Four out of five Americans, across the political spectrum, consistently support transparency when it comes to contributions to organizations that spend money on campaigns. Unfortunately, a growing number of states, now including North Carolina, are advancing so-called “donor privacy” bills to block public access to information about who is spending big money to secretly influence our vote and our government.
Senate Bill 636, is one such bill that is on track to pass the state Senate this week. What’s more, the mandate in this bill to conceal donor information applies not just to 501(c)(3) charitable, religious, and education organizations, but also to 501(c)(4) organizations that regularly engage in substantial partisan campaign activity, 501(c)(5) labor organizations and 501(c)(6) organizations like chambers of commerce.
Basically, if someone wants to spend big in North Carolina elections, all they will need to do under this legislation is to find some nonprofit groups through which they can route the money and they can be certain that the public won’t be able to trace the cash back to them. The effect will be to render limits on campaign contributions even more meaningless than they already are.
Sadly, all these new so-called donor privacy bills work toward the same general goal: preventing the public identification of big donors to nonprofit organizations. These bills strike at the heart of the “important government interests” that the U.S. Supreme Court identified in the seminal 1976 case, Buckley v. Valeo, in which the justices found that disclosure informs voters about the sources of political spending and helps to guard against corruption.
And it’s no surprise that these “donor privacy” bills are straight out of the ALEC playbook. The organization even has a “toolkit” for it.
Under current North Carolina law, so-called IE-only (independent expenditure) PACs are subject to disclosure, and so are the groups that donate to IE-only PACs. But in dark money shell games, that only accounts for the first two entities that are spending in North Carolina elections. If the money trail goes back further, through three or four nonprofits, the state Board of Elections and the public likely won’t be able to investigate those transactions. Current campaign finance statutes don’t require such nonprofits that are a few steps removed to disclose their donors, and if the SBOE wants to investigate, the nonprofits will be able to point to the provisions that would become law in SB 636 to say that they are not even allowed to disclose those transactions.
These shell games already exist of course, but SB 636 puts up another new wall, saying that the public can’t get access to this information if the money trail goes through more than just one or two nonprofits. The proposal would make it easy for wealthy special interests to route their money through a few groups just to avoid transparency and accountability.
During the 2020 election cycle, North Carolina voters were inundated with ads that distorted the facts. For example, in state Senate District 31, the innocuously named Citizens for a Better NC Senate sent mailers that lied about candidate Terri LeGrand’s policy views. Reporters traced the ultimate funding source for the mailers back to a Virginia nonprofit that was funded, in part, by donations from other nonprofits.
The beneficiary of those false ads was state Sen. Joyce Krawiec, who is now through her sponsorship of SB 636, helping to lead the charge to allow fat-cat donors to hide their political contributions by funneling them through nonprofit groups.
A few big-name examples of 501(c)(4) groups on the GOP side that have abused these loopholes would be the NRA, Club for Growth, and Heritage Action, the 501(c)(4) sister group to the Heritage Foundation. Democratic-leaning groups, like the 1630 Fund and Future Forward, may have less name recognition, but they have also engaged in similar tactics. Even small groups with one or a few wealthy funders can take advantage of the loophole, routing their money through a series of shell LLCs and 501(c)(4) groups before it gets to the Super PACs, at which point it’s impossible to determine where the money ultimately came from.
Donor privacy laws codify these practices and prevent the public from ever finding out who is funding our elections.
The bottom line: We all pay a price when political contributions influence our government. With the Greg Lindberg scandal, the now-imprisoned insurance company executive was trying to buy favorable treatment from regulators, putting North Carolina consumers at risk. When Duke Energy lobbies officials whose campaigns it helped fund to avoid paying its fair share of environmental cleanups, we all pay the price with higher utility bills.
We can all agree that the current political system isn’t working as well as it should for regular North Carolinians and their families. And now with Senate Bill 636, state legislators are threatening to make things even worse, by making it nearly impossible for voters to learn the identities of the big-money donors trying to influence our elections.
Rather than carving our legal protections for nonprofits’ political spending, state lawmakers should require real transparency regarding the sources of big money in our elections to create more government accountability, less influence for wealthy special interests, and less political corruption.
Melissa Price Kromm is the executive director of N.C. Voters for Clean Elections.