US & World

Watchdogs wary of foreign money funding election campaigns; others oppose disclosure

Think Progress reported that the US Chamber of Commerce is actively seeking foreign investment in a general account that it also uses to fund partisan political attack ads.
Think Progress reported that the US Chamber of Commerce is actively seeking foreign investment in a general account that it also uses to fund partisan political attack ads.
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Calls for disclosure and transparency are being weighed and debated on the heels of a recent report that alleges the U.S. Chamber of Commerce funds its political campaign ads out of its general account, which solicits foreign funding.

An online report published Oct. 5 by the progressive think tank stated “the Chamber is likely skirting longstanding campaign finance law that bans the involvement of foreign corporations in American elections."

If true, the Chamber’s solicitation of foreign funding to pay for electioneering would be illegal. Since the report’s release, the Chamber of Commerce has rebuffed inquiries into its list of foreign donors, which it is not under obligation to release as a nonprofit organization under the tax code.

“The charge is that some of that money must at a minimum be going into the same account that is funding $75 million… which is about quadruple what the Chamber spent two election cycles ago,” said Michael Crowley, a TIME magazine reporter.

Crowley's report detailing public scrutiny of the Chamber appeared today in print and TIME’s website.

The Chamber has denied that any of this foreign funding has been used for electioneering purposes and is properly accounted for.

“The bottom line is we can’t know — we can’t say — exactly what’s going on here,” Crowley said. “At the end of the day, the Chamber of Commerce doesn’t have to be transparent about who its donors are.”

As a nonprofit 501(c)(6) organization, the U.S. Chamber of Commerce is a lobbying group that is required to list how much it spends and how much it takes in, but not the identity of its donors.

Due to last January’s Supreme Court ruling in favor of nonprofit Citizens United, the Chamber can, and has, spent money on TV spots that mention a candidate.

Crowley, who has been following the reaction to ThinkProgress’ report, said that the January ruling has “made corporations more comfortable getting involved in politics. The Supreme Court is basically saying, ‘do what you want.’”

Crowley noted that their activities must educate voters about issues and not be used quite explicitly to elect or defeat candidates, but that distinction is “a pretty foggy line.”

“Everyone in Washington knows with a nudge and a wink what’s going on, it’s basically political advocacy, it’s basically attacks on candidates,” Crowley said.

The $300 million raised during this cycle, he notes, is almost overwhelmingly going to benefit Republicans over Democrats.

As Crowley noted in his TIME article, President Obama has taken an interest in ThinkProgress’ allegations and used them to motivate Democratic voters, but the political impact of such a backlash has yet to be seen.

In the meantime, ThinkProgress has continued to release reports, including one on Oct. 13 that claimed the Chamber released $885,000 from over 80 foreign companies.

The thrust of their criticism, said ThinkProgress editor Faiz Shakir, is that the foreign money is fungible and can comingle into the same general account. Shakir compares their political spending, which he noted had exceeded $10.5 million just this week, with traditional political action committees, who must disclose who paid them and limit its spending per candidate.

As a 501(c) nonprofit, the Chamber is not required to do either.

Some have called for transparency from nonprofit companies, including Senator Dick Durbin (D-Ill), who called on the Internal Revenue Service to investigate the tax status of Crossroads Grassroots Political Strategies and “other organizations that are directing millions of dollars into political advertising without disclosing their funding sources,” according to an Oct. 12 Politico article.

But revealing those sources of donations would be a betrayal to those organizations’ members, said Allison Hayward, vice president of policy for the Center for Competitive Politics.

“The Chamber has a larger commitment to its members,” Hayward said. “It can’t decide in a fit of whimsy to turn over the list [of donors].”

Forcing the Chamber to turn over a list of donors by law under full disclosure, could release an expansive amount of information unrelated to politics, burying the most relevant information.

“There’s an inappropriately broad standard for disclosure that we would never support,” Hayward said.

Jonathan Collegio is also hesitant to introduce further legislation enforcing disclosure. Collegio is the communications director for American Crossroads, a nonprofit operating under section 527 of the tax code, which allows political involvement if its donors are reported. American Crossroads also has a spinoff group Crossroads GPS, classified as a 501(c)(4) which can intervene in political campaigns as long as it serves political welfare.

“There’s a long legal precedent for nondisclosure,” Collegio said. “The laws are what they are, and I think that the outrage that you’re seeing by groups at this moment toward nondisclosure is really, really selective outrage.”

“In 2008, for example, there was $400 million of independent expenditures to help elect Obama and the Democrats,” Collegio said. “Much of that was nondisclosed, and there was no outrage about that. So the fact that a different party is using the same laws and is raising money to me shows that this is a political issue.”