Eleven years ago, in response to the landmark Supreme Court decision in Citizens United, Democrats rallied around a bill they hoped could prevent a new flood of money into elections. The DISCLOSE Act (short for “Democracy Is Strengthened by Casting Light on Spending in Elections”) would have required new reporting prior to Election Day of top donors to political ads sponsored by corporations, unions, and advocacy groups, with the top five donors disclosed in the ads themselves. “We do not want to chill speech,” New York Sen. Chuck Schumer stressed at the time. “We merely want the American public to have details about who is speaking.”
At the time, in advance of the 2010 midterms, dozens of groups were seizing on the new opportunities presented by Citizens United, which loosened campaign finance restrictions and made it far easier for donors to contribute money anonymously. New “super PACs”—which allow for unlimited spending by corporations and special interests—began registering, and more money started to flow into nonprofit “social welfare groups,” which are not supposed to focus primarily on politics and do not need to reveal their donors. A new era of so-called “dark money” had arrived.
Democrats passed the DISCLOSE Act through the House in June 2010, but fell one vote short of breaking a Republican filibuster in the Senate. Democrats were united in their outrage, and even President Obama condemned the GOP, unequivocally stating: “A vote to oppose these reforms is nothing less than a vote to allow corporate and special-interest takeovers of our elections.”
Obama was correct. A decade later, more than $1 billion in undisclosed spending poured into the 2020 federal election cycle. But the majority of it, around $514 million, went toward electing Democrats, according to an analysis by the watchdog group OpenSecrets, compared to roughly $200 million that helped Republicans. Joe Biden’s presidential bid alone attracted $174 million in anonymous contributions, more than six times as much as Donald’s Trump’s $25 million.
The DISCLOSE Act is now included in H.R. 1, the For the People Act, the Democratic Party’s comprehensive ethics, voting rights, and campaign finance package, which also stands little chance of passage without scrapping the filibuster. But today, Democrats find themselves in a more delicate spot, both backing federal legislation that would restrict the flow of undisclosed spending, while also becoming increasingly dependent on it and the donors who demand it.
To manage this tension, Democratic campaign officials, consultants, and donor groups consistently rely on a go-to phrase: unilateral disarmament. They claim to agree that money in politics can be detrimental to democracy, but they cannot afford to let all the benefits of super PAC spending flow to Republicans. They have to play the game as it’s played, distasteful though it may be.
But more quietly, leaders in the progressive fundraising world will admit that transparency is just not a serious priority anymore. With imminent threats to democracy, including Republicans clinging to false theories about a stolen 2020 election and the possibility that election officials will simply reject the will of the voters in the future, liberal donors say there are just higher-order matters to focus on. “They’re understandably scared shitless about Trump getting another term, and [they] act accordingly,” said Gara LaMarche, the former president of the Democracy Alliance, a network of progressive mega-donors.
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While the liberal argument to win now and focus on reform later makes some sense—the stakes are certainly high—a focus on winning at all costs comes, well, with a cost. Campaigners don’t readily give up winning strategies, and the assumption that all will be stowed back safely away if and when Democrats achieve sufficient electoral majorities starts to look fairly naïve. And all the while, the grip of the rich grows tighter on a party desperate to compete financially, hobbling options for policy that might pinch their elite class. As these happen to be among the most popular ideas with the broader electorate, furious with soaring inequality, the chase for dark money extracts a political cost that may corrode the party as much as it helps it.
WITH UNION MEMBERSHIP RAPIDLY DECLINING, progressives struggle to counteract the massive power and influence of the corporate lobby. To fill the gap, they turned to tax-exempt nonprofit organizations, of which there are two main kinds, both named for the section of the federal tax code under which they are regulated. 501(c)(3)s, also known as public charities, range from symphonies to the Boy Scouts to (full disclosure) The American Prospect. They can engage only in limited amounts of lobbying, and cannot donate to political campaigns. Financial contributions to c3s also yield donors a tax deduction. 501(c)(4)s—the social welfare groups—provide no tax deduction for contributions, but they can endorse candidates and engage in unlimited lobbying, so long as this doesn’t comprise the majority of their activities. Importantly, they need not disclose their donors.
