Running for office in the United States is an expensive affair. Whether candidates are seeking a job in the White House or the Wisconsin statehouse, they must raise vast sums to be competitive.
Fitful attempts at regulation have done little to rein in spending, failing to stop big spenders from “buying” politicians, say transparency advocates. Disclosure requirements leave gray areas. Meanwhile, from the day lawmakers assume office, fundraising eats up countless hours of their time.
In another tip sheet, we discussed the opaque world of lobbying and the tools journalists can use to track influence peddling. Here we highlight campaign finance, how limitless supplies of untraceable “dark money” can be harnessed to support or destroy candidates, and how the super-rich maneuver around donation limits. We’ll start with a review of federal campaigns and discuss state-level races below.
The law and the FEC
Campaigns for Congress and the White House are overseen by the Federal Election Commission (FEC), an independent, nonpartisan regulator. The FEC publishes candidates’ documentation about their spending and finances and enforces limits on contributions to federal elections. (State races are monitored by state campaign offices.)
Limited public funds are available in presidential campaigns and some state races, but candidates who accept these funds must agree to limit their overall spending. In recent years, the public funds system often has been called antiquated: With hundreds of millions of dollars available to candidates from private sources, any presidential candidate who accepts public funds risks being outspent.
At the FEC we can search candidate and committee disclosures, though the massive database demands patience.
One organization that has tried to sort the documents is the Center for Responsive Politics, a nonpartisan research group based in Washington, with its OpenSecrets.org project. This database is a critical instrument for anyone investigating influence peddling in Washington, though it can take a little fiddling to find what we need.
Corporations and unions are barred under FEC rules from donating directly to candidates, but individuals can donate up to $2,700 per candidate per campaign. For example, to see what Representative Nancy Pelosi, the Democratic House minority leader, has raised, we can visit her summary page on OpenSecrets.
Nancy Pelosi’s campaign raised $4.3 million and spent $3.5 million on the 2016 race. Her challenger, Robert Miller, raised a little under $11,000 and spent it all.
Click on Pelosi’s name and OpenSecrets takes us to a profile page with information on her donors, the industries and committees supporting her, and some details of how her campaign spent its money.
Political parties also support candidates. The Democratic Party raised $1.3 billion for 2016 federal campaigns compared to the Republican Party’s $969 million (their national committees each raised another $300-plus million). While both spent thousands of dollars on many different Congressional campaigns, their largest expenditures were made to defeat members of the opposing party.
In 2016, the Democratic Party spent $8.5 million to defeat Richard Burr, a North Carolina senator (he won); $8.3 million to defeat Kelly Ayotte, a senator from New Hampshire (she lost); and $7 million to undermine Donald Trump (he won). The party, of course, was not the only entity trying to defeat these candidates. Outside groups also spent $25.5 million to hurt Burr.
That year the Republican Party spent $7.5 million to defeat Catherine Cortez Masto, a Nevadan who was running for the Senate (and won); $6.8 million to defeat Maggie Hassan, who was running for Kelly Ayotte’s seat in New Hampshire and prevailed; and $7.9 million to support Donald Trump (others spent many millions to support him, as well).
Other Democratic Party affiliates (such as the Democratic National Committee) are listed here; Republican Party affiliates are here.
There are several types of groups that can raise money and advocate on behalf of a candidate. Most are tax-exempt nonprofits allowed to engage in limited political activity; others can raise and spend unlimited funds to support or harm a candidate.
Because the FEC restricts the amount individuals can donate to candidates, and the FEC bars corporations and unions from donating directly to campaigns, big-moneyed interests use these groups to influence elections. With the exception of PACs, these groups must be run independently of any campaign.
501(c)(4) “social welfare organizations”
This type of nonprofit is appealing to some donors because it can shield their identities. Though a 501(c)(4) is tax-exempt and must “be operated exclusively to promote social welfare,” the IRS explains that such a group “may engage in some political activities, so long as that is not its primary activity.” It may not tell voters explicitly whom to vote for.
