California regulators investigate group donating to San Francisco races

Seven candidates for office in San Francisco in November are benefiting from an unusual, if seemingly legal, arrangement: They are all receiving multiple $500 donations from different branches of the same statewide group, a practice that campaign rivals say circumvents city donation limits.

San Francisco has a strict donation limit of $500 per donor in supervisorial elections. But a nonprofit called Govern for California, which has historically funded state elections, has tasked eight of its various branches with giving $500 each to six supervisorial candidates and District Attorney Brooke Jenkins. Each of the candidates has received $4,000 from the group’s branches.

Govern for California was founded in 2012 to combat “special interests” in politics. The organization is currently under investigation by the California Fair Political Practices Commission after CalMatters published an investigation in 2022 into the organization’s use of local branches as “force multipliers” to influence policy. The FPPC confirmed on Friday that the investigation was ongoing but declined further comment.

The seven San Francisco candidates receiving funds from the Govern for California program are Marjan Philhour in District 1, Danny Sauter in District 3, Bilal Mahmood in District 5, Matt Boschetto in District 7, Trevor Chandler in District 9, Michael Lai in District 11 and District Attorney Jenkins.

A form that lists the monetary donations received for a campaign, listing the names, addresses, amounts, and submission dates of donors. The subtotal amount is $2,500.00. — An example of donations from Govern for California departments to candidates, in this case multiple $500 donations to 9th District candidate Trevor Chandler. Illustration by Junyao Yang.

Several campaign finance experts say this arrangement is probably not illegal: donors can coordinate to support the same candidates, thereby increasing their collective fundraising power.

But experts say these donations effectively obscure the origin of the money, hindering transparency and violating the spirit of campaign finance law.

“The question is: Who is giving that much money to a particular candidate? Because that’s the whole point of campaign finance law, to regulate the disclosure of information by individuals,” said Ann Ravel, former chair of the Federal Elections Commission during the Obama administration.

Ravel herself accepted money from Govern for California during her unsuccessful run for state Senate in 2020. She said the practice was legal, but the concern was that voters would not know who was funding the candidates.

“There are a lot of very wealthy people who are part of (Govern for California), so you don’t really know who is trying to influence the election in that way,” she said. “It’s important to know who the actual donors are.”

Bob Dockendorff, who served on the San Francisco Ethics Commission from 1996 to 2000, added: “It’s a problem, a big problem… It was never our intention for this to happen. That’s what we want to prevent: hiding of dark money.”

The approach is typical for groups at the national and local level

Govern for California was founded in 2012 by David Crane, a Stanford public policy professor who campaigned against public sector unions and served as an adviser to Governor Arnold Schwarzenegger in the 2000s. He developed Govern for California to counter “special interests.” Donors include wealthy Bay Area real estate and technology companies such as billionaire Mark Heising, venture capitalist Mark Perry and McKinsey partner Gary Pinkus.

Crane said he was influenced by unions in developing the chapter model. CalMatters reported and pointed to unions like the SEIU, whose local chapters spend money on candidates.

Govern for California typically focuses on governance issues and has clashed with public sector unions, for example opposing an ultimately successful 2023 state bill allowing lawmakers to unionize and most recently lobbying against a proposal to extend unemployment insurance to striking workers.

The group did not respond to requests for comment.

The CalMatters An investigation detailed that candidates for the state legislature, such as Representative Matt Haney, as well as candidates for the San Francisco Supervisor seat, accepted multiple donations from various branches of Govern for California, which made up a significant portion of their total haul.

The group’s practices and CalMatters’ reporting led to a public investigation by the California Fair Political Practices Commission.

According to its most recent tax filing, Govern for California had revenue of $2.21 million in 2022. Because it is a 501(c)(4) organization, the origin and use of that money is largely kept secret unless it goes to candidates or ballot measures.

The group also formed an associated 501(c)(3) nonprofit in April 2023 that is barred from spending money directly on candidates. Filings for that nonprofit have not yet been released.

While the group appears to be a modest donor in San Francisco, it has taken steps in that direction: in January it donated $10,000 to the public interest group GrowSF, in 2016 $15,000 to the moderate United Democratic Club, in January $5,000 to the school board recall PAC San Francisco Parent Action, and in February $1,000 to the influential Republican-funded organization Neighbors for a Better San Francisco.

The group has 17 active branches that often fund the same candidates. According to CalMatters, the group spent more than $3 million on statewide elections in 2022.

Cash holdings of the California branches

California

Business

coalition

Governing for California

Action Committee

Governing for California

Courage Committee

Governing for

California

network

Committee

Governing for

California

courage

Committee

Governing for

California

Action Committee

California

Business

coalition

Governing for

California

network

Committee

Chart by Xueer Lu. Data current as of June 30. Data source: California Secretary of State.

According to state records, the individual branches had a total of $1.59 million in the bank as of June 30. The San Francisco branch is the richest, with $246,125 in cash. The group also has four separate state-level political action committees with about $730,000 in cash on hand that fund state and local candidates.

The eight Govern for California divisions involved in San Francisco elections have spent a total of $28,500 on the 2024 election so far, including a $500 donation to Mark Farrell’s mayoral campaign. Since 2016, Govern for California has spent about $94,000 on San Francisco elections, according to city records.

Prior to the March primary, Govern for California chapters also donated about $10,000 each to Philhour and Mahmood for their successful Democratic Central County Committee races. San Francisco’s $500 donation cap does not apply to elections for the DCCC, a state board. Govern for California chapters also donated $5,500 to Lanier Coles, who also won a seat on the San Francisco DCCC.

Donations are only a small part of the total funds

Donations to candidates for San Francisco district supervisor represent only a small portion of their total fundraising: 3.4 percent for Chandler in the 9th District, for example, and 1.9 percent for Philhour in the 1st District.

But in races where winners and losers are separated by hundreds or sometimes only dozens of votes, the amounts can be significant.

“It may not seem like much, but having $4,000 on hand could be the equivalent of an entire employee’s monthly salary in a race where 100 votes can make the difference between being elected and not being elected,” said 9th District candidate Jackie Fielder, a public banking advocate and democratic socialist.

Fielder, who is running to succeed retiring Supervisor Hillary Ronen, initially accused her primary opponent of profiting from the arrangement. She said Chandler “should be investigated for evading campaign finance laws” and that a third party was planning to file a complaint with the San Francisco Ethics Commission.

District 5 County Executive Dean Preston’s campaign, through a spokesperson, denounced the agreement, calling Govern for California a “conservative PAC with multiple corporate heads.” District 7 County Executive Myrna Melgar called it an “anti-union group” and said, “I trust the regulators will look at (the group’s spending) and decide whether or not they are skirting the law.”

Most of the donations to Govern for California came over a two-week period in late April and early May. Some of the chapters, which are separate legal entities, are located outside of San Francisco, such as the chapters in Santa Cruz and Palo Alto.

Most candidates who received funding from Govern for California did not respond to requests for comment. Sauter said his campaign is following all relevant laws.

For her part, Philhour hit back at those who raised concerns about the agreement, saying they should instead focus on the fundamental issues that concern voters.

“Imagine there are only 95 days until Election Day – and instead of centering the voices and concerns of voters demanding real change, you create a distraction based on a flawed and confusing campaign finance system designed to keep political newbies out,” she said. “It’s the same old rhetoric that got us here in the first place, and San Francisco residents are sick of it.”

Disclosure: This reporter briefly worked with Jackie Fielder at The Worker Agency, a communications firm, in 2018.

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