Ten years ago today, the Supreme Court ruled that corporations and unions could use money from their general treasuries to finance independent election spending. Central to the ruling was the assumption, unsupported by evidence, that this “independent” spending would not lead to corruption.
The court did not anticipate the rise of “dark money,” a term that refers to anonymous outside spending in our political campaigns. Dark money is hard to study precisely because it is hidden, but here’s what scholars have managed to learn in the past decade.
1. Citizens United allowed new types of spenders. These groups haven’t been required to disclose their spending.
Groups that raise and spend money in U.S. federal political campaigns are required to disclose the sources of that money to the Federal Election Commission, which makes the data publicly available. In theory, voters can then check to see whether elected officials then offer favors to donors.
Citizens United allowed new types of groups to donate to campaigns, on the grounds that banning them violates their rights of free speech, including 501(c)(4) “social welfare” organizations and limited-liability corporations (LLCs). But here’s the catch. Since then, Congress has placed budget riders in spending bills to prevent agencies from regulating those groups’ political spending. Simultaneously, the FEC has been unable to pass robust disclosure covering these groups — so they don’t have to name their donors, as other groups do. The money they raise stays “dark.”
2. Lack of disclosure leads to ‘gray money’
These dark money groups can donate to super PACs, which are required to disclose their donors, leading to “gray money.” Super PACs are outside groups that make only “independent expenditures” — ads that advocate for a candidate. They can receive unlimited contributions.
To see how this works, let’s look at two FEC disclosures. VoteVets is a super PAC that seems to receive most of its money from individuals. Its FEC filings show that it raised $3.8 million dollars from more than 3,000 donors. But when a super PAC is supported by dark money groups, the donor list may not contain any individuals at all. For example, the pro-Trump super PAC Get Our Jobs Back reported over $50 million in independent expenditures during the 2016 primary. Its filing lists only four donors: the New York Post, Statware, “Other Firms” and TowersInvestors.com. Because three of these donors are dark money groups that do not need to report their donors, observers cannot follow the money to its original source.
Dark money can have a big impact in state races. The Brennan Center for Justice reports that by 2014, only 29 percent of outside spending on state and local campaigns was fully disclosed.
How Citizens United gave Republicans a bonanza of seats in state legislatures
3. Ads funded by dark money are on the rise, making campaigns more negative
Left-leaning groups are catching up to right-leaning groups in running such ads, which promote candidate and ballot initiative elections, judicial appointments, and ads on one side or another of issues such as gun regulation and abortion. Ads funded by dark money are more likely to be negative.
4. Dark money can hide ‘shy’ donors’ contributions
Who contributes to dark money groups? It is exceedingly hard to know. But political scientist Stan Oklobdzija examined a rare, publicly available donor list for Americans for Job Security, a conservative dark money group. California’s campaign finance regulator sued to force the group to disclose the sources of its spending on ballot initiatives there. Oklobdzija uses donor ideology estimates to analyze whether the people choosing to give directly to the ballot initiative campaigns — disclosable donations — are ideologically different from those who hide their donations via a dark money group. Indeed, he finds that the dark money donors are less conservative in their public giving than the donors who expected to be disclosed.
This study suggests that some donors may give anonymously to support political positions that they might not choose to take publicly.
How big is the gap between the donor class and ordinary Americans? Bigger than you think.
5. Voters prefer campaign finance transparency to dark money
In a survey experiment, I turned to 1,490 voting-age respondents from a nationally representative group of Americans, using Bovitz’s panel. After reading two candidate profiles, respondents were asked which they would support in a party primary for state senate. The candidate profiles included information about policy, campaigning, relationship to “groups that don’t disclose their donors” and campaign finance compliance. Both Republicans and Democrats were more likely to vote for candidates that discourage dark money than those accepted it.
Recently, a group of my colleagues ran a similar set of experiments, finding that when two candidates of opposing parties are running against each other, voters rate candidates of the opposing party less favorably when they accept dark money than when they don’t.
6. Dark money can hide foreign influence
This is the hardest point to study systematically. Consider the indictments of Igor Fruman and Lev Parnas, figures in the Trump impeachment case, for violating campaign finance laws. A lawyer at a nonprofit carefully matched Fruman’s and Parnas’s addresses to that of a dark money donation from a shell corporation to a super PAC that supported Trump — and found that the pair were laundering over $1 million from foreign countries to support Trump. That’s illegal under our laws, which forbid foreign nationals to donate to U.S. elections and forbid anyone to donate under someone else’s name.
Might other shell companies be allowing non-Americans to try to influence U.S. elections? Until the agencies and Congress decide to regulate dark money, we may not know.
7. The court may be wrong about whether such spending can corrupt
In Citizens United, the court assumed that independent spending on political campaigns does not corrupt our politics. The United States does have rules banning campaigns from coordinating with these outside groups. But those laws are easy to circumvent. “Independent groups” are often run by candidates’ former campaign managers and chiefs of staff. They know who the donors are. How could the public officials receiving their support not know whose favors to repay?
The rise of dark money in the decade since Citizens United often cuts off our ability to “follow the money.” If sunlight is the best disinfectant, as Justice Louis Brandeis had it, corruption may be breeding in the dark.
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Abby K. Wood (@yesthatabbywood) is associate professor of law, political science and public policy at the University of Southern California’s Gould School of Law.