Secret campaign donations -- so what?

Nonprofit social welfare organizations may become more potent political donors than super PACs. And they don't have to disclose who gave money.

Campaign finance regulation is an endless game of Whac-A-Mole. There’s always something popping up to respond to new rules, from soft money to 527 groups to super PACs. This year, the scrutinized group pouring tens of millions into races is the 501(c)(4). That clunky IRS alphanumeric refers to nonprofit social welfare organizations. Because of a loophole, they can also finance political activity. Their donors can give as much as they want, with no public disclosure.

Our reporting on campaign finance with PBS's Frontline got us thinking about a provocative question about anonymous donations. What’s the big problem with them, anyway?

Tackling the question is tricky because it’s so rarely asked. There are fierce arguments about campaign finance, of course, but they’re largely about who (or what) can give and how much. Few people publicly stick up for secret donations. The discourse is dominated by groups opposing secrecy, like Democracy 21, which is led by Fred Wertheimer.

"Secret money spent in elections leads to corruption and scandal," Wertheimer says.

Try to argue against that and one sides with sinister-sounding things: secrecy, anonymity, dark money. All while the opponent stands with open government, sunshine laws, transparency. The very language of the debate is arrayed against the argument before the facts are even presented.

But some do make the counterargument, like John Samples of the libertarian Cato Institute. Ask him about anonymous donations, and he doesn’t use the word secret.

“I think they’re private in the sense that people have a right to be free of sort of undue harassment,” Samples argues.

He wraps anonymous giving in the blanket of privacy. There’s an important distinction between secret and private. Notre Dame psychology professor Anita Kelly spends a lot of time thinking about these issues, though outside the political sphere. She specializes in information people hide from each other. Through the lens of her research, secret and private are totally different.

“Secret information is information that we hide from another person or a group of people and we know that they expect access to that information,” Kelly explains. “Private information is hidden information that we keep and we understand other people don’t expect to know that information.”

It all depends on the expectations of the people from whom the information is hidden. Imagine a banker concealing embezzled money. That’s secret, because his boss and the bank’s shareholders expect to know what’s going on. But if he doesn’t tell his boss that he’s cheating on his wife, that’s private. It’s just not his company’s business. (“But it wouldn’t be private regarding his wife,” Kelly points out.)

Kelly declined to rule on whether political giving is secret or private. Her field is psychology, not politics. But inviting political thinkers to work with her ideas produced some intriguing results.

“I think that’s a great framework,” says University of Chicago political philosopher Ben Laurence, who immediately knew which category he would place political donations in.

“Citizens have a right to know who is behind the attack ads,” he contends. “Given that they have this right to know, the campaign contributions cross that line from privacy to secrecy.”

Another political philosopher, Georgetown University’s Jason Brennan, disagrees, saying donors deserve the anonymity in the same way voters do.

“If you know how people spend their money just in the same way that if you know how people vote and then you have power, you can use that to retaliate against those people,” Brennan says.

Brennan is in the same camp as Samples with his belief that donations are private, not secret. Disclosing campaign giving draws a road map for people in power to retaliate against those who gave to other candidates. For them, a check written to support a politician or idea is as private as the checkmark made behind the drawn curtain of a voting booth. Think of political donations as private instead of secret and they don’t sound so obviously diabolic.

Presented with Kelly’s framework, Tufts University philosopher Lionel McPherson first said he thought donors could give privately as long as groups buying political ads provide information about their leaders and agenda. But in a move befitting one who thinks deeply for a living, after further reflection, he offered a different solution, based on magnitude.

“There’s a big difference between giving $50 or $100 and giving $5 million,” McPherson says. “A person who’s giving $5 million, even if it’s that person’s legal right, seems to me that they no longer have a claim to privacy. They’re no longer really operating as a typical equal citizen.”

Those big checks McPherson is concerned about add up. The Center for Responsive Politics says six years ago, campaign spending by groups that don’t disclose their donors was minimal. But in 2010, anonymous donations accounted for four in 10 dollars spent by outside groups.

