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What to Do About Campaign Finance

Unlimited political contributions are the new reality. Once we accept that maybe we can start to figure out the complicated relationship between money and politics.
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A strategic issues panel at the University of Denver (my employer) recently concluded a study of campaign financing and issued a report, which can be viewed here (PDF). The recommendations are primarily geared toward Colorado politics but have important lessons for the nation at large. As we try to navigate a rapidly changing area of the law and figure out the complicated relationship between money and politics, these recommendations strike me as a pretty decent place to start.

The first conclusion is one that I found surprisingly refreshing. From the summary: "Future campaign finance reforms need to accommodate an environment where unlimited political contributions and spending are the dominant reality."

This conclusion will no doubt be distressing to those who wish to see money driven from politics. Yet not only is removing money from politics unrealistic, but multiple efforts to do so have generally failed and resulted in even greater opaqueness and inequalities in the American political system. So it's good that the report starts by acknowledging where we are and are likely to be for the foreseeable future.

If we can't successfully limit the flow of money from individuals and organizations to parties and candidates, we should at least know where the money is coming from.

Next: "The panel supports the emphasis on personal responsibility for political speech ... and recommends that the principle of disclosure at the individual level guide campaign finance policies...."

Also good. If we can't successfully limit the flow of money from individuals and organizations to parties and candidates, we should at least know where the money is coming from. If you want to run for office with the strong financial backing of tobacco manufacturers, oil companies, and defense contractors, fine. But journalists and voters should be able to easily figure that out and render their own judgment on it.

Disclosure, however, is an incredibly difficult and complex issue today, as the report acknowledges. Recent election cycles have seen the rise of 501(c)(4) charitable organizations, which maintain a non-profit status as long as less than half of their funds are used toward electioneering. Karl Rove's Crossroads GPS is one such organization. It spent more than $70 million in the 2012 cycle with no real disclosure requirements. (Really, check out the chart on page 32, reproduced below, to get a sense of how integrated these groups are in modern campaigns and how they have complicated the relationship between donors and candidates is.)

Should donations to these organizations be publicly reported? Well, sure, but what about those who donate to, say, the League of Conservation Voters with the expectation that their money will only be used for the social welfare functions of the group, like raising awareness of environmental issues, and not on electioneering. Should their contributions be disclosed? It's possible that these groups provide legitimate public goods, but some donors would be less inclined to support them if it resulted in their name going onto a state or federal website.


So I appreciate that the panel recognized and grappled with this complex issue. But I'm not sure the recommendation would do much good: "The panel recommends that all 501(c)(4), (5) and (6) organizations engaging in the political process ... offer their donors the ability to choose whether they wish to allow their contribution to be used for political advocacy purposes."

I don't think voluntary disclosure really addresses the problem. Those donors with the least politically-appealing agendas will simply decline to disclose their activities.

I do appreciate that the panel recommended some encouragement of public funding of candidates, and it acknowledged the ongoing inequality issue presented by the fact that those contributing large donations to political campaigns are a highly unrepresentative sample of the American electorate. The idea of providing a floor for campaign money, rather than setting a ceiling, is a powerful one, and could help erode some incumbency advantages by helping promising but under-funded candidates run. Unfortunately, the panel chose a very weak form of public financing: a state income tax credit for those making individual contributions. I doubt this will encourage many new donations to challengers, and will probably mainly serve as a tax break for wealthy people who are already backing well-heeled incumbents.

At any rate, there are lots of interesting and provocative ideas in this report, and as far as compendiums of political reforms go, this strikes me as more realistic than most. This is a public debate we very much need to have.