The dark-money era brought changes to this model. As Columbia law professor David Pozen has observed, many progressive groups that formed in the wake of Trump’s ascent, like Indivisible and Women’s March, launched off the bat as c4s, and long-standing organizations like the American Civil Liberties Union, which had both c3 and c4 arms, began investing much more heavily in their c4 operations. The NAACP, after 108 years of existence, in 2017 decided to transition entirely to a c4 from a c3, precisely to engage in more lobbying.
“An increasing number of people understand that if they pool resources, they can make a difference on poverty or the environment in a way that you can’t with a standard c3,” says Aaron Dorfman, the president of the National Committee for Responsive Philanthropy. “[Donors] realize if you actually want to make a difference, you need to support movements that contest power and are dedicated to changing systems. That’s not a bad thing.”
Leaders in the progressive fundraising world will admit that transparency is just not a serious priority anymore.
Citizens United’s loosening of spending rules created easier opportunities to use c4s for undisclosed campaign spending. This has been particularly advantageous for the ultra-wealthy, who can avoid capital gains tax on the donation of an appreciated property, a far more valuable tax benefit than the benefit they’d get donating to a 527, entities designated as political groups under the tax code. While liberals worried about corporate-spending floodgates opening with the Citizens United decision, OpenSecrets found the biggest political actors to take advantage thus far have actually been individual wealthy donors.
Social welfare groups aren’t the only vehicles used to influence politics and shield donor data. There also exist so-called “gray-money groups,” which have donations traceable only back to other PACs. The Center for Responsive Politics says such partially disclosing political entities were “practically nonexistent” before 2010, whereas now the landscape is littered with shell groups that make tracing the origins of funds even more difficult.
A bevy of low-profile and well-heeled “venture philanthropy” funds, like the Sixteen Thirty Fund, New Venture Fund, and Tides Advocacy, have also distributed hundreds of millions of dollars to liberal organizations over the last few years. It wasn’t until a year after the 2018 midterms that a pair of journalists learned that the Sixteen Thirty Fund alone had contributed $141 million in dark money to left-leaning groups that cycle, including one (anonymous) $52 million donation. These funds identify as “fiscal sponsors” and boast of their ability to deploy collective resources strategically and quickly.
Even the most left-wing groups cannot resist the dark-money temptation. When Cori Bush and Jamaal Bowman mounted primary bids in 2020, the progressive campaign organization Justice Democrats spent $150,000 and $620,000, respectively, on their behalf in independent expenditures, which are outside spending efforts that can raise unlimited sums of undisclosed money. Bush and Bowman won their races; only after the election were their IE donors disclosed. It was a tactic Justice Dems hadn’t used months earlier in support of Jessica Cisneros, who lost her progressive challenge to Rep. Henry Cuellar, one of the most conservative Democrats in Congress, by just 3,000 votes.
Waleed Shahid, spokesperson for Justice Dems, said they had little choice if they wanted to win. “[Former Rep.] Joe Crowley did not have an independent expenditure supporting him,” he said, referring to Justice Dems’ early triumph with Rep. Alexandria Ocasio-Cortez (D-NY). “But every single one of our opponents after AOC’s victory just fought us on the coordinated and uncoordinated side with all they have. Part of our strategy that time around was that we could not afford to get outgunned.”
One doesn’t have to squint to see why dark-money groups are attractive to the rich. The vehicles allow them to donate and avoid the negative attention that might come with disclosing their identities, like protests outside their home or bad press. Anonymity also helps them avoid threats of violence or actual harm, defenders of the status quo like to say. The Philanthropy Roundtable, a conservative advocacy group for charitable giving, says shielding donors from public scrutiny is necessary for “philanthropic freedom.”
While some issues—particularly abortion access—have a real record of harm for supporters, most advocacy groups hide today behind harassment of abortion activists to rationalize their own lack of transparency. Other groups cynically cite a Supreme Court decision from six decades ago that unanimously ordered Alabama to stop accessing the NAACP’s membership list, concluding that doing so interfered with members’ right to freely associate. However, a billionaire donating to a political nonprofit to run anonymous ads against Medicare expansion should not be likened to the legitimate threats Black Americans faced in the South during the civil rights movement.
