On a recent afternoon, more than a dozen California lawmakers gathered to discuss thorny issues impacting a state that is the cradle of technological innovation — but also suffering from wildfires, aging infrastructure, and vast economic inequality. On the agenda: how to maintain wireless phone service during emergencies; how to protect internet connection during power outages; and how work is being changed by artificial intelligence and the gig economy.
There, elected officials heard from an exclusive crowd: tech lobbyists and executives whose companies had paid for them to attend via thousands of dollars in donations to a nonprofit created by the Legislature’s Technology Caucus. For $50,000, contributors could moderate and pick a panel topic, according to an invitation to the event, billed as a “Technology Policy Summit.” A $25,000 donation allowed them to place someone on a panel. And $10,000, the invitation says, would buy attendance at the two-day event, including dinner with lawmakers at a steakhouse where the regular menu feaures $115 filet mignon.
Who paid for this access to the elected officials whose agenda this year will likely include regulating massive power shutoffs and changes to a controversial labor law impacting the gig economy?
The public doesn’t get to know.
Federal law does not require charities to disclose the identities of donors, even if, like the Tech Caucus’ foundation, they are closely tied to elected officials. California law, however, does require elected officials to disclose payments made at their request to nonprofits and other organizations.
As the number of nonprofits run by lawmakers or staff has grown in the last decade, most have publicly reported donors to the state’s political ethics commission. But the Foundation for California’s Technology and Innovation Economy — formed in 2017 and overseen by three board members with close ties to the leader of the Tech Caucus, Democratic Assemblyman Evan Low of Campbell — last year stopped disclosing where its money comes from.
The choice highlights the potential for secrecy in the growing niche of nonprofits run by government officials. “Legally they’re not required to give a lot of detail, which is one reason these groups can be so opaque and remain in the shadows,” said Anna Massoglia, a researcher for the Center for Responsive Politics, a Washington D.C. based group that tracks money in politics. “It just depends on what a group chooses to disclose.”
By not telling the public where their money comes from, nonprofits affiliated with politicians may “allow not only buying influence, but also doing so without the public scrutiny that would ordinarily come through a disclosed campaign contribution,” said Rick Hasen, a professor of law and political science at University of California, Irvine.
Across the nation — and the political spectrum — political nonprofits have been criticized for hiding their donors and operating outside the bounds of campaign finance law. In President Donald Trump’s first year in office, a nonprofit run by his former aides raised $22 million from unidentified donors, which paid for ads urging support for the GOP tax bill and Trump’s nominee to the Supreme Court. Before him, aides to President Barack Obama ran a nonprofit to advance his agenda. Though it identified its donors, the group was described by The New York Times as operating in “a campaign finance limbo with few clear rules (and) ample potential for influence-peddling.”
In California, the Legislature’s Latino Caucus took heat in 2011 after it stopped reporting who donated to its affiliated nonprofit foundation. Following critical press reports and pressure from the then-Assembly Speaker, the Latino Caucus changed gears and began disclosing foundation donors, which include powerful interest groups such as labor unions, oil companies and pharmaceutical manufacturers.
The foundation’s mission, according to its IRS application for nonprofit status, is to “educate Californians about the vital role technology and innovation plays in the economic and civic success of our state.” In the application, the foundation wrote that it would make donations to other charities, organize tours of tech companies, plan discussions with tech executives and legislators, and spend about $75,000 a year putting on the tech policy summit.
During 2017 and 2018, Low reported soliciting $290,000 for the foundation, including donations from internet and cable providers, tech trade associations, Uber and Walmart. The donations were reported to the Fair Political Practices Commission as payments made at Low’s “behest” — a transaction that takes place when a politician asks a donor to give to another group, typically a charity. California law requires elected officials report behested payments of $5,000 or more.
Then in 2019, Low stopped reporting behested payments to the foundation. He said that’s because he no longer does the fundraising himself. Low said he hired a legislative staff member to take over fundraising responsibilities as a job outside her duties at the Capitol, and contended the payments only have to be reported publicly if an elected official was involved in soliciting them.