They’re spending even more this year -- though how much won’t be fully known until after the election. And we still won't know who gave. As for the question of what the big deal is about those donations, how people answer depends on whether they consider the giving secret or private.

Kai Ryssdal: We've got a collaboration going with Frontline this month. It's a special investigation into campaign finance, specifically: How did the Supreme Court's ruling in Citizens United -- which said labor unions and corporations could spend essentially as much as they wanted on politics -- how has that changed our campaigns.

Lots of ways, obviously -- maybe the biggest is that what's happening this election cycle is being driven by more money than ever. That money's being spent by campaigns, yes, and parties. Super PACs, of course. Also groups that're known simply as 501(c)(4)s. They're named after a section of the tax code, if you're curious.

But the big difference between them and super PACs is that the 501(c)(4)s don't have to tell anybody where they're getting their money. And they can spend as much as money as they want, as long as that spending is independent of candidates and campaigns.

The upshot of the whole thing is that this year, secret money is buying tens of millions of dollars worth of ad time. That secrecy makes some people uneasy. But why?

Marketplace's Mark Garrison got the assignment.


Mark Garrison: Kai’s question is tricky because it’s so rarely asked. There are fierce arguments about campaign finance, of course, but they’re largely about who can give and how much. You don’t hear many people publicly sticking up for secret donations. Mostly, you hear from groups fighting against secrecy, like Democracy 21, led by Fred Wertheimer. What’s his problem with secrecy?

Fred Wertheimer: Secret money spent in elections leads to corruption and scandal.

Try to argue against that and you’re siding with sinister-sounding things: secrecy, anonymity, dark money. And your opponent stands with open government, sunshine laws, transparency. The very language of the debate is arrayed against you before the facts are even presented. But some do make the counterargument, like John Samples of the libertarian Cato Institute. Ask him about anonymous donations, and he doesn’t use the word secret.

John Samples: I think they’re private in the sense that people have a right to be free of sort of undue harassment.

To him, donations are private, not secret. Disclosing campaign giving draws a road map for people in power to retaliate against those who gave to other candidates. Keep in mind, nobody questions your right to keep your vote private. For Samples, the check you write to a politician is as private as the checkmark you make behind the drawn curtain of a voting booth. If you think of political donations as private instead of secret, they don’t sound so obviously diabolic.

I wanted insight into why secret donations are such a problem for so many people, so I tapped a couple of psychologists, starting in professor Anita Kelly’s Notre Dame classroom. She specializes in information people hide from each other.

Anita Kelly: Keeping a secret can and often does violate expectations for honest communication in a relationship.

Kelly doesn’t focus on politics. But NYU psychologist Eric Knowles does. He says some secrecy is understandable, such as information withheld for national security reasons. It all depends on credibility.

Eric Knowles: When people have a generally positive impression of somebody, they can tolerate that person keeping secrets.

He says it seems secret donations trouble our mind in a way other secrets don’t, because we don’t trust political operatives.

Knowles: If somebody’s already seen as sort of a wheeler-dealer, then the secrecy has a very different connotation.

And the current campaign finance system is quite a playground for wheeler-dealers. I put the question of secret donations to Tufts University political philosopher Lionel McPherson. He first told me he thought donors could stay private as long as groups buying political ads provide information about their leaders and agenda.

Lionel McPherson: That wouldn’t require that we know everybody who has contributed to help make the ad possible.

But this is a guy who thinks deeply for a living. So after more reflection, McPherson offered a slightly different view, based on magnitude.

McPherson: There’s a big difference between giving $50 or $100 and giving $5 million. A person who’s giving $5 million, even if it’s that person’s legal right, seems to me that they no longer have a claim to privacy. They’re no longer really operating as a typical equal citizen.

So, this is the point in most campaign finance stories where either the badness of a bad guy is declared, or the reporter proclaims both sides had their say and the truth lies somewhere in the middle. Sorry to disappoint. The issue of secret donations is a lot more complex. In New York, I'm Mark Garrison, for Marketplace.

About the author

Mark Garrison is a reporter and substitute host for Marketplace, based in New York.

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