Sen. Sheldon Whitehouse (D-RI), the lead sponsor of the DISCLOSE Act, says he has no problem with rich donors who want to, say, give discreetly to their alma mater. “There are some good reasons for anonymity, maybe you want to give a big donation to your university and want to avoid other people coming to ask you for money—there’s nothing really wrong with that,” Whitehouse said. “But it’s different when you’re trying to exert political pressure over others and refuse to stand up for your views.”
DOES IT REALLY MATTER if liberal political advocacy groups and campaigns disclose their donors, if the house is on fire?
Dorfman thinks that transparency is “helpful to the cause” and that groups should disclose “a great deal of information,” but acknowledged that sometimes donors just don’t want to do that. “I think each organization in the progressive space needs to make that call, on their own within the limits of the law,” he said.
One challenge of hiding donors is that it makes it more difficult for the public to assess which organizations authentically speak for the communities they purport to, and which are just pet projects of the rich or schemes by companies.
Beginning in 2017, tens of millions of dollars were poured into a generic-sounding social welfare group called Generation Now, which funded TV ads, mailers, and flyers in Ohio to pass a bill that would subsidize an energy company’s power plants. It was only after an FBI wiretap and federal indictment of state lawmakers for bribery and corruption that the public learned the ads had been funded by affiliates of the energy company itself. Or take Patients for Affordable Drugs, which sounds grassroots, but is really a highly controlled lobbying entity backed by millions from the Laura and John Arnold Foundation.
Elyssa Feder, co-founder of Rising Organizers, a community organizing training program, notes that power dynamics between organizational leaders and donors will always be skewed. “If people’s jobs are on the line and a major donor says my $50,000 check is predicated on you funding a new project—even if that new project isn’t the best use of your time and resources—it’s hard to say no to that when that donation would be able to pay someone’s salary,” she said.
These advocacy groups, and their donors in turn, exert real influence on the priorities of politicians, leading them too often in less populist directions. This isn’t new, and the Democratic Party in particular has been making itself more easily swayed by the whims of the wealthy ever since the early 1980s, when Rep. Tony Coelho took over the Democratic Congressional Campaign Committee and established new direct lines of communication between corporate donors and members of Congress. He billed himself as a pragmatist, one simply playing by the rules of the game, and he’d later go on to fight for legislative loopholes on behalf of the wealthy donors he cultivated. The Washington Post would call him “the most influential young congressman of his generation.” Prospect editor Bob Kuttner referred to him in The New Republic in 1985 as “the Democrats’ Dr. Faustus.”
Coelho himself helped push to defeat a campaign finance reform measure that would have required greater donor disclosure, which might serve as a cautionary tale for Democratic leaders today. Indeed, just recently Sampriti Ganguli, CEO of Arabella Advisors, which helps consult for leading liberal dark-money groups, remarked that she sees “a low likelihood that the laws will actually change” regarding disclosure. “Our laws protect individuals and their privacy around causes they believe in,” she said.
The Democracy Alliance, a club of top liberal donors founded in 2005 to act as a counterweight to the conservative Koch network, is a top fundraising target for center-left and progressive groups. Political scientists Alexander Hertel-Fernandez and Theda Skocpol have noted that the structure of these elite donor consortia have potential to influence politics in uniquely powerful ways, even beyond similar partisan super PACs and single-issue advocacy groups.
Campaign deregulation advocates are turning their sights on disclosure rules, with increasing success.
While most donors in the Democracy Alliance would say their philanthropic spending should not be compared to conservatives’, because unlike Republicans they back causes that would not necessarily be in their economic self-interest, it remains true that regardless of partisanship, wealthy Americans generally hold different values and preferences from the rest of the country. For example, while having funded many center-left organizations, the Democracy Alliance never prioritized advocacy for Medicaid expansion, even when it became clear no alternative liberal group could meaningfully take that up. “Medicaid expansion just never seemed to capture a lot of liberal donor imagination,” Hertel-Fernandez and Skocpol concluded. (The Democracy Alliance declined to make their new president, Pamela Shifman, available for an interview.)
