End Dark Money Now
The insurrection shows why Democrats must enact long-overdue reforms that will expose who is funding the anti-government movement threatening our democracy.
This report was written by Andrew Perez and David Sirota.
If you are a billionaire or a corporation in America today, you can bankroll seditious politicians and the radical right-wing movement that staged last week’s violent insurrection at the U.S. Capitol — and you can do so with impunity. You don’t have to fear social ostracization, political consequences or a consumer backlash, because right now you can remain anonymous by funneling your cash through political groups that operate in the shadows.
Deterring this continued financing of violent right-wing radicalism — and allowing Americans to know who exactly is funding this dangerous movement — will require a new Biden administration and a Democratic Congress to finally enact long-overdue reforms to end the era of dark money.
Remember: Last week’s uprising at the Capitol was not some spontaneous grassroots conflagration — ABC News reported that “President Donald Trump's political apparatus worked behind the scenes with pro-Trump groups to plan and promote events in Washington, D.C., that ultimately led to Wednesday's attack on Congress.”
Following that assault, Americans have been reminded that billionaires, lobbying organizations and name-brand corporations have knowingly sponsored the politicians and groups that egged on the mayhem in hopes of overturning the national election — and a handful of those corporations have said they will suspend political action committee donations to individual lawmakers who tried to overturn the election.
While that’s good news, PAC donations to individual politicians are only a small slice of all the resources financing the insurrectionist GOP — and existing laws and rules only provide the public a partial snapshot of the money fueling the radical right. Right now, an increasing portion of resources flooding into politics is going into dark money groups that do not have to disclose their donors. OpenSecrets estimated that dark money groups injected more than $750 million into the 2020 elections — and that does not account for other dark money that funds propaganda, misinformation and astroturf organizing.
President-elect Joe Biden has called the insurrectionists at the Capitol “domestic terrorists” — and a push for a new anti-terrorism law may touch off a contentious debate over civil liberties. What should not be controversial is subjecting dark money to sunlight and disclosure.
In the name of protecting national security, lawmakers recently passed bipartisan legislation requiring more transparency from anonymous shell corporations. The same logic should apply to dark money in an era of violent insurrection.
These seven steps would let investors, consumers, journalists, watchdog groups and government agencies know who is funding the assault on our democracy.
1. Require corporate disclosure of all political spending
The Securities and Exchange Commission can require publicly traded corporations to fully disclose all spending on politics — including donations to 501(c)(4) dark money groups that have funneled money to the Republican groups that promoted last week’s insurrection.
Public interest groups pressed the Obama administration to enact such disclosure requirements, but the administration’s SEC chief, Mary Jo White, refused. The Republican-controlled Congress in 2015 then included language statutorily barring the agency from enacting such a rule in the annual congressional spending bill — and the provision has been re-authorized each year in subsequent spending bills, including the one that passed in late December.
“None of the funds made available by this act shall be used by the Securities and Exchange Commission to finalize, issue, or implement any rule, regulation, or order regarding the disclosure of political contributions, contributions to tax exempt organizations, or dues paid to trade associations,” the provision says.
Biden can select an SEC chief who supports such a rule, and congressional Democrats can now strip out that language from new spending bills. To prevent delays, shenanigans or inevitable attempts to water down the initiative, Democrats can additionally re-introduce an existing proposal statutorily forcing the SEC to issue regulations requiring public companies to disclose their political contributions.
2. Require dark money nonprofits to disclose their donors
A dark money arm of the Republican Attorneys General Association (RAGA) was one of several nonprofits that helped direct people to the protest before the insurrection at the Capitol, according to Documented. The shadowy organization, called the Rule of Law Defense Fund (RLDF), sent out robocalls urging people to “march to the Capitol building and call on congress to stop the steal.”
A group calling itself the Rule of Law Defense Fund supporting efforts to overturn a national election is about as Orwellian as it gets — but if you try to follow the money behind the organization, you hit a brick wall.
Indeed, while RAGA discloses its donors, records show more than 10 percent of the money it raised last election cycle came from the Judicial Crisis Network (JCN) and its parent organization, called the Concord Fund, which collectively donated $3.7 million. JCN separately reported donating $700,000 to RLDF between mid-2018 and mid-2019.
