Democrats, Republicans Reverse Roles on Disclosure of “Dark Money” Donations

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March 10, 2012; Source: Knoxville News Sentinel (ProPublica)

A little history lesson on the sorry trajectory of the secrecy of donations to politically partisan 501(c)(4) social welfare organizations: Did you know that only a few years ago, it was Republicans calling for disclosure of “dark money” donations and Democrats opposing it? ProPublica reminds us that a decade ago, long before the failure of the Democrats’ DISCLOSE legislation, Sen. John McCain (R-Ariz.) was pushing legislation to get 527 organizations that were running campaign ads to reveal their donors. Rep. Amory Houghton (R-N.Y.) then pushed for additional legislation that would require donor transparency for 501(c)(4), (c)(5), and (c)(6) organizations. Houghton’s bill would have required disclosure of donors of more than $1,000 to organizations that spent more than $10,000 on political ads and other campaign activity in any election cycle.

We remember that many nonprofit organizations—(c)(3)s—opposed the legislation, fearing that disclosure would scare away potential donors. Democrats on Houghton’s House Ways and Means Oversight Subcommittee also opposed the bill, with some charging that (c)(4) disclosure was a poison pill meant to undermine any campaign reform legislation—an unlikely scenario given McCain’s strident support for reform—and others saying that the disclosure requirements were “overly broad and uncertain;” an aide to former Democratic House Minority Leader Dick Gephardt said that Houghton’s proposal “goes too far.”  

Ultimately, the Democratic opposition forced McCain and the Republicans to push for a narrower bill which focused on strengthened disclosure requirements for 527s, which President Clinton signed into law in July of 2000. By leaving the 501(c)(4) loophole open, donors in search of secrecy shifted from 527s to (c)(4)s, bringing us to the position the nation—and the nonprofit sector—faces today. Now Republicans are the protectors of 501(c)(4) donor secrecy, having seen leaders like Karl Rove fashion remarkably successful  examples of political campaign-oriented social welfare organizations, and Democrats are sort of mild advocates of some measures of increased disclosure.

Who knows if the wheel will turn again? Who knows if additional loopholes will be created if some version of the DISCLOSE bill does make it through a do-nothing Congress? Increased and stronger disclosure requirements are needed to fix the American political process. Both parties ought to wake up and smell the coffee—or tea, as the case may be.—Rick Cohen