Pass the DISCLOSE Act! Why the Senate Needs to Unmask Secret Political Donors
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There’s no question that our democracy is in desperate need of transparency. Super PACs often take the heat for being secret campaign slush funds, but in 2010, nonprofits outspent super PACs three to two. And 90 percent of that money – almost $84 million – came from groups that never disclose their donors. So far in 2012, these groups have accounted for two-thirds of all political advertising purchased by outside groups.
But the veil of secrecy shrouding our elections could be lifted by Congress – if it musters the willpower. The Senate is about to vote on a crucial piece of legislation called the DISCLOSE Act, which would go a long way toward lifting the veil of secrecy shrouding our elections. It would require all super PAC, nonprofits, corporations, labor organizations and trade associations that spend more than $10,000 or more on campaign-related advertisements to report the source of their funding to the Federal Election Commission. The FEC would then be required to post the disclosure reports online within 24 hours.
Super PACs already are subject to some disclosure requirements, but corporations, nonprofits and trade associations like the U.S. Chamber of Commerce are not required to report their donors. That’s not to say that super PACs haven’t been playing the secrecy game. The DISCLOSE Act will crack down on a handy loophole super PACs have been exploiting to keep their donors hidden: the use of 501(c)4s, or “social welfare” nonprofit organizations.
Unlike super PACs, nonprofits do not have to disclose their donors so long as politics is not their “primary purpose.” However, the FEC has no exact definition for what constitutes excessive involvement in politics. This ambiguity leaves the door wide open for hyperpolitical nonprofit organizations that are essentially super PACs in everything but name, and should therefore be subject to disclosure, to spend away.
Crossroads GPS is one such beast; it is a faux nonprofit affiliated with the super PAC American Crossroads. Crossroads the super PAC is subject to FEC reporting requirements, but Crossroads GPS can take unlimited money from anyone, corporations included, and not disclose its donors. Since the FEC can’t decide where the threshold for “primary purpose” lies, GPS can run so-called issue ads that pertain to the election, or it can simply transfer the funds to American Crossroads, its super PAC. American Crossroads can then just list GPS as its donor, and we can all scratch our heads and wonder where the money came from.
If it seems far-fetched, keep in mind that as of April, $8 of every $10 raised by Crossroads GPS went to the non-disclosing GPS group. Together the two Crossroads groups plan to spend $300 million in the 2012 election, and the bulk of it is likely to be undisclosed.
Funneling money through nonprofits is one way super PACs get around those pesky reporting requirements, but that’s not the only trick they’ve got. Last year, the super PAC Restore Our Future reported a $1 million contribution from a corporation called “W Spann LLC.” If that doesn’t ring a bell, that’s because it doesn’t exist. Interestingly enough, W Spann LLC has the same New York address as Mitt Romney’s former company Bain Capital. After much controversy a former executive from Bain came forward to say the donation was his and that he had his lawyer create a fake corporation to keep the donation secret.
There’s no way of saying if this happens frequently, but any person looking to use a corporation to give money to a super PAC is perfectly capable of pulling the same stunt (though he or she would probably be a little more careful with the address next time).