A Bee Exclusive: Secrecy ends for travel donors

Gov. Arnold Schwarzenegger can no longer plead ignorance about which corporate contributors finance his trade jaunts overseas.

The obscure nonprofit that funds the governor's worldwide travels has abandoned – at least temporarily – its long-standing practice of hiding the identities of its donors.

In the four years of Schwarzenegger's governorship, the California State Protocol Foundation has raised millions to underwrite the governor and his staff's travels, but never disclosed the identities of those paying the bills.

The leaders of the nonprofit, which is closely aligned with the business lobby in Sacramento, have said that by keeping contributors' names secret, they were keeping Schwarzenegger – not just the public – in the dark about who pays for his globe-trotting ways.

"I have not the foggiest idea who is putting money anywhere," Schwarzenegger said in 2005, shortly before a trade mission to China.

But that changed Nov. 7 at San Francisco's de Young Museum, when Schwarzenegger and wife Maria Shriver headlined a fundraiser for the very same foundation. Attendees paid up to $25,000 for a seat at the head table with the governor and his wife.

It is unclear why the foundation decided to bring the donors into Schwarzenegger's full view, or whether it will continue. But government and nonprofit watchdogs say the series of events show the reasoning for secrecy was flawed from the beginning.

"It just shows the hypocrisy of it, frankly," said Bob Stern, president of the Center for Governmental Studies, a campaign watchdog group in Los Angeles.

Under state law, the donors at the San Francisco event must be disclosed within 30 days because Schwarzenegger technically solicited their donations.

Allan Zaremberg, president of the foundation and also president of the California Chamber of Commerce, has defended keeping donors confidential, saying there was no potential conflict of interest if Schwarzenegger was shielded from donors' identities. Zaremberg did not return calls for comment for this report.

In a written statement, the foundation said the governor simply attended because he was invited by event co-host Dede Wilsey, a prominent San Francisco philanthropist.

"The governor is committed to ensuring that California remains an economic powerhouse," said Charlotte Shultz, chair of the foundation and co-host of the fundraiser, in a statement. "He knows that we must take advantage of global trade opportunities and keep California a No. 1 attraction around the world."

Garry South, a Democratic political strategist who advised former Gov. Gray Davis, said Schwarzenegger's appearance would provide a financial boost to the foundation, which has spent more than $1 million in each of the last three years.

"Whenever you have the governor at the event, it's a major draw," South said. "When the governor is Arnold Schwarzenegger, it's an even bigger draw."

Schwarzenegger is not the first governor to use a tax-exempt nonprofit to pay for trips abroad. The previous three governors also undertook and privately paid for foreign missions.

The "host committee" created for then-Gov. Gray Davis did not initially disclose its donors either. But eventually the Democratic governor relented.

"The downside of withholding that information became more important than whatever upside was involved with keeping the donors secret," South said.

Stern, the campaign watchdog, said secrecy doesn't allow the public to scrutinize who is trying to curry favor with the Schwarzenegger administration.

Daniel Borochoff, president of the American Institute for Philanthropy, said the combination of secrecy and tax breaks for donors makes the protocol foundation "an example of how things have gotten out of hand in the nonprofit world."

Borochoff said there is an important history behind "nondisclosure and confidentiality" for nonprofits, citing the necessity of privacy for donors who give to socially unpopular causes, such as AIDS relief in the 1980s.

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• Call Shane Goldmacher, Bee Capitol Bureau, (916) 326-5544.