The Concord Fund and JCN are part of a cluster of conservative dark money groups led by Trump’s judicial adviser Leonard Leo and have spent tens of millions of dollars on recent Supreme Court fights. Their funding sources are a total mystery.
JCN donated $50,000 to another group listed as a participant in the Capitol protest — Turning Point Action, the 501(c)(4) affiliate of the conservative campus group Turning Point USA. Charlie Kirk, who leads the Turning Point groups, tweeted two days before the insurrection in Washington that Turning Point Action was “sending 80+ buses full of patriots to D.C. to fight for the president.”
H.R. 1, a sweeping piece of democracy reform legislation recently re-introduced by House Democrats, would require nonprofits that spend money in elections and on judicial nominations to immediately disclose their donors. If Democrats want to ensure there are no loopholes, they can broaden this provision and force all nonprofits that work to influence policy to disclose their donors.
3. Disclose contractor spending
Biden could sign an executive order requiring federal contractors to fully disclose all political spending, including to dark money groups. At the end of his presidency, Obama considered signing such an order, but he never did.
We already know that some corporations receiving government business are linked to those who finance the insurrectionist movement — for example, Uline receives government orders while its billionaire owner Richard Uihlein funds Turning Point USA, which provided Trump a platform to claim he won the election weeks before the insurrection.
Without an executive order, the public cannot know the full extent to which such contractors may be financing groups promoting political misinformation fueling the insurrection movement.
4. Repeal Trump’s dark money rule
The Trump administration last year issued a rule allowing nonprofits to avoid even privately disclosing their donors to Internal Revenue Service regulators. The rule followed a lobbying campaign by the Koch-linked dark money group, Americans for Prosperity. This rule must be rescinded.
5. Rescind rules making it more difficult for shareholders to compel disclosure
Shareholders have been filing resolutions to try to force corporations to fully disclose their political spending. The movement has resulted in more than 150 companies agreeing to provide expanded disclosure of spending, including tens of millions of dollars of previously secret payments. But the Trump administration recently passed rules to try to make it more difficult for such resolutions to be filed and re-submitted. Those rules can be rescinded by Biden’s administration and a Democratic Congress.
6. Pressure institutional investors to take action
Billions of dollars worth of stock in workers’ 401k accounts are in the hands of the so-called Big Four institutional investors: Fidelity, BlackRock, Vanguard and State Street. The latter three are collectively the largest shareholder in almost 90 percent of all corporations in the S&P 500. These institutional investors — not individual 401k account owners — get to decide how those shares of stock are voted in shareholder resolutions, and they often refuse to support resolutions requiring corporate executives to disclose political spending.
Indeed, “Blackrock, Fidelity, and Vanguard supported almost no proposals to mandate that corporations disclose their political spending,” wrote then-Delaware Supreme Court Justice Chief Justice Leo Strine in a 2018 report.
Had those asset managers voted the shares of stock in support of such initiatives, many of them might have passed.
Strine called this a “fiduciary blind spot” because it effectively deprives these institutional investors of the information to know whether they are adequately protecting their customers’ money and assuring it isn’t misused.
Federal, state and local governments employ these giant institutional investors to manage billions of dollars of government workers’ retirement savings. That gives public officials leverage to demand that these companies start voting stock shares in support of resolutions requiring comprehensive political spending disclosure.
If an asset manager like BlackRock does not want to vote for transparency measures, public officials do not have to continue giving the company the lucrative business of managing government workers’ money.
7. Use pensions’ leverage to press for disclosure
We already know that Pennsylvania public workers’ retirement system invests in Blackstone, whose CEO has bankrolled the political machine supporting the lawmakers who tried to invalidate Pennsylvania’s 2020 election. There are likely many perverse situations in which workers’ pension funds are indirectly subsidizing the political movement trying to disenfranchise those same workers.
State and local officials oversee almost $5 trillion of assets in these public pensions. Those officials can spearhead — and vote their holdings for — shareholder resolutions to force the companies to disclose all political spending including dark money spending. They can also review whether corporate resources are indirectly flowing to groups fomenting anti-democratic insurrections.
Additionally, when negotiating new investment contracts, state and local officials can use their enormous leverage to require private equity and hedge fund firms to disclose all political spending as a condition of receiving lucrative pension investments.
Workers deserve to know whether or not their retirement savings are subsidizing anti-democratic movements — these are ways to make that happen.
Photo credit: Spencer Platt / Getty Images
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