The suggestion that wealthy donors on the left never advocate for their economic self-interest doesn’t hold much water, either. The rapid demise of the ambitious and extremely popular redistributive tax proposals in the Democrats’ Build Back Better Act suggests who still has the ear of those in power.
“This stuff is so opaque and no one is holding anyone accountable,” said one staffer whose employer works with the venture philanthropy funds. “The organizational landscape of civic and political organizations is just totally being transformed as inequality grows and rich people get uber rich and we are finding more creative ways to distribute their money.”
The staffer, who works in progressive movement building, says the landscape is becoming “extremely donor-centric” in a way that no longer even resembles the industrial-titan philanthropic milieu they once knew. “We’re entering this new era of capitalism dominated by finance, tech, and insurance. The money is different,” they said. “We’ve linked our fates here to new powers within capitalism, and [how] that money is moved, aggregated, pooled, and filters down is really different than even several years ago, and it scares me a little bit.”
AS PROGRESSIVE GROUPS GROW more dependent on rich donors who’d like to keep their contributions private, liberals find themselves contorting into awkward positions to justify the status quo, insisting groups that are clearly affiliated with the Democratic Party are not, in fact, partisan. Political nonprofits tend to insist they’re independent and simply “issue oriented”—a framing that’s practically dubious but legally necessary to keep their nonprofit status.
This strained logic was on display this past year when The New York Times profiled obscure Swiss billionaire Hansjörg Wyss, who has become one of the top funders of left-leaning organizations, donating hundreds of millions of dollars since 2016 both to entities that distribute funds to other progressive political advocacy groups, and directly to organizations like the Center for American Progress, a liberal think tank where Wyss sits on the board. While Wyss does not donate directly to candidates or PACs, the groups benefiting from Wyss’s contributions work to help Democrats and defeat Republicans. Representatives for the billionaire insisted to the Times that his money was not “spent on political campaigning” and was merely “bolster[ing] social welfare programs in the United States.”
With a heavily weakened and embattled IRS, partisan c4s are so confident today that they will face no punishment for engaging too much in political activity that even Majority Forward, a c4 founded in 2015 and affiliated with Senate Democrats, told the Federal Election Commission that it did not receive contributions in 2018 earmarked for political purposes and thus refused to disclose its donors, despite spending more than $45 million that cycle boosting Democrats.
While congressional Democrats remain at least nominally behind political-transparency reforms, not all their donors are so keen. And publicly, the American Civil Liberties Union has been leading an effort to lobby against the c4 transparency requirements included in the DISCLOSE Act. While the overwhelming majority of Americans do not donate anywhere near the $10,000 minimum that would trigger disclosure, in a letter sent to the House of Representatives, the ACLU claimed such rules would nonetheless “chill the speech of issue advocacy groups and non-profits such as the ACLU, Planned Parenthood, or the NRA.”
Back in 2010, the ACLU also opposed the DISCLOSE Act on First Amendment grounds, and the group even sided with the plaintiffs in Citizens United. (This was not without internal criticism; in 2012, a former longtime ACLU lawyer outlined why he and others saw the group’s position as constitutionally misguided.) But the ACLU’s rhetoric to justify its opposition to transparency reform has also evolved over the last decade, in ways that suggest they’re struggling to convince the public, and perhaps themselves, that they’re not simply providing cover for the rich to unduly influence elections.
Like the Wyss Foundation and Majority Forward, the ACLU seeks to draw lines between ads that explicitly endorse or oppose candidates and all other political communications, like ads focused on bills or policies. The latter, they claim, should not trigger disclosure rules, and disclosure would in fact “do little, if anything, to serve the public’s interest in knowing.”