Examples include the NRA Institute for Legislative Action (a daughter of the National Rifle Association), the Planned Parenthood Action Fund (Planned Parenthood) and a branch of the Sierra Club. Often a 501(c)(4) is tied to a PAC or super PAC (see below).
Like all nonprofits, a 501(c)(4) is required to file IRS Form 990. The 990 details some spending, though often in vague terms. This form can be found on sites like ProPublica and Guidestar.
(Religious groups and some other charities file with the IRS as 501(c)(3) organizations and are prohibited from engaging in political activity or lobbying for legislation. But they can create daughter 501(c)(4)s and PACs to pursue political interests. Moreover, in May 2017 President Trump signed an executive order challenging the law that proscribes tax-exempt religious groups from engaging in politics.)
These groups are named for the IRS form they must file that discloses their contributions and expenditures. According to the FEC, a 527 is generally “a party, committee or association that is organized and operated primarily for the purpose of influencing the selection, nomination or appointment of any individual to any federal, state or local public office, or office in a political organization.” While every political committee that reports to the FEC is a 527, not every 527 is required to file with the FEC.
PACs and super PACs are usually 527s, though the term is used most often to describe an organization that does not expressly support a candidate and is thus not regulated by the FEC. The Center for Public Integrity, a Pulitzer-winning, nonprofit investigative journalism outfit, describes 527s in depth. The Republican Governors Association and a branch of the Sierra Club are examples.
Political Action Committee (PAC)
Federal law bans corporations and unions from donating money directly to candidates or parties, but they can organize employees to fund a PAC, which raises money and spends to elect or defeat a candidate. These employees may also contribute directly to candidates or parties. The PAC, which can coordinate with and donate to the candidate’s committee, must register with the FEC. An individual can give up to $5,000 to a PAC in a calendar year.
OpenSecrets makes researching donations from corporations and industries easy, but be careful: It can appear that donations represent a firm when they were made by employees. For example, let’s look at universities: The University of California appears, at first glance, to have given $4.3 million in the 2016 federal campaign cycle, 96.9 percent to Democrats. But schools cannot form PACs. Instead, these are donations from staff, faculty and students of the university, not the university itself.
Though it is illegal for corporations to donate directly to candidates, some may try. A Massachusetts law firm was being investigated in April 2017 for allegedly reimbursing employees who made political donations, The Boston Globereported.
There is no limit to how much money super PACs may raise from corporations, unions or individuals, or how much they may spend to advocate for or against candidates. But unlike a regular PAC, they are not allowed to donate directly to a candidate’s campaign or coordinate with the campaign. They must register with the FEC and disclose their donors, but can receive money from political nonprofits and shell corporations that don’t disclose their donors – this is also known as “dark money” (see next section).
Super PACs arose after two 2010 court cases, starting with Citizens United v. the Federal Election Commission, where the Supreme Court ruled that the government cannot restrict unions and corporations from making political donations. Then, in Speechnow.org v. FEC, a federal court ruled that the government could not limit the size of donations from independent groups.
OpenSecrets calculates that super PACs spent $1.1 billion in federal 2016 campaigns. The top spender, Priorities USA Action, disbursed over $133 million in support of Hillary Clinton.
When the source of money designed to sway voter opinion is unknown, we call it “dark money.”
For example, 501(c)(4)s are not required to disclose their donors and often engage in politics, even if (they claim) that is not their primary purpose. Super PACs are required to disclose funding, but sometimes they receive donations from shell companies or limited liability companies (LLCs), which, in states like Delaware, are not required to name their ultimate beneficiaries. In such cases, we cannot track who is behind them. “This complete lack of transparency and accountability makes LLCs the darkest of the dark money groups,” says OpenSecrets.
Under the summary tab, we see major defense contractors such as Lockheed Martin and General Dynamics. The color bars show to whom they donated. Most gave to both parties, though Republicans got a bit more.
