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Did Outside Groups ‘Fail’ to Disclose With the FEC?

The trendy way to influence elections this cycle is through independent expenditure committees, and as I wrote yesterday, these committees are, in most

Jul 31, 2020
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The trendy way to influence elections this cycle is through “independent expenditure committees,” and as
It all relates back to the aftermath of 2004, when 527 groups like Swift Boat Veterans for Truth had spent like mad during the election but hadn’t registered with the FEC as political action committees (and therefore hadn’t submitted themselves to the restrictions and disclosure requirements entailed in the designation). The Campaign Legal Center and other campaign finance and elections groups filed complaints with the FEC arguing these organizations were effectively skirting the law, and in response, the FEC made some new rules.
In an “Explanation and Justification” of its rules governing electioneering communication (or EC — essentially, political TV or radio ads run just before an election), the FEC determinedthat they could require disclosure about two kinds of donations — “funds received in response to solicitations specifically requesting funds to pay for ECs” and “funds specifically designated for ECs by the donor.” In other words, if a group received money in response to a solicitation that advertised their spending on electioneering communications, that money would be regarded as a “contribution” — an important designation that meant it would most likely have to be disclosed.
When the Supreme Court ruled in Citizens United earlier this year, it freed up limits on independent expenditures by corporations* but it didn’t necessarily change present disclosure laws. That was accomplished, instead, by a different ruling late last year, in which a federal appeals court decided in a case brought by EMILY’s List to strike down the “solicitation” regulation the FEC had drawn up.
In response to that court’s decision, the FEC got ridof the first requirement for disclosure (“solicitations specifically requesting funds to pay for ECs”) and keeping only the second (“funds specifically designated for ECs by the donor”). As a result, the conventional wisdom is that if a 527 group or 501(c)(4) group wants to keep their political spending in the dark, all they have to do is direct the donor to not specify what specific purpose their donation should be used.*
Some argue the FEC still has some legal leeway to compel these groups to disclose more about its EC spending — it’s just being timid about doing so. Others, however, maintain that it’s bound by the current law and, unless the courts or congress change things, there’s not much more the FEC can do — nor it there much more organizations should feel like they have to do.
*Update: An earlier version of this post said Citizens United vs. FEC freed limits on corporate campaign contributions. Instead, it freed independent expenditures on campaigns by corporations. An earlier version also said groups can avoid disclosing their expenditures through the use of separate funds. Instead, it can do so by directing their funders to not specify the purpose of their donations.
As an additional side note, legal scholars point out that the FEC could easily make a new rule, without the help of congress, to counteract the current avalanche of undisclosed electioneering communications. Partisan gridlock on the commission, however, makes the chances of such a scenario quite unlikely.
Dexter Cooke

Dexter Cooke

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Dexter Cooke is an economist, marketing strategist, and orthopedic surgeon with over 20 years of experience crafting compelling narratives that resonate worldwide. He holds a Journalism degree from Columbia University, an Economics background from Yale University, and a medical degree with a postdoctoral fellowship in orthopedic medicine from the Medical University of South Carolina. Dexter’s insights into media, economics, and marketing shine through his prolific contributions to respected publications and advisory roles for influential organizations. As an orthopedic surgeon specializing in minimally invasive knee replacement surgery and laparoscopic procedures, Dexter prioritizes patient care above all. Outside his professional pursuits, Dexter enjoys collecting vintage watches, studying ancient civilizations, learning about astronomy, and participating in charity runs.
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