Disclosing Campaign Contributions to Reduce Corruption

 

Public disclosure of campaign contributions to congressional and presidential candidates represents one of the United States’ earliest, longest lasting, and most perennially controversial transparency measures. 

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From the beginning, the primary purpose of campaign finance disclosure was to discourage corruption in government. In upholding the constitutionality of federal disclosure requirements in 1976, the Supreme Court suggested that disclosure reduced corruption in three ways. It aided voters in evaluating those running for office, alerting them “to the interests to which a candidate is most likely to be responsive.” It helped to “deter actual corruption and avoid the appearance of corruption by exposing large contributions and expenditures to the light of publicity.” And it was “an essential means of gathering data to detect violations of contribution limits.” (Buckley v. Valeo) 

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The use of transparency measures to reduce corruption in elections began in the early 1900s and improved episodically in response to perceived abuses. The first campaign finance disclosure law, the Publicity Act of 1910, as amended in 1911, required committees supporting U.S. House and Senate candidates to disclose donations and spending in primary and general elections if the committees operated in more than one state. 

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Today’s national system of campaign finance disclosure dates from the 1970s. In the Federal Election Campaign Act (FECA) of 1971, as amended in later years, Congress required federal candidates, parties, and political action committees (“PACs”) to disclose donations and spending, including the identity of donors. The law responded to the growing influence of money in politics and to allegations of corruption. It was part of a broader mandate that also placed limits on campaign contributions by large donors. An independent bipartisan Federal Election Commission received disclosed information and made it available to the public. 

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In 2002, Congress tightened spending limits and strengthened disclosure. The main purpose of the McCain-Feingold law (the Bipartisan Campaign Reform Act) was to close loopholes that allowed candidates’ supporters to donate “soft money” for issue ads placed independently of candidate or party organizations without abiding by campaign spending limitations. Congress set broader limits on donations and required reporting of contributions to PACs for independent candidate-specific issue ads. Intentional violations could result in criminal penalties. 

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However, a major Supreme Court ruling in Citizens United v FEC (2010) and cases that followed declared unconstitutional Congress’ limits on contributions by companies, labor unions, and other organizations to independent PACs. The courts ruled that such restrictions violated the First Amendment’s protection of political speech. Limits on direct contributions to candidates or political parties remained in place. These rulings opened the way for corporations, unions, and wealthy individuals to contribute large sums through PACs or non-profit organizations without revealing the identity of the original donors, sometimes referred to as “dark money.” 

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At the same time, the courts continued to support the constitutionality of disclosure requirements as the least intrusive way of improving public information and reducing corruption without limiting political speech. Writing for the majority in the Citizens United case, Justice Anthony Kennedy noted that “transparency enables the electorate to make informed decisions 

and give proper weight to different speakers and messages.” The justices recognized that disclosure could have negative effects. It could compromise privacy and might discourage some donors from contributing to candidates. But they concluded that its value in educating voters outweighed such negative effects. 

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The House of Representatives responded with proposed legislation to further strengthen the disclosure of contributions. Shortly after the Supreme Court ruling, the House approved the DISCLOSE Act to require political action committees and other organizations to reveal the identities of large donors. The House approved these provisions again in 2019 and 2021. However, the Senate took no action. As a result, the law did not require the disclosure of original donors who contributed to PACs that bundled donations, known as super PACs. The disclosed names of those PACs did nothing to inform voters. Examples listed on the FEC website in 2024 included Best of America, Unite the Country, Ready to Win, and Americas PAC.

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Meanwhile, the internet transformed the world of campaign finance and election advertising. Candidates raised money online, convened virtual town meetings, collected signatures, and customized messages to supporters. Advocacy groups mobilized supporters and resources. Voters shared facts, expressed their views about candidates, and provided contributions. 

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In some ways, the internet increased the transparency of campaign contributions and spending. In the 1970s, political committees made paper or microfilm filings to the Federal Election Commission, which could be accessed by the public at the Commission headquarters. By 2024, electronic filing and posting on the Commission’s website were the norm. 

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However, by making it possible to reach diverse audiences with customized information, the internet also made money harder to track. It created new ways to spread false or misleading information through sham websites. 

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Disclosure rules became outdated. The Federal Election Commission was slow in applying its settled rules for print and television advertising to online advertising. It was only in December 2022 that the Commission required internet ads that favored or opposed a candidate in federal elections to name PACs or other donors just as radio, print, or televisions ads were required to do. More generally, the Commission’s structure of three commissioners from each political party as well as its restricted budget raised perennial questions about its capacity to monitor and enforce disclosure requirements. 

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Campaign finance disclosure in federal elections remains widely supported in principle but severely compromised in practice. Political committees and other organizations avoided disclosing original donors. Congress failed to repair and update disclosure requirements. Stalemates and inadequate funding stymied rulemaking and enforcement by the Federal Election Commission. As of 2024 Congress still had not updated the law to require online advertising to meet all the disclosure standards applied to broadcast and print ads. And there were as yet no disclosure rules to alert voters when ads were created or enhanced by artificial intelligence. 

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Updated April 2024

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This case study is drawn from Full Disclosure, Fung, Graham and Weil, 2007.