Let’s click the “Money to Congress” There we can track members of Congress, Senate candidates, etc.
Within that tab, we can click “All Senators.” Up top, receiving $420,000 from the defense industry, is Bernie Sanders. Then Ted Cruz. Both ran for president, so it’s not a surprise they received a lot of money. Sanders hung on longer than Cruz. And, notably, their main rivals (Hillary Clinton and Donald Trump, respectively) were not in Congress, so they would not be listed here even if they had received more. Instead, we go to the “Recipients” tab and see Clinton received over $1 million from the defense industry; Trump received about $319,000.
Go to the “Contributors” tab (we’re still in “defense” here). On the seventh line a number jumps out. Electroimpact, a relatively small defense contractor based in Washington state, donated far more – over $1 million – than any other defense contractor to an outside spending group. What’s that about?
Let’s look up Electroimpact by typing the name in OpenSecrets’ search box and clicking the “organizations” search.
Use OpenSecrets’ donor-lookup feature (we start with advanced and enter “Electroimpact” under “employer” and click which campaign year we are searching for). This list shows us who supported whom.
Most of the donations – including to Rebuilding America Now – are from Peter Zieve, the company president. But we can also see that a few Electroimpact employees donated to democratic campaigns; Sallee Lucas gave $94.00 to Hillary Clinton. (That may have been a brave move. According to the attorney general of Washington state, Electroimpact agreed in March 2017 to pay almost half a million dollars in restitution after Zieve allegedly refused to hire Muslims and harassed employees with opposing political views.)
Broadcasters are required by the Federal Communications Commission (FCC) to file their contracts with candidates and independent groups. OpenSecrets codes this data and links to the filings.
Tracking campaign finance in the states
During the 2014 election cycle, candidates for state office (such as governor or state senator) across the U.S. raised over $3 billion, according to the National Conference of State Legislatures (NCSL).
Twelve states do not restrict individual contributions; the other 38 all have some restrictions, which NCSL details here. Indeed, each state has its own campaign finance laws, disclosure requirements (NCSL lists them here) and public records protocols, some more search-friendly than others. See this FEC page for a list of state election commissions. Some, such as Washington D.C., have an elections board separate from its campaign finance office. Florida’s Campaign Finance Database is within its Division of Elections office.
An independent tool is FollowTheMoney.org by the National Institute on Money in State Politics, a nonpartisan group based in Helena, Montana. The tool can be a little awkward at first, but it is full of data coded from millions of filings and disclosures.
We can search FollowTheMoney.org by year and state – say, Georgia in 2016, where candidates for all offices (including federal) raised $68 million. Over 90 candidates for 57 state senate races raised over $8.5 million.
One of those was Tyler Harper of District 7, a rural area in southern Georgia. Harper was the incumbent and ran unopposed. He also raised $139,000. Click on his name and “top donors” and we see a list of Harper’s donors. At the top is Tyler Harper himself; he gave his campaign $74,000. His second largest donor – Force3 USA, Inc. – is a private company that local online business directories suggest he heads and which does not appear to give money to other state candidates. Other large donors share his surname or are run by people who do.
The State Financial Disclosure Project at Northeastern University ranks states’ by how accessible they make their leaders’ financial disclosures. The project ranks states’ transparency and disclosure policies in an easy-to-navigate visual that includes links, when available, to governors’ financial statements. (John Wihbey of Journalist’s Resource helps run the project.)
A 2016 study found that state supreme court judges who use public funding during their campaigns may become less likely to favor lawyers who donated to their previous campaigns.
A 2011 study in the Journal of Political Marketing, “Riding the Waves of Money: Contribution Dynamics in the 2008 Presidential Nomination Campaign,” examines patterns in individual campaign contributions using FEC data.
A 2011 study in the Journal of Public Administration Research and Theory, “Campaign Contributions, Access, and Government Contracting,” looks at how corporations use campaign donations to secure government contracts.