Shining a light on ‘dark money’ and online ad spending

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There’s nothing less transparent than “dark money.” Secretive political groups that don’t disclose their donors have run free for decades without oversight, but they now face an unprecedented level of scrutiny as the 2020 election kicks off.

Dark money groups in 2018 spent $148 million reported to the FEC and funneled $176 million to super PACs and hybrid PACs, spreading dark money into the coffers of hundreds of mainstream political spenders. Groups that don’t fully disclose their donors spent more money than groups that disclose the true source of their funding — $539 million vs. $537 million.

FEC-reported dark money spending has surpassed $1 billion since 2006. Still, those numbers don’t tell the whole story with dark money — nothing does. Though these groups are spending less on independent expenditures, they are shelling out additional millions on unreported “issue advocacy” ads that often mention candidates but don’t explicitly advocate for or against their election campaign.

Members of Congress have introduced countless bills to curb dark money, but only one has picked up serious momentum.

The Democrats’ For the People Act of 2019 (H.R. 1), which passed the House last week on a party-line vote, consists of several measures to expose the funders behind dark money groups and political ads, including ads published online and on social media that aren’t currently regulated under primitive campaign finance laws.

Perhaps most important, and powerful, among them is the DISCLOSE Act. The measure would require political nonprofits that spend on independent expenditures and electioneering communications to disclose donors that contribute more than $10,000. In an attempt to reduce abuse of issue advocacy ads, the bill requires spending on any ad that supports, promotes, attacks or opposes a candidate to be reported to the FEC. It also mandates reporting for any ad that merely refers to a candidate within 120 days of an election or 60 days of a primary or caucus — double the current timeframe.

If enforced properly, the new rules would force general election-focused political nonprofits such as Majority Forward and the U.S. Chamber of Commerce to disclose their donors. It would severely limit Demand Justice and Judicial Crisis Network — dark money groups that spent millions in non-FEC disclosed funds to attack and defend Donald Trump’s Supreme Court picks, respectively.

The act also prohibits contributions from shell companies — a growing trend among groups trying to avoid disclosure.

In an addition that is sure to rile not just dark money groups but all politically-active organizations, H.R. 1’s Stand By Every Ad Act makes groups disclose their top donors in campaign-related video and audio ads.  

H.R. 1 also goes into online ads, picking up where 2017’s Honest Ads Actsupported by the Center for Responsive Politics and numerous pro-transparency organizations — left off. The section brings online political ads into the world of FEC regulation, requires in-depth exclaimers over who is funding them and bans foreign nationals from purchasing them.

Digital political ad spending is experiencing tremendous growth. Facebook political ads accounted for more than $350 million from May 2018 through Election Day. Another $75 million went to Google during the same period. Digital spending isn’t typically reported to the FEC, but CRP estimates House candidates disclosed spending more than $33 million in 2018, up from $16 million in 2016.

Following outrage over Russian-purchased ads meant to influence the 2016 election, Facebook, Google and Twitter launched their own databases to track political advertising. However, it’s clear lawmakers don’t want to rely on the social media giants to track the spending or decide which ads qualify as “political.”

By the end of 2018, all three companies endorsed the Honest Ads Act, urging Congress to come up with its own rules for political ads that show up on Americans’ timelines.

Not everyone agrees on the methods in which H.R. 1 forces disclosure. Though the American Civil Liberties Union (ACLU) endorsed most of the bill’s provisions, the organization ultimately opposed the bill due to provisions dealing with increased disclosure of political speech.

The ACLU said the dark money-related measures “unconstitutionally chill” free speech and infringe on the privacy of advocacy organizations. The group references dark money nonprofits such as Planned Parenthood and the National Rifle Association as being essential to public discourse and argued they should not be forced to reveal their donors for running politically-focused ads.

“These groups need the freedom to name candidates when discussing issues like abortion, health care, criminal justice reform, tax reform, and immigration and to urge candidates to take positions on those issues or criticize them for failing to do so,” the ACLU stated.

Conservative groups and lawmakers commonly use the “free speech” argument used by the left-leaning ACLU. The Institute for Free Speech issued a lengthy analysis of the bill, stating “groups will be silenced when trying to participate in public debate on important policy issues.”

Campaign finance reform organization Democracy 21 disagrees with the idea that the disclosure measures are unconstitutional, noting that the Supreme Court in its Citizens United v. FEC ruling said, “we reject Citizens United’s contention that the disclosure requirements must be limited to speech that is the functional equivalent of express advocacy.”

The strong difference in opinions shows just how much weight is held in the current political climate by issue advocacy ads — which don’t expressly advocate for or against a candidate. Campaign finance reformers see them as skirting FEC rules and avoiding disclosure of spending and donors. Other groups see them as being important parts of public discourse.

Regardless of perspective groups’ opinions on H.R. 1, it has little to no chance of passing the Senate. After all, Senate Majority Leader Mitch McConnell calls it the “Democrat Politician Protection Act.”

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