Nearly Half of Recent Campaign Money From Undisclosed Sources

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By Kenneth P. Doyle

Undisclosed donors provided nearly half of the more than $20 million in outside campaign spending in three closely watched, current congressional election races, a Bloomberg BNA review of Federal Election Commission reports found.

Bloomberg BNA looked at FEC independent expenditure reports filed in the special election campaigns for U.S. House seats for Georgia, Montana and South Carolina. These races, for seats vacated by Republican lawmakers who joined President Donald Trump’s administration, are being treated by both Republicans and Democrats as important bellwethers reflecting the mood of the electorate following Trump’s first months in office and have drawn record campaign spending.

Of a total $20.7 million, so far, in independent expenditures of $50,000 or more in the three House races, just under $4 million—nearly 20 percent—is from trade associations and nonprofit groups that disclose none of their donors.

This direct spending by non-disclosing nonprofits is only part of the story, however. Much of the rest of the outside campaign spending has come from super political action committees receiving large contributions from nonprofits or other entities that keep their original donors under wraps.

GOP Super PAC Funded by Non-Disclosing Group

For example, the Congressional Leadership Fund, a super PAC linked to House Speaker Paul Ryan (R-Wis.) and other Republican leaders, has spent a total of nearly $8 million to influence the Georgia and Montana congressional races and has received $5 million in contributions this year from an affiliated nonprofit, the American Action Network, which doesn’t disclose donors.

Outside campaign money being spent in the special election races also has come from Democratic and Republican party committees, which, like super PACs, file disclosure reports with the FEC. The national party committees are required to take only individual contributions in limited amounts and disclose all original contributors of their funds.

Most of the independent campaign spending from trade associations and nonprofits is coming from well-known groups such as the U.S. Chamber of Commerce, the nation’s largest business lobby and a key supporter of Republicans. On the Democratic side, some spending has come from nonprofits such as the Planned Parenthood Action Fund, which, like the Chamber, doesn’t report its donors to the FEC.

Mystery Groups, Super PACs

Some entities spending in the current races are more mysterious, however, and have provided few clues about where their money is coming from.

For example, an organization called CLA Inc. spent nearly $400,000 on campaign ads supporting state lawmaker Tommy Pope in a May 16 Republican primary in South Carolina, but has never previously filed campaign finance reports with the FEC. The background of CLA Inc. is unclear, but its FEC filings were signed by a veteran Washington lobbyist, Marc Himmelstein, who heads a firm called National Environmental Strategies and lobbies mainly for energy companies.

Pope appears to have lost a close election in South Carolina to a rival GOP candidate, Ralph Norman, though a recount is possible. The general elections in South Carolina and Georgia are set for June 20. The Montana special election is May 25.

In addition to little-known nonprofits spending directly to influence the congressional races, a significant amount of untraceable money is coming through super PACs.

The Congressional Leadership Fund, which got $5 million from the non-disclosing American Action Fund, and other super PACs reported receiving most or even all of their contributions from entities that don’t reveal their donors. These include two mysterious super PACs seeking to influence the South Carolina and Georgia elections—Hometown Freedom Action Network and Americans United for Values.

Debate Over Disclosure

The spending from undisclosed sources in the current congressional races comes as supporters and opponents of tougher disclosure rules continue to debate the impact of what critics call “dark money.”

“Sensational rhetoric” on the issue created a “false impression that nonprofits are a major source of campaign speech,” the Center for Competitive Politics (CCP), a nonprofit policy group that supports allowing some money from undisclosed sources to influence elections, said in a recent analysis.

In reality, the CCP study said, nonprofits that spend money in campaigns but disclose none of their donors consistently account for less than 5 percent of reported political spending. Regulated political committees and others, like the media, “continue to have the most prominent voices in elections” the CCP said.

Allowing a small role for nonprofits doesn’t “drown out” candidates or undermine disclosure but adds to the diversity of views necessary in a healthy democracy, the CCP said.

The center’s study didn’t look at campaign money contributed to super PACs from other, non-disclosing groups, Luke Wachob, who worked on the CCP analysis, told Bloomberg BNA in phone interview. He discounted the impact of this funding—sometimes called “gray money"—because decisions about where the money is spent are up to the super PAC, he said.

‘Rabbit Hole’ or ‘Right to Know’

Searching for the original donors of all outside campaign money “leads you down a rabbit hole” in a chase for something that isn’t very significant in terms of its overall impact on campaigns, Wachob said.

The Campaign Legal Center (CLC), which supports stronger disclosure rules, criticized the CCP study. The argument that money from undisclosed sources is insignificant in recent elections is an “alternative fact,” CLC’s Brendan Fischer said in a blog post,

“Dark money—that is, election-related spending whose donors are kept secret from voters—continues to play a major and troubling role in U.S. elections,” Fischer said.

This spending gained in significance due to Supreme Court decisions rolling back restrictions on campaign money and weak rules and enforcement by the FEC, he said.

The original sources of all money seeking to influence campaigns should be disclosed so that voters can understand and assess who is providing that money and what interests they may have before candidates and officials, Fischer said.

“The public has a right to know who’s trying to influence campaigns,” he said.

To contact the reporter on this story: Kenneth P. Doyle in Washington at kdoyle@bna.com

To contact the editor responsible for this story: Paul Hendrie at phendrie@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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