#9 New Laws Preventing Dark Money Disclosures Sweep the Nation

by Project Censored
9. New Laws Preventing Dark Money Disclosures Sweep the Nation

Across the United States, Republican lawmakers are pushing legislation modeled after a policy authored by the American Legislative Exchange Council (ALEC) that makes it illegal to compel nonprofit organizations to disclose the identity of their donors. In a June 2021 article for Sludge, Donald Shaw explained how these bills create a loophole allowing wealthy individuals and groups to pass “dark money” anonymously to 501(c) organizations which in turn can make independent expenditures to influence elections (or contribute to other organizations that make independent political expenditures, such as Super PACs), effectively shielding the ultimate source of political funds from public scrutiny. “These bills are about making dark money darker,” Aaron McKean, legal counsel for the Campaign Legal Center, told Shaw.

As Shaw outlined, ALEC “brings together corporate activists, lobbyists, and state lawmakers to partner up on the crafting of rightwing legislation and other initiatives.” The organization is commonly referred to as a “corporate bill mill” and has crafted other controversial laws, such as Stand Your Ground.

Legislation inspired by the ALEC bill that makes possible the silent transfer of political funds has been proposed, has passed, or is currently pending in Oklahoma, Arizona, Mississippi, Utah, West Virginia, Arkansas, Iowa, Tennessee, North Carolina, South Dakota, and Florida. In South Dakota, Governor Kristi Noem, whose first gubernatorial campaign was supported by a Super PAC that received $95,000 in dark money donations, signed a version of the ALEC bill into law in early 2021. As Sludge reported on February 19, 2021, the South Dakota law passed by overwhelming majorities in both houses of the Republican-dominated state legislature, despite the fact that, in 2016, voters passed a ballot measure requiring disclosure of “the identity of donors who give more than $100 to organizations for the purpose of political expenditures,” a requirement the legislature repealed a year later.

The impact of ALEC’s model policy has extended beyond state legislatures. In a March 2022 article for Sludge, Shaw documented that the federal omnibus appropriations bill for fiscal year 2022 contained a rider exempting political groups that declare themselves “social welfare organizations” from reporting their donors, and another preventing the Securities and Exchange Commission from “requiring corporations to publicly disclose more of their political and lobbying spending.”

Moreover, according to a May 2021 article from OpenSecrets, Senate Minority Leader Mitch McConnell (R-KY), Senator Mike Braun (R-IN), and forty-three other Republican senators have announced their support for the “Don’t Weaponize the IRS Act,” which would prevent the IRS from requiring that 501(c)(4) nonprofits disclose their top donors.

Beginning with the Supreme Court’s 2010 decision in Citizens United v. FEC, a series of court rulings, Republican-backed laws, and executive orders has progressively insulated political spending by corporations and wealthy individuals from government regulation and reporting requirements. However, Democratic politicians and good government organizations have begun to push back, often citing bipartisan support for stronger enforcement of campaign finance laws and transparency in elections. On April 27, 2021, thirty-eight Democratic senators sent a letter to Treasury Secretary Janet Yellin and IRS Commissioner Charles Rettig urging them to roll back an anti-disclosure rule put in place by the Trump Administration. In addition, the Democrats’ comprehensive voting-rights bill, the For the People Act, would have compelled the disclosure of all contributions by individuals who surpass $10,000 in donations in a given reporting period. The bill was passed by the House but died in the Senate.

The Washington Post reported on Democrats pressuring the Biden administration to repeal Trump-era dark money rules, but made no mention of the wave of state laws designed to outlaw dark money disclosures. The Associated Press reported on Governor Noem’s defense of the South Dakota law shielding dark money donors, but failed to discuss ALEC’s model bill or the other states considering similar legislation. Outside of local reports appearing in regional papers such as the Tampa Bay Times, there has been little acknowledgment in the establishment press of the stream of ALEC-inspired bills passing through state legislatures that seek to keep the source of so much of the money spent to influence elections hidden in the shadows.

Alyce McFadden, “GOP Bill Would Codify IRS Rule Hiding ‘Dark Money’ Donors,” OpenSecrets, May 27, 2021.

David Moore, “Florida Republican Introduces ALEC Bill to Protect Dark Money in Politics,” Sludge, February 25, 2022.

Donald Shaw, “Laws Preventing Dark Money Disclosure Are Sweeping the Nation,” Sludge, June 15, 2021.

Donald Shaw, “Noem Bill Would Make Dark Money Disclosure Illegal,” Sludge, February 19, 2021.

Donald Shaw, “Omnibus Bill Contains Dark Money Riders,” Sludge, March 10, 2022.

Student Researcher: Zach McNanna (North Central College)

Faculty Evaluator: Steve Macek (North Central College)