“It seems to me that in this discussion, it’s been a given that a charitable organization is saying they need to do this because it’s a significant portion of their fundraising,” said David J. Randell, vice chair of the Ethics Commission. “But I haven’t seen any evidence of that at all from any charitable organization. Period.”
SB671 has already had a checkered past, beginning as sweeping ethics reform legislation, morphing into an overreaching measure to allow lawmakers to accept more gifts than they currently can, and then finally being amended into its present state, which passed the Senate and is now being considered by the House.
Lawmakers asked the commission to review the latest version and provide testimony as it’s considered by two House committees.
The current bill was intended as a compromise between lawmakers, the ethics commission and nonprofits.
After ethics commission Executive Director Les Kondo wrote an opinion barring lawmakers from accepting a Hawaii Institute for Public Affairs (HIPA) fundraiser ticket valued at $200 per person, nonprofits fought back.
They supported the first amended version of SB671 — a bill that would have drastically loosened state gift laws — authored by Senate Majority Leader Brickwood Galuteria. Nonprofits argued if they couldn’t give free tickets to lawmakers, attendance and donations at fundraisers would drop.
Despite the nonprofit concerns, the bill was eviscerated, in large part due to testimony from Kondo pointing out that lawmakers and employees would have been able to accept gifts from unions, lobbyists, and others trying to influence a vote. But Kondo offered a suggestion to the Senate committe considering the bill, saying perhaps a sliver could be carved out specifically for 501(c)(3) organizations, such as the American Red Cross.
After a little more finagling with the bill’s language, the Senate settled on a version that created a sole exemption for lawmakers and state employees to accept free tickets to dinner events and other fundraisers like golf tournaments, if specifically for 501(c)(3) fundraisers.
That’s the bill the commission reviewed and decided to oppose. (The commission typically has five members, but there is currently a vacancy.)
The commission raised several concerns about SB671 SD2.
Chair Maria J. Sullivan pointed out that while nonprofits did fall under the 501(c)(3) classification, many were still vendors with compensated employees.
“True, they do a lot of charitable work for people that are in need across the state of Hawaii out of their nonprofit dollars, and so, if they didn’t fill that, potentially, the state of Hawaii would have to fill it,” Sullivan said. “But also, a number of 501(c)(3)’s, frankly, I believe are vendors for the state… A number of 501(c)(3) are compensated, you know, they put the staff together and frankly, they fight hard for those contracts and to receive that stipend from the state of Hawaii. So, although a nonprofit, they’re a vendor.”
Kondo acknowledged Sullivan’s point was a good one and that some nonprofits do lobby the Legislature.
Board member Cassandra J. Leolani Abdul also pointed out that many nonprofits have for-profit arms, while many for-profit organizations have nonprofit arms.
“So, you know, I think it’s a much more complex and convoluted question and not something that you can come up with easy answers for,” Abdul said.
Vice Chair Randell added his two cents. He said he had not seen any proof from nonprofits or lawmakers that free tickets for politicians were essential to nonprofit revenue.
“Since I’m sitting here talking, I have to go on what my basic gut feeling is, and I have a very hard time thinking that, for instance, the HIPA organization… the fact that some legislators couldn’t go to that fundraiser significantly affected the fundraising, when I saw that it was being held at the Hilton Hawaiian Village, I’m going to guess there were probably 50 tables there,” Randell said.
“So therefore, when I think about it, how would a table of 12 legislators significantly adversely affect the fundraising? I don’t think it probably did. So I’m not willing to take the given, which seems to be the major point of argument from the legislators that their attendance is a significant part of the 501(c)(3) fundraising. I need some proof of it. And it hasn’t been presented either by the legislators or the 501(c)(3)’s.”
Kondo replied to Randell, saying he did not disagree that there is no proof of the connection between lawmakers and fundraising. But, he said that from a practical standpoint, the situation was different. He said that while the 2011 HIPA dinner may not have been greatly affected by the lack of lawmakers, the situation could change next year.
“Next year, maybe, those same lobbyists may not buy that table because they know they cannot fill it with legislators,” Kondo said. “Where the legislator also plays the important role, is the incentive or the bait. If they can’t be brought by the lobbyist, it’s my speculation, my assumption, that if they are invited by the event, the lobbyist still comes because they get access to the legislator. I’m speculating — and no one says this because I think it would leave a bad taste in people’s mouth for people to understand that the state official is being used as the bait to attract people to come to the event — but as a practical matter, I think that’s probably reality.”
Les Knudsen was the only member of the commission who didn’t vote to oppose the bill. The commission directed Kondo to testify in House committees that it would not support SB671 SD2, but that there were likely scenarios where lawmakers should be able to attend nonprofit events, which would need to be further discussed.
The bill has been referred to the House Judiciary and the Legislative Management committees.