Colorado Dems Have A Plan To Shine A Light On Dark Money. Could It Work?

June 20, 2019
Photo: Colorado SOS | Jena Griswold - KBeaty
Secretary of State Jena Griswold speaks to a reporter in her office, Jan. 30, 2019.

Colorado Secretary of State Jena Griswold won her office last November with a promise to expose dark money in state politics. Now, the newly-elected Democrat is ready to switch on a sort of legal flashlight lawmakers built for just that purpose.

The question is whether it will work — or whether donors can easily evade the spotlight.

The Clean Campaign Act of 2019 is designed, in part, to reveal donors using nonprofits or other groups to pump millions of untraceable dollars into state-level super PACs. It also bans campaign contributions from any foreign country, individual or corporation and requires more “paid for by” disclosures on election messages.  

“Coloradans deserve to know who’s spending millions and millions of dollars to influence their votes,” Sec. Griswold said. “This legislation will add transparency. It really is a leading national model on how we tackle big donors, special interest, funneling money in secret into our politics.”

A Flood Of Without A Known Source In 2018

According to the Secretary of State’s Office, independent expenditure committees, better known as super PACs, took in about $80 million during the 2018 election cycle. The groups can raise unlimited sums of money for political advocacy, so long as they don’t contribute to candidates or coordinate with their campaigns.

Currently, those committees must disclose the source and the amount of each contribution in the state campaign finance system. But those donations often come from nonprofits or other groups which don’t have to reveal their individual donors.

“Some people call it the Russian nesting doll issue,” explained Steve Bouey, who runs the campaign finance disclosure program at the Colorado Secretary of State’s Office. “You have one group receiving money from another group, but then that group receives the majority of its funding from another group. You really have to go many many many steps to trace who specifically that money is coming from.”

One clear example is the Sixteen Thirty Fund. The social welfare nonprofit, based in Washington D.C., spent about $11 million in Colorado during the 2018 election cycle, which made it the third biggest overall contributor.

Their money supported a range of progressive causes. It funded super PACs that helped Democrats take the state Senate and hold the governor's office. Those groups often were the forces behind negative campaign ads against Republican candidates.

Groups on the right used similar tactics. The Colorado Taxpayers’ Advocate Fund, a Denver-based nonprofit, funneled $2.4 million into super PACs set up to help Republicans win the governorship. The money helped with an aggressive attack ad against Jared Polis that suggested he harassed a female employee and tried to prevent her from calling 911.

In both cases, the nonprofits worked as a firewall, shielding the actual donors from any public scrutiny.  

Sunshine For The Source Of Money

The Clean Campaign Act forces nonprofits or labor unions to disclose any donors who give more than $10,000 for a political purpose, such as opposing a candidate for governor.

By focusing on earmarked donations, Sec. Griswold said the law helps get around the “Russian doll problem.” Donors could no longer hide their identity by transferring a donation through a series of groups. If a contribution has an assigned purpose, an affirmation of the donor’s identity must be transferred along with the money.

“It doesn’t matter if you’re putting your money through one organization or 20. If you are earmarking for political spending through a super PAC, you will be disclosed,” she said.

Outside observers, however, see the provision as a major weakness of the new legislation.

Paul Seamus Ryan, vice president for policy and litigation for Common Cause, a national good-government group, said a similar requirement already exists at the federal level. To get around it, donors simply don’t earmark their donations.

“They don't write anything on the memo line of the check. They don't send an email. They simply refrain from designating or earmarking the money in any way,” he said. “Under the new Colorado law, or at least my reading of it, those donors don't have to be disclosed.”

Catherine Hinckley Kelley, director of policy and state programs at the Campaign Legal Center, said the Colorado law is a big step in the right direction. According to her analysis, only three other jurisdictions have “some sort of mechanism to get back to the original donor.” Those include Rhode Island, California and the city of Austin, Texas.

But Hinckley Kelley also thinks savvy contributors will be able to get around the requirement. Even if they don’t earmark a donation, the law allows them to ask to remain anonymous if they face a reasonable threat of harm or harassment.

The provision is rooted in a 1957 Supreme Court case, which decided the NAACP didn’t need to reveal its donors under an Alabama state law. Hinckley Kelley said Colorado’s exception is well intended, but contributors could abuse it to get around the new requirements.

Meanwhile, some Republicans worry the law could discourage people from getting involved in politics.

Scott Gessler, a former Republican Secretary of State and an election lawyer, said Colorado already has some of the most restrictive campaign finance laws in the country. His worry is that any additional requirement will only hurt small groups that can’t afford expensive election lawyers.

“And what happens is only the most sophisticated groups can be effective,” he said.

In response to criticism, Griswold said the Clean Campaign Act is meant to create as much transparency as possible while respecting people’s First Amendment right to engage in political speech.

“I will continue to fight for more transparency in political spending because I think it's a major democracy issue and people deserve to know who is trying to influence their votes,” she said.