Keeping You In The Dark

May 14, 2021

Among the bills that was voted out of the North Carolina State Senate on a party-line vote this week was SB636, the deceptively named “Donor Privacy” bill. SB636 embodies an awful lot of what’s wrong with our political process here in North Carolina: not only what the bill does, but who’s really behind it and why it’s such a high priority for them.

In short, SB636 is an anti-disclosure bill. It erodes transparency in our elections by further disguising who’s spending big money on ads that lie to you. It helps big corporations and interest groups conceal coordinated spending on political ads aimed at influencing voters which they’d otherwise have to come clean about. It is a bad bill, which has been proposed (and will likely be passed) for bad reasons – and the public will suffer for it.

There are really two big things you need to understand about SB636: both what it does, and who’s behind it – and why.

Follow the Money – While You Can

To understand what SB636 does, you need to understand a little bit about how political “dark money” works. Millions in dark money is already spent in NC elections every cycle. Both national issue advocacy groups (like the NRA or Planned Parenthood) and big corporations (like Duke Energy and the NC Chamber) spend heavily on elections to elect friendly lawmakers. We actually know exactly how much some of these groups spent, because they’re required to disclose their election spending in their Independent Expenditure PACs. For example, here’s Planned Parenthood’s spending report from the 2020 cycle. It’s pretty easy to read – they spent a lot of money (like many groups did).

For other groups, it’s not so simple. They’ve figured out how to route their financing through numerous front organizations and shell non-profits that exist only on paper to effectively conceal their investment. A group called “Citizens for a Better North Carolina” did exactly this last year. “Citizens” is an IE PAC run by some ex-staffers to Senate Leader Phil Berger who now have a prominent Republican campaign consultancy in Raleigh. (Their consultancy, as it happens, also managed numerous Republican legislative campaigns that “Citizens” spent money supporting. Legally, IEs are supposed to be totally separate and not coordinated with candidate campaigns, but this rule isn’t really enforced.) “Citizens” was something of a clearinghouse for money from multiple sources, including lots from out of state, into Republican legislative races. In a bit of dark comedy, one of the key messages of their ads attacking Democrats was “don’t let out of state money buy your vote.

In 2020, Duke Energy, the NC Chamber and many national Republican groups routed millions of dollars through these shell organizations to effectively obscure how much they’ve spent – or that they’re involved at all. We still don’t know exactly how much these groups each spent on political ads in our state, or who else was funding them.

Does it matter who’s spending millions of dollars to influence your vote? Well, a lot of people would like to know. The idea enshrined in law is that public disclosure is the bare minimum requirement – that way, at the very least, people know (or can find out) that, say, a particular big corporation is spending heavily to elect friendly politicians.

Into this already highly problematic disclosure system, SB636 is a big cloud of fog. Currently, if a non-profit (like a 501c(3) or c(4) organization) gives a lot of money to an IE PAC, they are subject to disclosure about their biggest donors. This makes obvious sense: you’d want to know if some billionaire is funding election spending, whether they routed it through a front organization or not. But SB636 throws up a wall here. Under the bill, the organization would be subject to no disclosure at all. The public would be left guessing.

You don’t have to be a political genius to see what will happen next. Big corporations, issue groups and mega-donors can just set up new shell non-profits and route all their contributions through them. That way, the donors can stay hidden. No disclosure. The only folks who will know who’s funding election ads are the funders, and the politicians who benefit from it.

Want more dark money with much less disclosure in North Carolina politics? SB636 is how you get it.

Who’s (Really) Behind SB636?

To say that shielding corporations and mega-donors from dark money disclosure is not exactly most North Carolina voters’ top priority would, of course, be the understatement of the decade. Nevertheless, SB636 is a top priority for legislative leaders. So what gives?

Because SB636 will allow large corporations and political mega-donors to spend nearly unlimited amounts of money influencing elections with no disclosure, it should come as no surprise that the main supporters of the bill are large corporations and political mega-donors. As is often the case, these two groups often find that their interests are aligned. Here in our state, the anti-disclosure “donor privacy” bill is mainly being pushed from two closely allied but distinct groups.

First – ALEC, the American Legislative Exchange Council, has been pushing “donor privacy” for a number of years. ALEC is a corporate-funded national right-wing outfit that acts as a sort of uber-lobbyist. They literally draft template bills for legislators that directly benefit their corporate members’ bottom lines (like on taxes, working conditions or regulations) and then get legislators to propose and pass them. In exchange, they not only mobilize large-scale campaign contributions, but also lavishly fund lawmakers’ activities in office. Dozens of North Carolina Republican lawmakers are members. ALEC is the kind of group whose activities would shock and outrage most people, if they knew about them, but which is considered just par for the course by political insiders.

Secondly, and more locally, the Art Pope-John Locke Foundation has also been pushing for a “donor privacy” law for some time. It earned a mention in their 2021 legislative agenda, which is a pretty good roadmap for what Republican leaders in the legislature will do. AP-JLF is particularly anxious about pushing for less disclosure not only because they’re closely aligned with the NC Chamber and the state’s corporate lobby, but because of their founder and major funder, Art Pope.

Few non-political followers appreciate just how much of North Carolina’s right-wing organizational infrastructure is solely attributable to just this one man. Pope singlehandedly finances John Locke, as well as NC Civitas, until the two had to merge this year to avoid tax penalties. He is also the main or sole funder of several other hard-right organizations throughout the state. Pope singlehandedly funds the “free market” Carolina Journal, for example, because it could not survive otherwise.

These organizations are almost wholly reliant on Pope for their existence. In 2017, for example, Civitas had only a few hundred small contributors, and their tax return shows that Pope himself was the source of 79% of the organization’s budget.

Naturally, Pope spends very heavily in election cycles as well, and is therefore very interested in reducing his exposure to public disclosure.

Between ALEC, the Pope network and the state’s traditional corporate lobby (like Duke Energy and the NC Chamber), there is tremendous money and pressure on compliant lawmakers to water down elections disclosure laws under the guise of “donor privacy.”

Though the AP-JLF communications team’s claims about SB636 range from the misinformed to the patently deceptive, the most telling aspect is how closely – in many places, point for point – their arguments resemble ALEC’s “legislative toolkit” talking points on the issue. There’s a good reason for this. The AP-JLF just took ALEC’s draft copy and wrote up PR for SB636 with some minor revisions. It’s actually that simple, though they did add a flourish about “cancel culture” (that part was pretty good). As just one example, you may notice that at every opportunity, they bring up the case of the State of Alabama attempting to force the NAACP to disclose its donor list seventy years ago as a reason why this bill is needed now – an example drawn straight from ALEC’s talking points.

The notion that the NC Chamber or a right-wing billionaire is in any way comparable to the Alabama NAACP in the middle of the Civil Rights Movement is risible; but of course, it’s not the sort of claim that is either made, or meant to be taken, seriously. It’s a rhetorical point, a sort of debate-club tactic, that reflects the kind of cynical nihilism behind many such political debates in North Carolina today. Half a million people in our state lack healthcare, hundreds of thousands are out of work, COVID has just begun to subside and we have a rising housing crisis, but North Carolina’s right-wing leaders, insulated from voter accountability by a nearly impenetrable gerrymander, are debating how to best soothe their wealthy donors’ feelings.

SB636 is not just a bad bill – it is a symptom of a rotten system. And the system is going to get worse before it gets better, in part because of legislation like this. Let this be a warning, and a reminder of how we got there.

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