Supreme Court Orders Disclosure For Dark Money, As New Report Unveils Some Donors

Sep 18, 2018
Originally published on September 19, 2018 6:40 pm

The Supreme Court on Tuesday insisted that many donations to predominantly conservative political nonprofit groups — what's often called dark money — be disclosed, seven weeks ahead of the 2018 midterm elections.

The ruling closes, at least for now, a loophole that has allowed wealthy donors to finance aggressive ads while staying anonymous. Crafted by the Federal Election Commission nearly 40 years ago, the loophole flourished after the 2010 Citizens United ruling.

The court set aside an order issued by Chief Justice John Roberts on Saturday. The social welfare group Crossroads GPS, a defendant in the lawsuit, had fought to stall disclosure while it prepares to appeal. It failed in the D.C. Circuit Court of Appeals and then appealed to the Supreme Court.

The disclosure requirement is expected to apply to explicitly political ads by nonprofit groups for the remaining weeks of the campaign season.

The decisions came in a 2016 lawsuit against Crossroads and the FEC, by Citizens for Responsibility and Ethics in Washington. Chief Judge Beryl Howell of the federal district court in Washington, D.C., last month ruled in CREW's favor. She gave the FEC 45 days to replace the regulation, which it didn't do.

CREW's executive director, Noah Bookbinder, said the Supreme Court ruling "is going to affect spending in the 2018 elections. Groups that run these kinds of ads — ads that tell you to vote for or against another candidate — are going to have to disclose their contributors, and that is incredibly important."

The Supreme Court's decision comes less than a week after a new research report by the government reform group Issue One, which puts some dollar amounts on what these unreported donors are giving. The report, which took a year of research, finds that the top 15 politically active nonprofits raised and spent more than $600 million on campaigns between 2010, when Citizens United boosted secret fundraising, and 2016.

The secret giving is made possible by a regulatory loophole at the FEC. The groups, usually organized as 501(c)(4) social welfare organizations or 501(c)(6) business associations, don't register as political committees with the commission. With the loophole, the FEC wants donor disclosure only when a donor earmarks the money for specific ads.

The top four spenders identified by Issue One are the U.S. Chamber of Commerce, the mainstream conservative Crossroads GPS, the Koch network's Americans for Prosperity and the National Rifle Association. Issue One says that collectively, the four groups pumped at least $357 million into elections between 2010 and 2016.

"Opaque organizations are using contributions from opaque donors and secretly funding election campaigns and ads that are urging viewers to vote for or against candidates," said Michael Beckel, research manager at Issue One. "And it remains very difficult to track back the true sources of dark money groups."

Meanwhile, Americans for Prosperity has launched AFP Action — a superPAC that will regularly report its donors to the FEC, sidestepping the disclosure controversy.

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AUDIE CORNISH, HOST:

Some of the anonymous political donors financing ad campaigns this fall will soon be disclosed. These are politically active nonprofit groups. The disclosures will happen because of a move yesterday by the Supreme Court. NPR's Peter Overby reports.

PETER OVERBY, BYLINE: For nearly 40 years, a regulation of the Federal Election Commission has enabled politically active nonprofit groups on both sides to hide donors who give millions of dollars each cycle. But for now, thanks to a district court judge and the Supreme Court, the rule goes away.

NOAH BOOKBINDER: This will really mean more disclosure of who is influencing elections.

OVERBY: Noah Bookbinder is director of Citizens for Responsibility and Ethics in Washington, the watchdog group that spent two years suing the FEC over the regulation. The court ruling doesn't affect the secret money behind what are called issue ads, the ones that say, call your senator. But the judge said independent expenditures must be funded with money that's disclosed.

BOOKBINDER: Groups that run these kinds of ads, ads that tell you to vote for or against another candidate, are going to have to disclose their contributors. And that is incredibly important.

OVERBY: But it's not a surprise. Nonprofit groups and the FEC fought it up the line, but the Supreme Court yesterday sided with federal District Judge Beryl Howell, who struck down the regulation in August. Dan Backer is a conservative lawyer who represents politically active nonprofits.

DAN BACKER: I don't think anybody's freaking out about it because everyone's been warned since the original decision that this could be happening.

OVERBY: The U.S. Chamber of Commerce is one of the big political advertisers that don't disclose their donors. At this morning's Christian Science Monitor breakfast with reporters, Chamber President Tom Donohue said he isn't bothered by the new requirements.

(SOUNDBITE OF ARCHIVED RECORDING)

TOM DONOHUE: This is not a big problem for us.

OVERBY: He talked about the Chamber's issue ads for which the rules don't change.

(SOUNDBITE OF ARCHIVED RECORDING)

DONOHUE: We don't have to disclose our donors if what we're doing is doing what we do 12 months a year.

OVERBY: He didn't mention that so far this cycle, the Chamber has spent $12 million on independent expenditures that explicitly support or attack candidates. The Supreme Court's interest in disclosure is longstanding. Even in Citizens United, the 2010 ruling that let corporations and the wealthy spend freely in elections, Justice Anthony Kennedy made clear disclosure was critical.

(SOUNDBITE OF ARCHIVED RECORDING)

ANTHONY KENNEDY: Those mechanisms provide information to the electorate. The resulting transparency enables the electorate to make informed decisions and give proper weight to different speakers and different messages.

OVERBY: But this transparency isn't permanent. Plaintiffs are still challenging the substance of Judge Howell's ruling, and their appeal will be heard sometime after Election Day. Peter Overby, NPR News, Washington.

(SOUNDBITE OF CHARLES BRADLEY SONG, "THE TELEPHONE SONG") Transcript provided by NPR, Copyright NPR.