The Jan. 6 Capitol Hill rioters had some unseen help. Shady fundraising groups such as Women for America First and Turning Point Action helped organize the gathering and transport people to Washington for the event. Secretive shell companies and nonprofits affiliated with former President Donald Trump’s own campaign committee supported other elements of the rally.
It’s nearly impossible to know who funded such organizations, or what exactly they spent their money on, because the most sordid money in American politics hides—legally—in “dark money” groups that don’t have to report such details publicly. While many of the rioters who committed crimes at the Capitol now face charges, we may never know the names of political financiers who helped make it happen.
The House of Representatives passed new legislation on March 3 that would address this problem and end the ability of political donors to launder their money to avoid connection with unsavory causes. The For the People Act, as it is known, includes a provision that would require all political groups to disclose the names of donors who give more than $10,000, and ban the transfer of money from group to group to hide donor identities. “Dark money comes into the election system without anyone knowing its true source,” says Adav Noti, chief of staff at the Campaign Legal Center, which backs campaign-finance reforms. “This would eliminate dark money contributions that end up in campaign systems."
Campaign finance in the United States is a complex web of opaque activities that invites abuse. Traditional campaigns and political-action committees must abide by four- or five-figure donation limits and identify donors, except for those giving small amounts. They must also detail what they spend their money on in regular reports to the Federal Election Commission.
So called “super PACs” must identify donors and expenditures as well, but there’s no limit on donations. Since these are “independent expenditure” groups, they’re not allowed to coordinate with the candidate or campaign they're backing. But they do coordinate informally and some just break the rules. The biggest super PACs raise millions of dollars per election cycle and run many of the ads that blanket the media during campaigns.
Anonymous donors
Dark-money groups are different. Many have nonprofit status but don’t have to report anything to the FEC. Some run ads or conduct campaign activities—such as transporting protesters to the Jan. 6 Trump rally. Others raise money from donors able to remain secret, then contribute to super PACs able to accept huge donations. Those PACs must list the dark-money group as a donor, but whoever gave the money in the first place remains anonymous.
A new dark-money twist is a shell company affiliated with a traditional campaign that can spend campaign funds without the normal disclosure requirements. The 2020 Trump campaign used a private company called American Made Media Consultants for nearly half of its $1.3 billion in spending on advertising, direct mail, software and a variety of other things. The Trump campaign had to disclose disbursements to the shell company, but the shell company didn’t have to disclose what it spent the money on. That raises the possibility the firm is a kind of slush fund directing donor money to favored vendors and perhaps even Trump family members getting paid as “consultants.” The Campaign Legal Center filed a complaint with the FEC, arguing the arrangement is illegal.
Dark-money groups spent at least $750 million in the 2020 elections, a record. One dark-money group funneled more than $1 million in foreign donations to Trump operations, which is flatly illegal. Author Jane Mayer asserts in her book “Dark Money” that secret funding by billionaires allows plutocrats to control government policy, worsening wealth and income inequality.
The For the People Act wouldn’t ban any donations. It would only illuminate dark money, by requiring disclosure of the donors and the activities their money is spent on. That’s a deliberate effort to survive court challenges, given that the Supreme Court's "Citizen's United" decision in 2010 opened the financial floodgates by allowing unlimited corporate donations to super PACs. “The bill has been drafted with great care and with the Supreme Court in mind,” Noti says. “The court has been hostile toward democracy reform laws, but it has been uniformly supportive of disclosure.”
The For the People Act has gotten more attention for controversial changes to voting procedures that are arguably partisan. Democrats say these changes are necessary to prevent Republican-led states from restricting access to the polls, while Republicans argue it represents federal overreach. The bill passed the House with no Republican support, and it’s likely to die in the Senate, because it would take 10 Republicans in addition to all 50 Democrats voting for it to overcome the 60-vote filibuster threshold.
The disclosure measures should be less controversial, since there’s nothing democratic about funding political activity in secret. The Capitol riots should be a further spur for basic reforms. Yet Democrats have pushed to bring dark-money funding into the light for nearly a decade, with consistent opposition from Republicans, and that seems likely to continue. If the overall voting-reform bill dies, Democrats can introduce the disclosure requirements as a standalone measure, and if Republicans still block it, run on the issue in the 2022 and 2024 elections. If political money is vital to democracy, the people who provide it should be happy to say who they are.
Rick Newman is the author of four books, including "Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips, and click here to get Rick’s stories by email.
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