“If it’s directly asked by me, that’s the disclosure requirement,” Low said in a brief interview. “We are completely compliant with the law.”
That interpretation seems to conflict with the law as described by the state’s political watchdog. The Fair Political Practices Commission says a payment must be reported as a behest not only when solicited by an elected official, but also when it is “made in cooperation, consultation, coordination, or concert with the public official.”
“If the elected requested or suggested in any way to do so, then, under the definition, it would require reporting,” FPPC spokesman Jay Wierenga said in an email.
Policy Conference for Sale
Clues about possible contributors were evident during the policy conference at the Marriott Residence Inn in Cupertino in early February, where at least 16 lawmakers listened to presentations from tech industry leaders. Outside the hotel, blue “Evan Low for State Assembly” campaign signs dotted the flower beds. Inside, logos for numerous companies rotated on a screen at the front of the closed conference room. Among them: Lyft, Doordash, Square, and the Chinese telecom behemoth Huawei, which both the Trump administration and House Speaker Nancy Pelosi have said should be banned from involvement in Western next-generation cellular networks because it is a security risk.
During the roughly 20 minutes Low allowed a CalMatters reporter to sit in, a panel of executives from major broadband companies explained how their technology works and fielded questions from lawmakers about how to keep customers connected to the internet during the blackouts that have grown increasingly common as California utilities cut power to avoid sparking wildfires.
Another session, which CalMatters was not allowed to attend, included executives from Postmates and Instacart — gig companies that are fighting a law passed last year that requires treating workers as employees instead of independent contractors. Assemblywoman Tasha Boerner Horvath said she found the discussion informative.
“It’s important to make sure that we are listening to the business community,” said the Democrat from Encinitas. “We’re taking that back, what they’re doing that’s innovative, and (thinking about) how do we dovetail that into a future of work that does work for all Californians.”
Most legislative caucuses hold annual policy meetings that are either exclusively for lawmakers, or include guest speakers that legislators invite regardless of monetary contributions because they want information on a specific subject. The Latino Caucus, for example, invited union leaders to speak at its policy retreat last year, during a discussion on closing the pay gap for Latina workers.
“We do serious policy work and we decide who is informing us on that,” said Assemblywoman Lorena Gonzalez, a San Diego Democrat who chairs the Latino caucus. “We don’t feel we could do that if someone else was setting the agenda.”
In a brief interview, Low refuted that the agenda for the tech policy summit was driven by donors, and one summit organizer said the top-tier contribution turned out to be negotiable, and no one paid it. But Low declined to answer follow-up questions about the invitation that makes the link explicit. Instead, he referred questions to the Tech Caucus foundation’s attorney.
“The Foundation for California’s Technology and Innovation conducts its fundraising in accordance with the applicable legal requirements, and has publicly disclosed its activities where it is required to do so,” attorney Stephen Kaufman wrote in an emailed response.
Even if the law permits selling speaking slots at a meeting, the practice raises questions about whether policymakers are getting the best information, said Jessica Levinson, a professor at Loyola Law School and former president of the Los Angeles Ethics Commission.
“It doesn’t look like a real symposium,” she said when told about the invitation tying the policy discussions to donations. “It just looks like a place for donors to buy facetime, buy prominence, buy control over the symposium. It doesn’t look like it’s designed for anything other than fundraising and showboating.”
Not so, said Carl Guardino, CEO of the Silicon Valley Leadership Group, who attended the conference the last two years and this year moderated a panel on transportation technology. He said he was not asked to pay to participate.
“The substance was incredibly strong,” he said. “A significant portion of my panel was for really appropriate, often hard, questions from the legislators.”
How the Money Is Spent
Several tech industry insiders declined to talk on the record about the Tech Caucus and its foundation, saying they feared doing so could lead to retribution.