Kate Ruane, the senior legislative counsel at the ACLU who has been leading the organization’s opposition, insisted to me that “we cannot lose sight” of how disclosure laws “can be used to suppress marginalized voices” and deter speech. She pointed to Black Lives Matter protests following George Floyd’s death and noted that some opponents tried to figure out who was allegedly funding them. “Presumably that was intended to direct a certain amount of harassment and violence toward the people who were supporting those movements,” she said. “My concern is that H.R. 1 could hurt especially smaller organizations that are just beginning to build their political advocacy, and we want to make sure we are supporting them.”
But what about TV ads run by groups that purport to be environmentalists yet are secretly funded by fossil fuel companies? Or groups that are affiliated with the Democratic Party but go by vague names like Floridians for a Fair Shake? Shouldn’t the public have a right to know who is behind those political statements, even if they’re not discussing candidates specifically? “There is a certain amount of balancing happening here,” Ruane said.
“I think the ACLU is just wrong on this,” Sen. Whitehouse told me. “While there are very, very rare circumstances like when NAACP members needed protection from Jim Crow state-sponsored violence, when there’s not a record of a specific threat, democracy is better served and citizens are better served by knowing who is behind political messages.”
Meanwhile, the Supreme Court and conservative activists are hard at work to dismantle what’s even left of financial-disclosure law, dropping unsubtle hints that the privacy of donors to spend as they please should trump public accountability. At the rate things are going, it’s not even clear the DISCLOSE Act would pass judicial review, leaving average Americans who are already fast losing trust in their political system with little reassurance.
For the last 45 years, the courts have said financial transparency is the one campaign finance safeguard least likely to pose a First Amendment concern. “In most applications [disclosure requirements] appear to be the least restrictive means of curbing the evils of campaign ignorance and corruption,” the U.S. Supreme Court reasoned in its 1976 Buckley v. Valeo decision. In Citizens United, while the Court ruled that restrictions on election messages were unconstitutional, it also said “disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way” and that transparency “enables the electorate to make informed decisions and give proper weight to different speakers and messages.”
“There’s a real danger of dark money becoming institutionalized,” said Anna Massoglia with the Center for Responsive Politics.
Yet now deregulation advocates are turning their sights on disclosure rules, with increasing success. This past summer, the Supreme Court ruled along party lines in favor of conservative plaintiffs challenging a California law that required charitable groups to disclose the names and addresses of their major donors. The petitioners—conservative dark-money legal groups Thomas More Law Center and Americans for Prosperity—argued such rules could have a chilling effect on donors’ First Amendment rights. The ruling, as Whitehouse quipped, created “a new constitutional right to dark money.” But some liberal groups, including the ACLU, the Human Rights Campaign, NAACP Legal Defense Fund, and the Southern Poverty Law Center, allied themselves with the conservative plaintiffs.
Liberal justices highlighted the dangerous implications the decision holds for political elections. “How is this different from campaign finance laws, where there is an even stronger interest in donating anonymously?” asked Stephen Breyer during oral arguments.
“It’s open season on a lot of things we thought were settled,” says Roger Colinvaux, a professor at Catholic University who specializes in nonprofit tax law. He thinks the next major constitutional challenge will be against public disclosure to the IRS. “One of the things I’m worried about is what this will mean for 990 tax forms [the annual disclosures nonprofits must file]. We’ve been filing 990s and disclosing all this information for 50 years and nobody ever said that affects my First Amendment right to associate.”
WHY NOT VOLUNTARILY DISCLOSE DONORS? There have been other instances when Democrats voluntarily committed to things that were not technically required, like avoiding corporate PAC money or returning donations from fossil fuel executives. Even if one accepts the argument that one side of the aisle should not unilaterally disarm when it comes to fundraising, why not just stipulate that funds voluntarily donated to a progressive group or campaign, at least when they reach a certain threshold, must be publicly disclosed? Legally, a group doesn’t have to, but why not make that a model practice anyway?
The Prospect reached out to several leading progressive groups to ask if they would consider making their c4 contributions public, even if it wasn’t legally required. Sunrise Movement, which publishes its 990s on its website and says it’s “committed to financial transparency and accountability,” did not return multiple requests for comment.
“When progressives play by a more stringent set of rules, we reduce the incentives for comprehensive reform,” said Data for Progress executive director Sean McElwee. “As we’ve seen with gerrymandering, when progressives embrace one rulebook and fascists embrace another, we only set our cause back. There is nothing progressive about losing.”
