The New York Times
More than half of the general election advertising aired by outside groups in the battle for control of Congress has come from organizations that disclose little or nothing about their donors, a flood of secret money that is now at the center of a debate over the line between free speech and corruption.
The advertising, which has overwhelmingly benefited Republican candidates, is largely paid for by nonprofit groups and trade associations, some of which are set up with the purpose of shielding from public scrutiny the wealthy individuals and corporations that contribute. Over all, significantly more political advertising comes from nondisclosing groups than from “super PACs,” the explicitly political committees whose fortunes have dominated attention with the rise of big money in politics.
Fifty-five percent of broadcast advertising in the midterm elections has been paid for by groups that do not fully disclose their donors, according to an analysis by The New York Times of advertising data from the Campaign Media Analysis Group, compared with 45 percent from super PACs, which are required to file regular financial disclosures with the Federal Election Commission.
The dominance of secretly funded advertising defies one of the underlying assumptions of the Supreme Court’s Citizens United decision, which paved the way for outside groups to raise and spend more money, so long as they did not coordinate with candidates and parties. In the majority opinion, Justice Anthony M. Kennedy envisioned campaigns in which unlimited independent spending by unions and corporations would be paired with robust real-time disclosure.
“Shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits,” Mr. Kennedy wrote, “and citizens can see whether elected officials are ‘in the pocket’ of so-called moneyed interests.”
The reality is far different. In race after race, voters are confronted by advertising from an array of groups with generic names and unclear agendas. The groups’ finances are disclosed only on a federal tax return, typically filed more than a year after Election Day, on a form on which the names of donors are allowed to be redacted. Critics call it “dark money.”
The proportion of advertising flowing through nondisclosing groups is slightly lower than in 2012, a presidential election year with far more spending over all. But secretly funded advertising is widely expected to surge in 2016, when there will be no incumbent running for the White House.
“There are assumptions in Citizens United that have never happened,” said Fred Wertheimer, the president of Democracy 21, which supports more robust disclosure. “The assumption that we would have real-time disclosure never happened. When we get to the 2016 election, the dark money is going to greatly explode.”
The advertising data also suggests that while Democrats and Republicans have built formidable outside spending networks since the Citizens United decision, Democrats have aired far more advertising through super PACs, while Republicans have relied significantly more on advertising paid for with secret money. (Both parties also rely on alliances of grass-roots nonprofit groups or unions to help turn out voters, spending that is even more difficult to track.) The greater transparency of liberal groups has helped drive a perception that liberal billionaires, not conservative ones, have been the biggest political donors this cycle.
But close to 80 percent of general election advertising by outside groups aiding Republicans has been paid for with secret money, donated to groups like the U.S. Chamber of Commerce, Freedom Partners — a trade association of donors with ties to Charles G. and David H. Koch — and Crossroads GPS, founded by Karl Rove.
Heavily regulated businesses like insurance companies have long relied on such groups to allow them to quietly intervene in campaigns. But many donors who gave freely to super PACs during the 2012 cycle have shifted part of their giving to nondisclosing groups, Republican strategists said; among them is Sheldon G. Adelson, one of the biggest political donors in either party. Little is known about how much the Kochs give to outside spending groups they oversee, virtually none of which disclose donors.
Conservative groups said that donors had become more sensitive in part because of Democrats’ attacks on the Kochs, along with controversy over the Internal Revenue Service’s reviews of the tax returns of Tea Party groups.
“Given the record of this administration in using regulatory agencies like the I.R.S. in a retaliatory fashion, then it’s understandable that there’s concern about disclosure from a lot of individuals,” said Tim Phillips, the president of Americans for Prosperity, a conservative organization that combines field efforts with large advertising campaigns. “Donors on the left don’t have to have that concern.”
By contrast, about three-quarters of general election ads aired by liberal-leaning outside groups during the 2014 cycle have been paid for by super PACs, particularly the Senate Majority PAC and the House Majority PAC, two organizations with close ties to Democratic leaders in Congress. Unions, which raise money from their members and are often eager to get credit for their contributions, have both aired their own ads and donated millions of dollars to Democratic super PACs.
“They’re contributions accumulated from working people and represent support for worker issues, and there’s no reason not to be completely upfront about that,” said Michael Podhorzer, the political director of the A.F.L.-C.I.O. “I think a lot of the contributions that come from corporations, the corporations would rather mask their commercial interest in making these contributions.”
But Democrats have secret money, too. Much like Mr. Rove’s groups, which pair a super PAC (for donors who do not mind disclosure) with a political nonprofit (for those who do), the Senate Majority PAC works in tandem with Patriot Majority, a 501(c)(4) organization that is run by a former aide to the Senate majority leader, Harry Reid of Nevada.
Much of the secret money benefiting Democrats in ads has poured through a network of regional and national environmental groups like the League of Conservation Voters and the Sierra Club, which are a growing force in the world of outside spending. These groups have grass-roots memberships, but have also spent millions of dollars on election activity in recent years. And their budgets include sizable checks from a few large anonymous donors, including a $6 million contribution on the most recent tax return by the League of Conservation Voters.
Because of the limited disclosure, it is unclear exactly how much money conservative and liberal nonprofit groups are spending on campaigns. The only political expenditures that they are typically required to disclose to the Federal Election Commission is money over a certain threshold that is spent specifically advocating the election or defeat of a candidate. Even then, the donors behind the spending usually do not need to be disclosed.
According to a new analysis by the Brennan Center for Justice, a New York-based think tank that supports tighter campaign rules, more than half of the reported outside spending in nine leading Senate races — in Alaska, Arkansas, Iowa, Colorado, Georgia, Louisiana, Michigan, Kentucky and North Carolina — has come from anonymous donors. Through Sept. 30, reported expenditures in the nine Senate races by groups that shield their donors totaled $84 million, well ahead of the pace in 2012.
While most nonprofit groups operate in multiple races, in part to demonstrate to the I.R.S. that they are not overly attached to individual candidates, several such organizations have emerged this cycle with what appears to be the sole purpose of supporting a single candidate. A group called the Kentucky Opportunity Coalition, which is overseen by a former aide to the Senate minority leader, Mitch McConnell, has been one of the biggest spenders in 2014, airing 10,000 ads through the end of September to benefit Mr. McConnell.
“When Citizens United started, the reaction was, this is terrible because it opens the door to money from corporate treasuries,” said Lawrence Norden, a Brennan Center scholar who worked on the study. “But what you are really seeing is dark money and people using buddy groups to get around contribution limits.”
Efforts by the Federal Election Commission to introduce further disclosure requirements on nonprofit groups and trade associations after the Citizens United decision have been stymied by opposition from Republican commissioners. For years, Democrats on the commission refused to update election rules to bring them into compliance with the Citizens United ruling unless the Republicans agreed to the kind of disclosure requirements envisioned by Justice Kennedy. That debate ended only on Thursday, when Ann M. Ravel, a Democrat appointed by President Obama, agreed to join three Republican commissioners in a ruling that discarded rules rendered unconstitutional by the Citizens United decision but did not impose any new disclosure requirements.