Some said the caucus is struggling to assert its power as public opinion has begun to turn against the tech industry, and lawmakers face pressure to vote for labor laws and privacy regulations that the industry opposes. The caucus, one tech executive said, is in “a bit of a growing pain. Tech has become broader than what it used to be.”
Others expressed frustration at being asked for huge sums with little to show beyond the annual policy conference.
“The foundation has never made good on the major things they said they were going to do with their money,” such as charitable donations, a tech lobbyist said.
Kaufman, the foundation’s lawyer, said it has “made a number of charitable contributions,” including in 2019 to Code.org, which works to get girls and minorities into computer science studies, and to Social & Environmental Entrepreneurs, which helps launch social justice nonprofits, including one founded by another assembly member who reported requesting a payment from the Tech Caucus foundation.
The foundation reported just one charitable donation on its 2018 tax filing: $10,000 to the De Anza Community College Foundation. A board member of the De Anza college foundation, Gilbert Wong, also sits on the board of the Tech Caucus foundation. He helped Low launch his run for Assembly in 2011, according to press coverage from the time, and has donated to his campaigns. Low attended De Anza college and later returned as an instructor.
The foundation also put together a video from last year’s policy conference that features tech executives and politicians heaping praise on Low.
“There is no member of the state Legislature that cares and is focused as much on technology and its effect on society in California than Representative Low,” Gary Kremen, an investor who founded Match.com, says in the video, which was deleted from YouTube after CalMatters began asking questions about it.
Venture capitalist Steve Westly, speaking to the camera, adds: “What (Low) is doing is the smartest thing I have ever seen. This is exactly what California needs to keep the venture and the entrepreneurial sector and Silicon Valley close to Sacramento.”
The video shows that former U.S. Senator Barbara Boxer was a guest speaker at last year’s conference. In it, she says, “I am so impressed with the work of the Tech Caucus.”
Boxer worked for Lyft last year as the company fought a California bill to overhaul the gig economy by restricting the ability for companies to use independent contractors. Despite intense opposition from tech companies, it passed the Legislature with overwhelming support from Democrats, including those who participated in the tech policy conference. Lyft is now trying to fight it on the ballot.
Assemblywoman Gonzalez, who wrote the controversial bill, said she didn’t worry about her colleagues rubbing shoulders with tech executives at the conference.
“I feel confident in my fellow legislators that they can hear both sides of the argument and come out on the right side,” she said. “Gaining information is not necessarily going to affect how they vote.”
Nonprofits organized as 501(c)(3) charities — such as the Tech Caucus foundation — are granted a lot of leeway under the law in how they spend their money. But one forbidden activity is engaging in political campaigns for public office, said Phil Hackney, a professor at the University of Pittsburgh Law School who specializes in nonprofit tax law.
The Tech Caucus video does not make reference to an election or explicitly ask anyone to vote for Low. It’s a 5-minute long reel that would be too long to use as a typical campaign ad. Those factors mean it likely poses no issues for the foundation under federal tax law, Hackney said.
But it could indicate the foundation is pushing boundaries even if it’s not breaking them, he added: “Is this charitable, or is it for the assemblyman? It’s not a hard and fast thing.”
Assemblyman Calderon, who founded the tech caucus with Low a few years ago, said he was unaware of the affiliated foundation and had never talked with Low about raising or spending money for it. As the nephew of two former legislators who were convicted in a federal corruption case, Calderon said he has little interest in seeking donations beyond what’s needed for his own campaigns and ballot measures.
“I’ve always skewed on the side of, if you don’t have to create something that raises more money it’s probably better to just not do it, because it raises more questions than it answers,” Calderon said.
The case against his uncles, former Sen. Ron Calderon and former Assemblyman Tom Calderon, included an undercover FBI agent making a bribe by donating $25,000 to a nonprofit that Ron Calderon said they planned to use as an income stream after leaving office.
“That right there is a perfect example as to why these could be perceived as not being legitimate,” the younger Calderon said. “It only takes a couple to ruin it for everyone else.”
CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.