Justice Democrats’ Shahid said they hadn’t really thought about the idea before but probably would not since most of their PAC work is already required to be disclosed. “We 100 percent support the transparency reforms in H.R. 1,” he said.
Leah Hunt-Hendrix, the co-founder of Way to Win—which tries to mobilize Democratic donors—said she accepts the tensions that come with using dark money. “I don’t think we can unilaterally disarm, and I think we should use all the money we possibly can raise for movements that can fight for the working class,” she said. “I feel OK about funding through a super PAC because we’re doing it in total alignment with organizations for whom their mission is to redistribute wealth, to fight corporate power.”
While Hunt-Hendrix acknowledges that disclosure has not been a top priority for Way to Win, she thinks if the laws were changed, their focus would shift toward transparency. “There are funders who wouldn’t necessarily want their names out there, and don’t want to open themselves up to attacks, but funding is political work and should ultimately be a public act,” said Hunt-Hendrix. “There may be some donors who feel they can’t make that sacrifice, who feel they’d be putting the rest of their family at risk, and so there are major donors we might lose. I think that’s OK though.”
Others agreed that the desire for privacy was partly a function of habit, and most donors would adjust if they could no longer be anonymous. Disclosure, said Shahid, would help Democrats and progressives far more than it would help Republicans.
The limits of voluntary measures were revealed in the 2020 primary, when leading Democratic candidates one after another swore off super PAC contributions to signal their commitment to getting big money out of politics. Yet those self-imposed bans disappeared as soon as the going got tough. Joe Biden, who struggled early with fund-raising, walked back his pledge just six months into his campaign. Elizabeth Warren, who sharply criticized her competitors for months about their fundraising tactics, ended up with a super PAC of her own in the final days of her campaign. (Nearly all of the funding for Warren’s Persist PAC came from a single California donor.)
Progressive advocacy organizations are similarly conflicted. “I think Bernie Sanders is an interesting case in that in the 2016 race he elevated small-dollar donations [and] I do think for progressives that’s the funding mechanism most aligned with our values, but it’s hard for grassroots groups to collect enough to meet their budgets, especially if you want a strong organizing and digital team,” said Lia Weintraub, a progressive strategist. “Foundation dollars still remain the easier way to get money. You can write a proposal and get millions of dollars.”
Dark-money groups are already pouring funds into the federal midterm elections. Fringe candidates who stand little chance of winning are finding they can now raise massive amounts of money quickly, earning them national recognition and post-campaign opportunities. Dark-money groups and their consultants are also exploiting this fundraising landscape, realizing that Democrats too often prioritize fundraising even at the expense of campaigning. “There’s a real danger of dark money becoming institutionalized,” says Anna Massoglia, an investigative researcher with the Center for Responsive Politics. Indeed, the entities that shield donor information aren’t just popular during campaign seasons. Presidential administrations now have their own dark-money entities to support their agendas: Donald Trump had America First Policies, and Joe Biden has Building Back Together.
Embracing the idea of winning at all costs, some advocates suspect, is not an approach that’s so easy to turn away from, especially after years of defending and shrugging off practices that were once more taboo.
“I think there’s a real disconnect between the political operatives in this town who want to win, win, win, and everyone else,” says Sheila Krumholz, executive director of the Center for Responsive Politics. “There’s this loss of faith in our political and campaign systems and that ultimately has a damaging effect on democracy. How do you rebuild it? By being absolutely forthright, candid, and transparent.”
When asked about the massive influx of dark-money spending on the Democratic side of the aisle, Rep. John Sarbanes, the lead sponsor of H.R. 1, insisted he doesn’t believe that means dark money has been normalized. “I think there are lawmakers who are uncomfortable with the increasing influence that money has,” he said. Sarbanes also argued that campaign finance reform is useful in its ability to motivate an increasingly “cynical and disillusioned” public. “If we can diminish the influence of money and special interests at the same time that we lift up the voices of everyday Americans,” he said, “that’s how a democracy ought to operate.”
