In summary
The report laid out dozens of potential violations by Low involving a non-profit tech foundation for which he raised a half-million dollars.
California’s campaign finance investigators allege that former Assemblymember Evan Low — who raised Big Tech money for a foundation co-managed by his chief of staff — then received non-monetary donations worth more than $113,000 from that foundation for his re-election campaign.
If proven true, such donations — and a lack of timely disclosures from Low and the nonprofit foundation — would violate the state’s reporting requirements and contribution limits, according to a staff report from the California Fair Political Commission.
The commission report laid out dozens of counts of potential violations by Low and the nonprofit foundation— violations its enforcement division said it had probable cause to believe took place. The findings represent the first publicly available details from a commission-initiated, five-year investigation into Low and the tech foundation. That probe was launched the same day CalMatters published the third installment of its 2020 “Sweet Charity” series, which included an examination of the relationship between Low and the foundation.
It will be up to the commission to determine whether the alleged violations occurred. The staff report simply means the agency believes that the evidence it collected supports a “reasonable belief or strong suspicion” that Low, his 2020 Assembly campaign committee, and the foundation broke the law.
A lawyer for the tech foundation disputed the commission staff’s findings. Low and his attorney did not respond to CalMatters’ questions.
Low — a Campbell Democrat who served as a co-chair of the state Legislature’s Tech Caucus at the time — sought donations from tech giants to the Foundation for California’s Technology and Innovation Economy, a nonprofit created by the caucus and run by three people closely tied to Low, CalMatters previously reported. The foundation held annual policy summits, where tech companies paid tens of thousands of dollars each to gain access to state lawmakers behind closed doors.
The Fair Political Practices Commission report said its enforcement division investigators found sufficient evidence to suggest that, between 2018 and 2020, Low failed to disclose, in the time required by state law, $227,500 he raised for three nonprofits, including $97,500 for the tech caucus foundation.
The report further said there is probable cause to believe the tech caucus nonprofit made $113,524 in “non-monetary contributions” — typically donated goods and services under the state’s definition — to benefit Low’s campaign between December 2019 and February 2020. That would potentially exceed the contribution limits, which were $4,700 for individual donors giving to state lawmakers at the time.
Shery Yang, a commission spokesperson, would not specify what those contributions entailed.
The foundation did not disclose any campaign or lobbying activities on its federal tax documents for 2019 and 2020. “The foundation did not make any contribution or provide any other benefit to Evan Low’s campaign and had no reporting or disclosure obligations,” said Stephen Kaufman, an attorney representing the nonprofit, stating the foundation will “vigorously defend” the case.
The commission report raises significant ethics concerns, advocates say, because it suggests that Low and a closely affiliated nonprofit foundation potentially traded benefits.
“It’s rational for the public to come to the conclusion that it’s like ‘you scratch my back and I scratch yours,’” said Sean McMorris, California Common Cause’s transparency, ethics, and accountability program manager.
And a lack of timely disclosure of those transactions would hinder the public’s “right to know and to evaluate the behavior of a legislator accordingly,” said Steve Glazer, a former Democratic lawmaker who led the Senate Elections Committee. “It flaunts the letter and spirit of the law.”
Low — whom Glazer labeled “one of the most prolific, successful fundraisers in the Assembly” — represented the ultra-wealthy Silicon Valley for a decade. Last year, he ran for Congress, surviving one of the closest primaries in California history before ultimately losing to former San Jose Mayor Sam Liccardo in November.
Many state officials raise money for nonprofits. Those funds are called “behested payments” — money that donors give to a person, nonprofit or a state agency at an official’s “behest” for legislative, governmental or charitable purposes.
He is also one of many California officials to spark controversy for directing funds to organizations closely affiliated with themselves. Attorney General Rob Bonta, for example, created a foundation that collected money from interest groups and gave some of its money to his wife’s employer in 2018.
The tech caucus foundation Low fundraised for was formed by Gina Frisby, Low’s former chief of staff; Alina Hernandez, an Assembly employee who worked with Low on the legislative LGBT caucus; and Gilbert Wong, who helped Low launch his first Assembly campaign.
A behested payment is not supposed to directly benefit the official who requested it. But still, it can be used to build relationships between officials and donors, and to elevate a politician’s profile and image, said Tracey Frazier Wigglesworth, a campaign finance and election attorney who worked at the Fair Political Practices Commission’s enforcement division for more than five years.
