Three Can Keep A Secret, If Two Of Them Are Dead: A Thought Experiment Around Compelled Public Disclosure Of 'Anonymous' Political Expenditures

Article by Joseph M. Birkenstock*


"Three can keep a secret, if two of them are dead." Variously attributed to Benjamin Franklin and the Hell's Angels,1 this aphorism captures an important concern posed by the recent upswing in "anonymous" political activity. In short, much of it is not actually anonymous.

This essay explores one possibility for fundamentally changing the existing disclosure regime around political expenditures. Specifically, it considers the application of a potential new disclosure regime that seeks to strike a better balance between, on the one hand, the First Amendment interest in political expression, including genuinely anonymous political expression, and on the other the public interest in protecting our system of government from the dangers of corruption and undue influence threatened by opaque, private leverage over public officials.

To accomplish this goal, the alternative disclosure regime discussed below would move from the existing disclosure regime under which disclosure is triggered based on the content of a political communication to a regime that premises public disclosure on private disclosure. Admittedly, this new regime would present significant, although perhaps surmountable, administrative challenges. This game still may be worth the candle, however, as this new regime has the potential to better focus disclosure on ferreting out corruption while simultaneously removing a disincentive to at least some political engagement by allowing those whose interests are purely electoral (and not legislative) to operate with genuine anonymity.


    There are two related considerations around dollar-denominated political activity that is other than fully anonymous2: first, complete anonymity is often not truly desired by funders; and second, therefore, funders' identities are often revealed to or discovered by public officials. There is strong evidence that funders of political activity generally do not desire to remain completely anonymous, but rather prefer to be known to elected officials, party insiders, and perhaps even the public more broadly.

    For example, in the 1970s, Dade County, Florida experimented with requiring all contributions to judicial elections to be anonymous.3 Beginning in 1972, all contributions to judicial candidates were placed into a blind trust and then periodically distributed to candidates. As a reform measure, the experiment failed because donations quickly dried up,4 but it did illustrate that enforcing a requirement of actual anonymity tends to discourage more political activity than it encourages. Similarly, the identities of many funders of political activity are ultimately disclosed, even if not to the general public but instead only privately to a purposefully selected audience.

    For an example of how this kind of selective disclosure can occur in practice, consider a hypothetical of particular relevance in the current campaign finance era of so-called "Super PACs" and their nonprofit affiliates. Assume that the leaders of a newly organized tax-exempt 501(c)(4) social welfare organization wish to fund independent expenditures attacking a particular incumbent who they believe holds positions contrary to their interests. The group successfully raises several million dollars to fund a wide variety of advocacy work: first a relatively inexpensive website, thin on functionality and detail, but nevertheless available to anyone with an internet connection. Shortly thereafter, the group uses a much larger proportion of its funds to undertake public education efforts of varying stripes. First, electioneering communications5 and independent expenditures6 in the days and weeks leading up to the incumbent's primary and/or general elections, and later, after election day, a robust series of similar activities advocating around public policy issues instead of directly or indirectly attacking or supporting candidates as such.

    Assume furthermore that the group itself is not widely known among the general public, but has been organized by individuals who are relatively well known by political professionals. Indeed, as explained above, the group may wish to affirmative ensure that its existence, purposes, and the identities of its funders become well known to certain public officials and political insiders. Towards that end, this information about the group can be shared with public officials either explicitly by disseminating information about the group and a list of its donors, or implicitly by, for example, hosting a "Trustees' Retreat," or a similar event to which only top donors and select public officials are invited. The context of the retreat could make it abundantly clear to the public officials in attendance that the "trustees" are the group's strongest and most important financial supporters, a description which will not be misunderstood by any political professionals or public officials in attendance. Indeed, the trustee's meeting itself may even be a fundraiser for the group, with donors pledging hundreds, thousands, or millions to the group in the presence of public officials.7

    At this private trustee's meeting, questions about public policy could be asked of public officials, the group and its trustees could voice their support for or concerns with certain policies, and the public officials and donors in attendance could leave the retreat with an all-but-explicit understanding about the consequences of their future action. Even if never announced out loud, the message conveyed by the subtext of this "Trustees' Retreat" would be clear: the group and its donors hold the purse strings bankrolling the group's future advertisements, and any public officials in attendance can ensure those resources only help, and not harm, their election campaigns by favorably addressing the public policy concerns privately raised at the meeting.

    To be sure, the public advertising need not even necessarily focus on the same set of policy concerns as those aired in the meeting. And likewise, the ads need not necessarily be negative. The same set of facts are as easy to envision regarding a group willing to fund positive advertising or perhaps negative ads against a candidate or officeholder's challengers – again, pending suitable answers from the candidate or officeholder in question.

    Under current campaign finance and tax laws, this hypothetical group could undertake the entirety of the fact pattern laid out above while triggering no legal obligation whatsover to disclose to the public the sources of its funds. Indeed, donors who wish to fund such groups without being publicly identified have a range of potential approaches available that allow them to do exactly that.

    First, tax-exempt social welfare entities organized under Section 501(c)(4) of the U.S. Tax Code are allowed to engage in partisan political activities, including seeking to influencing elections, provided that those activities are not the "primary activity" of the organization.8 Independent expenditure-only political action committees (commonly referred to as "Super PACs")9 allow more efficient funding of independent expenditures, although these committees are still PACs and therefore still must file reports of their receipts and disbursements with the FEC. These two vehicles for donor anonymity were made possible by the Supreme Court's ruling in Citizens United v. FEC10 as well as two related rulings of the D.C. Circuit11 and Advisory Opinions issued by the FEC in July 2010.12 Both Super PACs and 501(c)(4) entities are allowed to solicit and accept unlimited contributions from individuals, corporations, and unions provided that their expenditures are "independent," meaning that they are not "coordinated" with federal candidates or political parties.13 Maintaining such independence from candidates is relatively easy due to the FEC's permissive coordination regulations.14

    While both Super PACs and 501(c)(4)s are required to file certain disclosure reports with the FEC, existing regulations allow both Super PACs and 501(c)(4)s to easily avoid disclosing the identities of their funders. Super PACs need not disclose anything about the actual people involved in donations to the Super PAC from corporations or labor unions.15 In the case of 501(c)(4)s, donors may remain undisclosed indefinitely, as the FEC only requires 501(c)(4)s to disclose the names of individuals funding a such a group's independent expenditures if such individuals donate more than $200—or $1000 in the case of electioneering communications—to the organization specifically "for the purpose of furthering" independent expenditures or electioneering communications.16 This means that contributions donated generally to the 501(c)(4), but not specifically for any particular independent expenditure or electioneering communication, need not be disclosed by the 501(c)(4) in its reports to the FEC.17

    As applied to the hypothetical Trustees' Retreat outlined above, so long as the specifics of the advertising itself is not discussed at the retreat in the presence of the elected official that will benefit or be damaged by the advertising, the names of the groups donors attending the retreat who pledged funds for such advertisements may not ever need to be disclosed. The ads would not meet the FEC's coordination test, because nothing in the fact pattern even remotely supports the conclusion that the incumbent (or his or her agents) requested or suggested that the advertising be produced or distributed, nor was the incumbent "materially involved" in producing the advertisement, or engaged in a "substantial discussion" about the candidate's plans, projects, or needs as a candidate.18

    Indeed, the Trustees' Retreat need not involve much of a reference at all to the group's advertisements or to the incumbent's campaign, but instead could focus on issues of official government policy and the incumbent's...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT