9the nonprofit organization’s total expenses that are made during
10the reporting period.

11(3) For purposes of a nonprofit organization for which the
12combined amounts of contributions, expenditures, and independent
13expenditures made during the reporting period exceed 10 percent
14of the nonprofit organization’s total expenses, each of the following
15with respect to contributions, expenditures, and independent
16expenditures made during that period:

17(A) The amount of any funds, or the fair market value of any
18services or assets, that are provided in relation to a contribution,
19expenditure, or independent expenditure.

20(B) The amount or fair market value of any liabilities incurred
21in relation to a contribution, expenditure, or independent
22expenditure.

23(C) The date that the funds, services, or assets were provided
24or the liabilities were incurred.

25(D) The name and address of the recipient of the contribution,
26expenditure, or independent expenditure.

27(E) A description of the contribution, expenditure, or
28independent expenditures and its purpose, including whether the
29contribution, expenditure, or independent expenditure was made
30in support of or opposition to a candidate, political party, ballot
31measure, or other question put before the voters in an election.

32(F) Information related to each donation received by the
33nonprofit corporation during the reporting period, including each
34of the following:

35(i) The name and address of each donor who made donations
36in an aggregate amount of ten thousand dollars ($10,000) or more
37during the reporting period.

38(ii) The name of the employer of each individual donor, if
39available.

40(iii) The date and amount of each donation.

P11   1(c) (1) Except as otherwise provided in this subdivision, a
2nonprofit corporation described in subdivision (a) shall file, at a
3time to be determined by the Commission, a Nonprofit and
4Multipurpose Organization Disclosure Statement with the
5Commission for any year in which the nonprofit corporation meets
6the fifty thousand dollar ($50,000) threshold for combined
7aggregate contributions, expenditures, and independent
8expenditures made during a fiscal year. Except as provided in
9subdivision (d), the Commission shall make the filed Nonprofit
10and Multipurpose Organization Disclosure Statement available
11to the public, as required by Section 81008.

12(2) A nonprofit corporation is not required to disclose the
13information described in paragraph (3) of subdivision (b) if that
14information has been previously disclosed by the nonprofit
15corporation in any other campaign statement or report required
16by this title.

17(3) If a nonprofit corporation required to file a Nonprofit and
18Multipurpose Organization Disclosure Statement pursuant to this
19section maintains one or more segregated bank accounts for the
20purpose of making election-related contributions, expenditures,
21or independent expenditures, and those accounts represent the
22exclusive source of the nonprofit corporation’s election-related
23contributions, expenditures, and independent expenditures in this
24state, the nonprofit corporation is only required to report
25information described in subparagraph (F) of paragraph (3) of
26subdivision (b) with respect to donations deposited into the
27segregated election-related accounts.

28(d) A nonprofit corporation or a donor to a nonprofit
29corporation that is subject to the reporting requirements of this
30section may petition the Commission, no later than 45 days prior
31to the date on which the Nonprofit and Multipurpose Organization
32Disclosure Statement must be filed, to maintain the confidentiality
33of donor information that is disclosed on the statement. If a
34petitioner demonstrates by clear and convincing evidence that the
35public disclosure of donor information reported on the Nonprofit
36and Multipurpose Organization Disclosure Statement will cause
37undue harm, threats, harassment, or reprisals to the donor or that
38the donor did not know or have reason to know that his or her
39donation would be used to make a contribution, expenditure, or
40independent expenditure in this state, the Commission shall,
P12   1notwithstanding Section 81008, treat the donor and donation
2information as confidential and shall redact the donor and
3donation information from any documents that are made available
4to the public. The Commission shall inform the petitioner, in
5writing, whether the petition to maintain the confidentiality of
6donor and donation information has been granted or denied. The
7Commission’s grant or denial determination shall include a
8statement of findings and conclusions, and the reasons or basis
9for the determination.

end insert
10begin insert

begin insertSEC. 3.end insert  

end insert
begin insert

No reimbursement is required by this act pursuant to
11Section 6 of Article XIII B of the California Constitution because
12the only costs that may be incurred by a local agency or school
13district will be incurred because this act creates a new crime or
14infraction, eliminates a crime or infraction, or changes the penalty
15for a crime or infraction, within the meaning of Section 17556 of
16the Government Code, or changes the definition of a crime within
17the meaning of Section 6 of Article XIII B of the California
18Constitution.

end insert
19begin insert

begin insertSEC. 4.end insert  

end insert
begin insert

The Legislature finds and declares that this bill furthers
20the purposes of the Political Reform Act of 1974 within the meaning
21of subdivision (a) of Section 81012 of the Government Code.

end insert
begin delete
22

SECTION 1.  

It is the intent of the Legislature to enact
23legislation that would strengthen the Political Reform Act of 1974
24by requiring greater accountability and disclosure by multipurpose
25groups and nonprofit organizations that make campaign
26contributions and independent expenditures.

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