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Michigan Legislative Update

Week of April 9, 2015

by Judy Augenstein

Michigan law bans corporations from making direct contributions to lawmakers' candidate committees.  But that does not stop corporate dollars from flowing to other organizations tied to top state officeholders and in these cases, the dollars can be much more difficult to track.  There are more than 40 nonprofit tax-exempt organizations established in Michigan that appear to have direct connections to lawmakers, state officials or their staff members.

Some of the organizations are 501 (c) (4) s that purportedly have community minded social welfare missions.  Others are political organizations established under Section 527 of the Internal Revenue code, which often focus on so-called "officeholder expenses". While much of these groups' activity goes undisclosed, 11 of the largest organizations do provide contribution disclosures.  Of those 11, some $1.8 million was raised in 2013 and 2014 with only 4.3% coming from individuals.  Much of the balance came from corporations, trade associations, other nonprofits or Native American tribes.

Many legislators have been encouraged to start nonprofit organizations as a way to raise money by taking corporate donations.  Many say companies would rather give to 527 and 501 (c) (4) organizations than give to a candidate committee.  Although the competition for traditional candidate campaign money is fierce, it can be easier to collect money through nonprofit organizations, multiple sources said. Most Michigan legislators have a traditional "PAC Committee" and an "officeholders account."  The term limit law requires Michigan legislators to be constantly campaigning and running for office.

The Legislature will return from spring recess on Tuesday, April 14. 

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