Documenting Donor Influence on Politicians’ Fundraising
Program Date: May 9 and March 30, 2022

If you don’t cover campaign finance, you don’t fully cover politics, Patrick Svitek, Texas Tribune political correspondent told NPF’s 2022 Statehouse Reporting Fellows. (Transcript | Video)

For many candidates, fundraising takes up most of their time. “Hours and hours a day making calls, attending events, all geared toward raising money … [to pay] for things like TV ads, polling, all the important things and functions that go into a successful campaign,” Svitek said. More importantly, “money can influence the decision-making of elected officials … [whether] there’s an actual quid pro quo … [or] that big donors tend to get access to politicians that normal people, average voters do not.”

Svitek broke down fundraising into three categories, with declining transparency:

  • Hard money: A candidate’s campaign account
  • Soft money: Political action committees (PACs)
  • Dark money: Groups, such as 501(c)4s, that spend money for political influence but do not disclose donors

Anna Massoglia researches dark money as editorial and investigations manager at OpenSecrets, a non-partisan, non-profit organization that tracks money in politics. (Transcript | Video)

Nonprofit 501(c)4s are the donation “vehicle of choice” for “wealthy donors who would like to remain anonymous or don’t want the flashy headlines of supporting a political candidate or a cause that might not help either their business or their personal life,” Massoglia said.

Since the Supreme Court’s Citizens United decision in 2010, dark money groups have spent $1 billion, she said.

Other types of dark money groups include limited liability companies, shell companies and fiscally sponsored projects.

Online ads from dark money groups may stoke extremism

Ads often appear to be sponsored by an independent group with their own name, when in fact they are under a 501(c)4’s umbrella, Massoglia said, and the Federal Election Commission (FEC) doesn’t require disclosure of digital ad data in the same way they do TV or radio ads.

“Digital spenders are another emerging way for money from opaque sources to really flow into our elections,” Massoglia said. These spenders engage in microtargeting in which they buy Facebook or YouTube ads aimed at “a very specific type of person based on traits that they have. … This is how extremism can be stoked in some ways or very specific contributions can be enlisted, how in some cases disinformation can spread among these very niche groups.”

Most online ads avoid language that would trigger reporting under the Buckley v. Valeo Supreme Court ruling, including such terms as “defeat,” “elect” or “vote for/against.”

Online ads are often images and memes, Massoglia said, “where you’re saying, ‘thank your senator … we hate your senator, your senator helps kills puppies.’ That type of thing is totally fair game.”

Campaign finance information to mine outside the FEC

Check more than one document, Massoglia says, including FEC filings, tax returns and incorporation records. You may find different information for the same group.

990 forms from the Internal Revenue Service are “core resources” for getting information on non-profits. But they’re unavailable for nearly six months after the end of the fiscal year. However, Form 1023 for a 501(c)3 or Form 1024 for a 501(c)4 have similar details.

If the group in question has a physical office and normal business hours, a journalist can go there and request their 990 form as soon as it’s filed and the group legally must provide it the same day, Massoglia said, but that has been difficult during the pandemic. You can also request the form in writing and they must respond within 30 days.

When requesting the forms specify that you also want the Schedule B, which will show  whether a group is fully funded by a single multimillion dollar donation or a number of smaller donations, Massoglia advised.

LD-203 reports are required of  lobbyists or corporate PACs that meet a certain threshold for donations donate to politicians.

Lobbyists “meet a certain threshold where they’re compensated or whether they make expenditures to directly communicate with a member of the executive or administrative branch of government to influence legislation or administrative action,” said Anne Temple Peters, Texas Ethics Commission executive director. “Once they’ve met those thresholds, then they have to register and then registration triggers the reporting requirements.”

Lobbyists must disclose, and that disclosure also includes contributions to advocacy groups, Massoglia said, which can be a breadcrumb for tracking related groups.

LM-2 filings from the Department of Labor reveal  donations from unions to super PACs, or in some cases to dark money groups, Massoglia said.

State-level agencies should be researched for state-level campaign finance reports as well as incorporation documents.

However, “many of the more opaque nonprofits are incorporated in states like Delaware, where you can just pay an agent to file your paperwork on your behalf or a company … so there’s very little information on the filings themselves,” Massoglia said. In those cases, she seeks information directly from the clerks.

What political reporters need to know

Four things every good campaign finance reporter must know, Svitek said, are:

  1. Federal campaign finance rules as well as their state rules, particularly contribution limits
  2. Reporting periods and deadlines (and how they change as election day approaches)
  3. Who the authorities are (i.e. FEC at the national and state level. The agencies vary by state. (In Texas it’s the Texas Ethics Committee).
  4. Who the sources are (beyond the donors and candidates).

Fundraising is a metric that a lot of people use to judge candidates, like it or not, fair or not fair, good for democracy or not good for democracy,” he said. Get to know the sources that are primarily focused on fundraising:  “people who put together events, people who help connect candidates with donors, get to know the donors themselves if you can … try to understand what motivates them. Obviously, some people give at a very high level because they want access. … that bypasses the access that the average voter can get. Some people have very deep ideological issues that drive them to give so much.”

Massoglia recommends setting up notifications with the FEC to find out when a candidate or group of interest to you is sent a “request for additional information” (RFAI) letter, which could be minor or very fruitful. Much of campaign strategy is “figuring out how to follow the letter of the law, but maybe not necessarily the spirit of the law,” Svitek said. “Super PACs, especially in recent years, try to put off donor disclosure for as long as possible, and they can do this by popping up in the final days before an election. And they structure themselves in a way where they don’t have to disclose their donors until after an election. And it’s technically all legal.”

Svitek feels strongly that these issues must be covered because “campaign finance groups can … almost supplant campaigns as power centers.”

“This is all about shining a light on a part of politics that often happens in private, and the end goal is to hold people accountable and bring more sunshine to this part of politics.”

SPEAKERS

Anna Massoglia, OpenSecrets editorial and investigations manager
Patrick Svitek, Texas Tribune primary political correspondent
Anne Temple Peters, Texas Ethics Commission executive director


The Statehouse Fellowship is sponsored by Arnold Ventures. NPF is solely responsible for the content.

Anna Massoglia
Editorial and Investigations Manager, OpenSecrets
Patrick Svitek
Primary Political Correspondent, The Texas Tribune
Anne Temple Peters
Executive Director, Texas Ethics Commission
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Transcripts
Texas Tribune's Patrick Svitek and Anne Temple Peters' NPF Presentation
Anna Massoglia's OpenSecrets NPF Presentation
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