Blog — Campaign Finance Reform

January 15, 2015

CREW Urges FEC to Strengthen Disclosure and Circumvention Regulations

By Adam Rappaport

FECWhen you combine a broken Federal Election Commission and Supreme Court decisions like Citizens United and McCutcheon, the result is a broken campaign finance system.  That is why CREW jumped at the chance to tell the FEC how to strengthen its regulations to improve donor disclosure and stop circumvention of contribution limits in response to the FEC’s public solicitation of ideas on how it should change its rules on a broad range of issues.

Read more about CREW's comments to the FEC

Disclosing the sources of political spending is critical to deter corruption, help voters evaluate campaign messages, and hold elected officials accountable.  Although the law currently requires disclosure of donors in many circumstances, the FEC’s regulations fall short of those requirements.  As a result, outside groups are allowed to spend hundreds of millions of dollars on political advertisements while keeping their donors secret.

Most of this dark money spending is independent expenditures – advertisement and other activities that expressly advocate the election or defeat of a candidate.  The law requires groups that make independent expenditures to disclose their donors who gave money for the purpose of influencing a federal election and donors who gave for the purpose of furthering an independent expenditure.

The FEC’s regulations, however, are much narrower.  They only require disclosure of contributors who gave the group money for the purpose of furthering the reported independent expenditure.”  The seemingly minor change effectively guts the law.  Instead of requiring groups to disclose donors who gave money to be spent on federal elections or independent expenditures generally, the regulations only require disclosure if the contributor specified the money be used for a particular advertisement or other independent expenditure.  As a result, groups are able to evade the law’s disclosure requirements simply by claiming none of their donors targeted their money for a particular ad.

The FEC’s regulations and legal interpretations similarly limit the law’s requirement that groups who made electioneering communications – ads run close to the election that mention a candidate but don’t explicitly advocate voting for or against the candidate – disclose all their donors.  Bootstrapping on its interpretation of the independent expenditure rules, the FEC requires disclosure only of donors who gave money for a specific electioneering communication.

In its comments, CREW strongly urged the FEC to change its rules on independent expenditures and electioneering communications to conform with the broader language of the law itself.

CREW also pressed the FEC to address the repercussions of the Supreme Court’s 2014 decision in McCutcheon v. Federal Election Commission that eliminated the law’s overall limits on contributions to federal candidates, parties, and political action committees.  The overall limits were put in place to stop donors from circumventing the limits on contributions to particular candidates.  It is easy for a donor who has given the maximum to a candidate to give more money to another candidate or a PAC, and for that money then to be transferred to the first candidate, thereby circumventing the individual limits.

The Supreme Court mistakenly thought the FEC’s rules were strong enough to prevent that kind of trickery.  Those rules are supposed to treat any contribution given to one candidate or PAC that is “earmarked” in any way for another candidate – even by an implicit agreement or other indirect manner – as a contribution to the candidate who ultimately receives the money.  The FEC, however, has enforced those rules very weakly, finding earmarking only when the contributor explicitly and unquestionably designated the contribution for a particular candidate, as demonstrated by irrefutable documentary evidence.  To deal with this weak enforcement, CREW today urged the FEC to establish new and stronger rules for determining when a contribution is earmarked.

CREW also asked the FEC to fix its rules dealing with affiliation between two political committees.  More and more, super PACs supporting a candidate are run or funded by parents and close relatives of the candidate.  CREW recommended that the FEC’s rules explicitly consider this kind of relationship in deciding whether to treat contributions to those super PACs as contributions to the candidate.

The past few election cycles have revealed a dramatic increase in federal campaign spending, with an equally dramatic decrease in disclosure of the people and companies paying for that spending.  The FEC’s regulations are part of the problem, and the agency should take this opportunity to fix them.

CREW Analysis: The Role of Money in the 2014 Elections

Following the 2014 election, CREW analyzed the transformation of American politics and how outside spending impacted both Democrats and Republicans. Read More ›

Shape-Shifting Nonprofit Is Major Funder of a Run-and-Gun Super PAC

Groups such as Ohio's A Public Voice are shape-shifters — organizations that pop up to influence elections or ballot initiatives and then change their names and focus, making it even harder to track the money behind them. Read More ›

Freedom Partners Makes Things Even More Complicated

The financial nerve center of a network of secretive politically active nonprofit groups linked to the Koch brothers has filed a new tax return that provides some tantalizing clues to its activities during the current election cycle. Read More ›

Dark Money Groups Work Together to Shield Donors’ Identities in State Elections

Dark money nonprofit groups are applying their playbooks to state races, spending vast sums to shape the outcome of contests lower on the ballot while transferring money from group to group to shield donors’ identities. Read More ›

Political Operative Connects Missouri Dark Money Group to PAC It Funded

One woman is the key connection between a PAC that tried to influence Missouri state elections and the dark money nonprofit that funded it. Read More ›

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