House Republicans reintroduced sweeping “election integrity” legislation last week that would roll back federal oversight of elections, encourage states to purge voter rolls and implement voter ID requirements, and reassert congressional control over local election laws in Washington, D.C., which have drawn the ire of Republicans for allowing noncitizens to vote.
Buried in the 200-plus page bill known as the American Confidence in Elections (ACE) Act are provisions that would gut donor disclosure requirements and allow nonprofits to circumvent certain campaign finance regulations, paving the way for an even larger deluge of dark money in politics under the aegis of protecting the political speech of conservative donors and corporations from government overreach. The bill’s sponsor, House Administration Committee Chairman Bryan Steil (R-WI), champions the bill as “the most conservative election bill to be considered in the House in over 20 years.”
Although a previous iteration of the ACE Act was introduced last session, it didn’t advance with Democrats in control of the House.
“The free speech provisions in the ACE Act would defend the vital role nonprofit organizations serve in encouraging free speech and the free exchange of ideas,” a coalition of dark money-funded groups wrote in support of the bill.
While the bill has received the full-throated endorsement of dark money groups that push back against donor transparency, it doesn’t substantially change existing Internal Revenue Service (IRS) reporting requirements for 501(c)(3) nonprofits or donors.
“For the most part, this proposed legislation simply codifies changes to donor disclosure rules that were promulgated by the IRS and Treasury under Trump,” said Ellen Aprill, a professor of tax law at Loyola Marymount University. “It is not such an enormous change since the rule remains the same, but, at the same time, legislation is much more difficult to change than regulations.”
The primary impact of the bill derives from its redefinition of “political committee” to include only groups that either expressly advocate for or against candidates during elections or routinely spend the majority of their funds on elections. Since the bill also eliminates the requirement of nonpolitical committees to report donors for independent expenditures, the result would be that countless “social welfare organizations” (advocacy groups considered 501(c)(4)s under tax law) that engage in political advocacy would be able to spend virtually unlimited money on elections without having to disclose their donors, even if the money is earmarked for political spending.
“The ACE Act would allow significantly more dark and special interest money into politics, all under the guise of protecting political speech,” Aaron Scherb, senior director of legislative affairs at Common Cause, told the Center for Media and Democracy (CMD).
The bill also bars any federal agency outside of the IRS from requiring the disclosure of donors, a move that would permanently prohibit the Federal Election Commission (FEC) from requiring corporations to disclose their political contributions or contributions to tax-exempt groups or trade associations.
“The idea that this is about freedom of speech is a canard,” University of Pittsburgh tax law scholar Phillip Hackney told CMD. “It’s about the wealthy influencing elections.”
Making Dark Money Darker
Proponents of the bill claim that looser transparency laws are needed to protect the First Amendment rights of conservative donors and shield them from what they deride as left-wing cancel culture. Critics warn that this legislation will expand the proliferation of untraceable dark money.
“The ACE Act would open the door to more secret money in our elections and further empower the wealthy few to spend even more money purchasing access and influence,” noted Stephen Spaulding of Common Cause in his testimony at a House hearing in May.
Allowing organizations to spend millions of dollars in independent expenditures without forming political committees and reporting the funding source for those expenditures would amount to a substantial change from current campaign finance laws.
The existing Federal Election Campaign Act requires those who spend money supporting or opposing candidates to disclose their donors. Were the ACE Act to become law, “it would invite corruption and undermine confidence in elections,” Spaulding said.
This proposed change echoes the provisions of a model anti-disclosure resolution developed by the American Legislative Exchange Council (ALEC), the right-wing bill mill that fights campaign finance transparency through its Center to Protect Free Speech. Adopted in 2017, the resolution states that “any entity with a tax exemption under Section 501(c) of the Internal Revenue Code (or any successor provision of federal tax law) shall not be a political committee and shall not be required to file any reports set forth in this chapter.” If the proposed ACE Act passes, it will have the same effect in practice.
ALEC’s model resolution has picked up steam in recent years, being adopted as the Personal Privacy Protection Act (PPPA) in state houses across the country.
“Voters have a right to know who the secret funders are that may be influencing candidates’ political interests,” Rep. Terri Sewell (D-AL) said in the same May hearing. “There is a common misconception, however, that by hiding dark money, we are helping to shield donors from some sort of harm or their privacy being invaded.”
Anti-Disclosure Advocates Smell Blood
Although the ACE Act does not change or eliminate the requirements for 501(c)(3)s to file nonpublic disclosures of their major donors to the IRS, the bill has attracted the attention of longtime anti-disclosure groups, many of which are funded by conservative, dark money donors.
“Our pervasive cancel culture and attacks on nonprofit donor privacy represent one of the most serious threats to free speech and democracy today,” said Matt Nese, vice president of People United for Privacy (PUFP). The State Policy Network (SPN) launched that anti-disclosure group in 2016 to protect nonprofit donors from public scrutiny and to support efforts at the state and federal level to prevent disclosure of donors to governments.
These efforts are part of a “public messaging project that seeks to reduce public support for political transparency rules by frightening people with dramatized stories about alleged disclosure-induced threats and harassment,” according Erin Chlopak, senior director of campaign finance at the nonpartisan Campaign Legal Center.
Americans for Prosperity (AFP) and the Koch-funded Institute for Free Speech have both filed major lawsuits in California over that state’s disclosure rules. AFP’s $10-million lawsuit went to the U.S. Supreme Court, where it won a favorable ruling.
On the flip side, “the Court has repeatedly reaffirmed the constitutionality of campaign finance transparency requirements,” Chlopak said in an interview. Even in the Citizens United case, “the premise of the Court’s decision that unlimited corporate election spending wouldn’t be problematic” was that such spending could constitutionally be subject to disclosure requirements “so the public would be able to evaluate and make judgments about how it was used to influence their votes.”
The ACE Act (HR 4563) passed out of the House Administration Committee last Thursday, with the committee’s four Democrats voting against the amended bill.