“If an official repeatedly steers donations to a particular nonprofit, they may gain influence over the organization’s leadership, policies, and activities,” Wigglesworth said. “The nonprofits that benefit from the behested payments may then endorse policies or political positions that align with the official’s agenda.”
But what the probable-cause findings in Low’s case demonstrate, McMorris said, is a potential for abuse of the state’s campaign finance system.
“This is an example of how nonprofits can be exploited by both politicians and political donors as well as special moneyed interests to curry favor and buy influence with elected officials,” he said.
Did Low and the nonprofit coordinate their spending? That remains unclear.
But the answer could affect how heavy the penalties would be if the commission decides that the violations did occur.
There are 44 counts of violations proposed by the commission staff based on the assumption that there was coordination, Yang, the commission spokesperson, told CalMatters. But the staff also listed six alternate violations that would apply instead if that assumption is disproven, which could lead to a much lower fine if the commission decides to pursue monetary penalties. Under the state’s Political Reform Act, the commission can seek up to $5,000 in fines for each violation.
The commission can refer the case to an administrative law judge for a hearing or conduct the hearing itself in the presence of a judge, Yang told CalMatters. But she said she could not say when the hearing would happen.”
Big checks from Apple, AT&T, Facebook
The staff report said there’s probable cause to suggest that between February 2018 and April 2020, Low failed to timely disclose 16 behested payments to three nonprofits. State law requires officials to disclose behested payments that total $5,000 or more from a single donor in a year and report them within 30 days of meeting that dollar threshold.
In 2020, Low told CalMatters he believed he did not have to disclose funds he raised for the tech caucus foundation because he himself did not directly solicit it. But the commission’s guidance states that the officials must report the transactions if they were made “at the request, suggestion, or solicitation of, or made in cooperation, consultation, coordination or concert with the public official.”
It isn’t uncommon for officials to disclose behested payments late. In fact, the Fair Political Practices Commission allows some of those cases — often first-time violations or cases involving small amounts of payments — to go through its “streamline” process that often results in low to no penalties.
But Low’s case stands out partly because of “the sheer number of counts and the amount of money involved,” McMorris said. “What is laid out so far is pretty incriminating.”
Low failed to timely disclose almost $100,000 he raised for the tech caucus foundation from five donors between February 2018 and April 2020, according to the commission staff’s probable- cause findings.
That includes $35,000 from Apple in November 2018, $30,000 from AT&T in January 2020, and $10,000 from Facebook in April 2019. Low’s behested payment reports — obtained by CalMatters from a public records request — show that all of those donors made the contributions to sponsor the tech caucus foundation’s annual policy summit, where tech industry lobbyists meet state legislators behind closed doors.
Low failed to report those three payments until May 2020, nearly three months after CalMatters’ revelations, according to his behested payment filings. That month, Gina Frisby, who was both Low’s chief of staff and the president of the tech caucus foundation, told the Assembly Rules Committee in a letter that those payments “were only recently identified as behested payments.”
Low was also late to report two other payments also made to sponsor the tech policy conferences: $17,500 from cable TV company Cox Communications and $5,000 from the San Manuel Band of Mission Indians, both in 2018, the commission believes.
But the tech foundation wasn’t the only nonprofit Low apparently helped channel money into.
Low got donors to give the tech foundation half a million dollars
In separate counts, the commission staff found probable cause to conclude that Low failed to timely disclose $55,000 he raised for Equality California, a nonprofit advocating for LGBTQ rights. The money was to help pay for the group’s San Francisco Gala in 2020, according to Low’s behested payment filings. The staff also believed that Low didn’t disclose on time $75,000 he raised for the California Legislative LGBT Foundation, a nonprofit tied to the state Legislature’s LGBTQ Caucus, where he was chair for four years.
All told, during his time as a state legislator, Low has now reported raising $505,000 for the tech caucus foundation — a top recipient of payments at Low’s behest, state records show.
Even more intriguing is the non-monetary contributions the nonprofit allegedly made to Low’s campaign, which, if proven, could run afoul of federal tax law.
Under the state’s definition, non-monetary contributions can include donated goods and services, discounts that are not publicly available, and salaries employers must pay if an employee is spending at least 10% of their work time on the political campaign. The amount of those contributions is calculated by the fair market value, and campaigns must report non-monetary contributions exceeding $100 from a single donor in a year.
