Shedding some much needed light on a needlessly complex Campaign Finance System.
Expect to see a lot about Super PACs illegally coordinating with Hillary Clinton in the final weeks of the 2016 Presidential Election.
The rules that regulate our campaign finance system are needlessly complex and are open to abuse.
This article is part one of a series of articles aimed to provide clarity in regards to what a Super PAC is, and what constitutes legal and illegal coordination.
It’s so important for Americans to understand why something is illegal, instead of just repeating a talking point. Armed with this knowledge, we will be much more effective in influencing positive change.
This article is split into two parts – What is a Super PAC, and what does Coordination mean.
Part 1: What’s a Super PAC?
If you’ve ever donated to a political campaign, you’re probably aware that there’s a $2,700 individual contribution limit. So, what do big time donors do when they “max out” their contributions?
They donate to Super PACs.
Super PACs are political committees that can accept unlimited contributions.
Ever seen a notification like this at the end of a political ad?
That’s an example of the disclosure Super PACs are required to place at the end of an advertisement.
Super PACs are required to show this disclosure to prove that the advertisement was created and disbursed without any consultation with a political candidate.
Super PACs can’t coordinate with Political Candidates
Super PACs are officially known as “independent expenditure only committees”. That’s pretty self explanatory – Super PACs are prohibited from coordinating expenditures with political candidates or political campaigns.
For example, if the following scenario happened behind closed doors, it would constitute illegal coordination:
Super PACs and “Dark Money”
Super PACs are often linked to political “Dark Money”. Here’s where it gets interesting.
Super PACs are required to disclose their donors. If someone donates directly to a Super PAC, their name will be disclosed.
Let’s use American Bridge 21st Century, a pro Clinton Super PAC, as an example. We can see that George Soros made a direct donation of $1,000,000 to the Super PAC on March 17, 2016.
This money isn’t “dark” – we can see where it came from.
If Super PACs have to disclose their donors, where’s the “Dark Money” coming from?
“Dark Money” is coming in via 501(c)4s – Social welfare nonprofits.
Let’s look at American Bridge 21st Century Super PAC again. On February 26, 2016, American Bridge received $250,000 from the Heising-Simons Action Fund.
As we described in a previous article, the IRS doesn’t require nonprofit organizations to disclose who they receive money from.
Heising-Simons Action Fund, being a social welfare nonprofit, isn’t required to disclose the origin of the $250,000 that was donated to American Bridge.
Since there’s no way to verify the origin of the money, this $250,000 contribution would be considered political “Dark Money”. We can thank the IRS for enabling nonprofit “Dark Money” to influence our elections.
Why are Nonprofits allowed to contribute to Super PACs?
The IRS allows social welfare nonprofits to engage in political activity as long as it comprises less than 50% of their total operating costs.
Why are Super PACs legal?
Super PACs were made legal as a result of the Supreme Court’s 2010 decision, Citizens United.
- When people call for a repeal of Citizens United, what they’re effectively asking for is the removal of Super PACs from our campaign finance system.
The winning argument was that people have the 1st Amendment right to spend as much money as they’d like in support of a political candidate as long as they don’t coordinate with the candidate.
Part 2: Super PACs and Coordinated Communications
Buckle up, we weren’t kidding when we said the rules regulating Super PAC Coordination were needlessly complex.
Remember, Super PACs are officially known as “independent expenditure only committees.” Super PACs are prohibited from coordinating with political candidates and their campaigns.
US Code of Federal Regulations (linked here) define 2 types of coordination:
- Coordinated Communications
- In-kind Contributions
If a Super PAC engages in either of these types of Coordination, they’re engaging in illegal activity.
This article will focus on what “Coordinated Communications” are. Our follow up will provide clarity on the second type of coordination.
What does “coordinated” mean?
The Federal Election Commission defines “Coordinated” as anything made:
- In Cooperation, Consultation or Concert with a Political Candidate or Political Campaign, or
- At the Request or Suggestion of a Political Candidate or Political Campaign.
WHAT does “COMMUNICATION” Mean?
Communications are Paid Advertisements.
The Federal Election Commission defines “Public Communication” as any paid political advertisements across the following mediums:
- Broadcast TV or Radio
- Outdoor Advertising Facility (Billboards)
- Mass Mailing
- Telephone Bank
- Paid Internet Communications
Emphasis placed on Paid Internet Communications. For example:
- A paid advertisement placed on YouTube is a Paid Internet Communication.
- A comment placed for free on an Internet Forum falls outside the bounds of “Public Communication”.
Combining the two – What is a “Coordinated Communication”?
Remember, Super PACs are prohibited from engaging in Coordinated Communications.
The FEC provides what’s called the “Three Pronged Test” in order to determine if a communication was coordinated. A communication must satisfy all three prongs of the test in order to pass as a Coordinated Communication:
- Payment Prong
- Did the Super PAC pay for the communication?
- Content Prong
- Is the communication a “Public Communication” that advocates for the election or defeat of a political candidate?
- Conduct Prong
- Was there Coordination between the Political Candidate and the Super PAC prior to the release of the paid advertisement?
Let’s apply the Three Pronged Test on the example provided at the beginning of this article.
Loophole used to avoid triggering the Conduct Prong
There’s a pretty big loophole in regards to the Conduct Prong.
Quite often, Presidential Candidates and Super PACs will communicate strategy via a Press Release, Television Interview, or Public Website. Once a specific communication strategy makes its way into the public domain, it’s impossible to satisfy the Conduct Prong.
The FEC calls it a “Safe Harbor for Publicly Available Information”. Publicly available sources include:
- Newspaper or Magazine Articles
- Candidate Speeches or Interviews
- Transcripts from Television Shows
- Press Releases
- A Candidate’s Website
- Any other publicly accessible website
It’s very hard to trigger the Conduct Prong. There needs to be clear evidence that there was a behind closed door discussion between a Political Candidate and a Super PAC regarding a specific topic.
Apply the 3 Pronged test for any allegations that come out
When it comes to allegations regarding Super PACs and Illegal Coordination, ask the following questions:
- Payment – was communication funded by the Super PAC?
- Content – was it a communication expressing support or defeat of a candidate?
- Conduct – was the Candidate or the Candidates Campaign in private coordination with the Super PAC prior to release of the communication?
If you answer yes to all 3 questions, then the allegation is very likely legitimate, and deserves an investigation into the involved parties.
This article provided a very high level overview on what Super PACs are and what an Illegal Coordinated Communication is.
Yes, there are many more loopholes and technicalities that will be explored in a follow up article, along with a discussion on the 2nd type of Coordination – In-kind Contributions.
But the point remains – for anything that comes out, ask yourself if there’s evidence of Payment, Content, and Conduct. If you can answer yes to all 3 questions, then the evidence most likely points to Illegal Coordination.
My intention here is to shed some light onto our incredibly complex campaign finance system, and I hope I accomplished that goal.
A significant amount of work went into communicating the complexity of this system into an easily understandable format. However, if there’s any room for improvement, I’m all ears!
If you have any questions, please don’t hesitate to leave a comment below. I’m happy to jump in and offer clarification.