The staff report said evidence suggests the nonprofit made seven non-monetary contributions to benefit Low’s campaign totaling $113,524, between December 20, 2019 and February 10, 2020. That includes two $55,000 installments, the report says.
The nonprofit denied ever making those contributions. As a 501(c)(3) nonprofit organization, it is prohibited from “directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office,” according to the Internal Revenue Service.
“Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity,” the IRS website said.
On its federal tax documents for 2019 and 2020, the foundation said it did not engage in any campaign or lobbying activities. Nor did it register with the state as a major donor, which the commission staff report alleges violated state law.
The only spending related to lawmakers that the foundation listed was money spent “educating legislators about developments within the technology industry.” The foundation reported spending $470,183 on that in 2019, including $73,000 in grants, and $12,694 in 2020.
Low’s campaign also did not report any non-monetary contributions from the nonprofit during that time, state campaign finance data shows.
The IRS restriction on 501(c)(3) nonprofit applies to monetary and non-monetary contributions alike, said Ellen Aprill, a scholar at the UCLA School of Law who specializes in nonprofit tax law.
But if a 501(c)(3) nonprofit suspected of breaking the law could prove that it has made similar non-monetary contributions to others on a non-partisan basis, Aprill said it might not violate the federal law.
“If (it) always engaged in conduct at the same cost for everyone, for example renting their mailing list to whomever at a certain cost, it would be OK if a political campaign were among those who rented the list,” she said in an email.
The legal question aside, however, the commission staff’s findings alarmed ethics advocates.
“At a minimum, the ethics is murky here,” McMorris said.
“If it was just Evan Low soliciting contributions for this nonprofit that was doing things that … adhere to the nonprofit’s mission, there’s nothing wrong with that,” he said. “When that happens and then the nonprofit organization does something in return that highly benefits either Low personally or his campaign in some way, then yes there is an ethical problem.”
If the findings hold true, Glazer, the former lawmaker, said a key question to answer is whether Low was aware of the foundation’s giving.
“If he knew that the foundation was going to use these donations to help his campaign, that would be unethical,” said Glazer.
But, Glazer noted, Low had an easy campaign to run in 2020. His campaign entered the year with $2 million in the bank. He faced no in-party competition and defeated his Republican challenger handily.
“I’m just pointing out … why it’s so baffling to me that this foundation would engage in this conduct at a time in which it was completely irrelevant to his re-election prospects,” Glazer said. “So what were they doing? Where was the money spent, and for what purpose?”
Over the years, reported behested payments have soared. Lawmakers reported just $105,000 in behested payments in 2011. And by 2019, lawmakers reported $2.9 million in just that year, with $13.3 million reported over nine years.
By the end of last year, the total amount reported over more than a decade topped $505 million. Reported behested payments spiked in 2020 during the COVID-19 pandemic, with officials reported soliciting $237 million that year alone, according to state data.
Gov. Gavin Newsom accounted for most of that spike. In 2020, Newsom alone solicited more than $226 million in behested payments — six times as much as what his predecessor, former Gov. Jerry Brown, reported raising in his entire eight-year tenure. Most of the money Newsom raised went to state programs, including one promoting the importance of masking and an effort to provide rehabilitation and housing for homeless people. The donors were largely corporations including Facebook, Google and Blue Shield of California, sparking concerns about their sway over the state government.
Since taking office in 2019, Newsom has reported raising more than $321 million in behested payments, state data show.
Donors may see an incentive in contributing to nonprofits at an official’s behest, instead of to the official directly. That’s because there’s no contribution limits on behested payments, and the dollar threshold for disclosure is higher for behested payments than it is for campaign contributions.
“It’s become abundantly clear over the last decade that behested payments are now a huge loophole in our campaign finance system,” McMorris said. “People who want to buy favor have figured that they are actually a safer way to buy favor, because they can be anonymous unless they reach a certain threshold (for reporting).”
Over the past five years, the Legislature hasn’t passed any legislation to tighten regulations of behested payments.
One attempt, Senate Bill 1367 in 2022, would have prohibited the state from awarding no-bid contracts to donors who made contributions at Newsom’s behest within the preceding year. Introduced by Sen. Scott Wilk, a Santa Clarita Republican, it never made it to the Senate floor.
“If the politicians are enjoying what they can do under current behested payment law,” McMorris said, “…they are not going to be too willing to change it.”
