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Press Release

Politicians Using Nonprofits to Cloak Spending After Election Day

New Brennan Center report finds that at least two presidents, seven governors and several mayors from both major parties have established nonprofits that allow them to raise unlimited, anonymous funds for political spending after election day.

March 15, 2018

New York, N.Y. –  At least two pres­id­ents, seven governors and several prom­in­ent mayors – from both major parties – have estab­lished nonprofits that allow them to raise unlim­ited, anonym­ous funds for polit­ical spend­ing after elec­tion day, accord­ing to a new report by the Bren­nan Center for Justice at NYU School of Law.

The report, Elec­ted Offi­cials, Secret Cash, is the first compre­hens­ive analysis of a yawn­ing gap in rules that govern money in polit­ics and govern­ment ethics, and poses a seri­ous risk of corrup­tion. The report found that spend­ing by nonprofits that coordin­ate with elec­ted offi­cials after they take office goes almost entirely unchecked, and calls for new laws to limit polit­ical fund­ing by office­holder-controlled nonprofits. 

“In recent years, the risk of dark money in our elec­tions has become appar­ent. But we pay less atten­tion to the politick­ing that happens after elec­tion day – specific­ally when it comes to dark money channeled through secret­ive nonprofits,” said Chisun Lee, lead author of the report and senior coun­sel at the Bren­nan Center for Justice. “Donors and politi­cians have exploited a regu­lat­ory gap that allows them to raise polit­ical funds using nonprofits without the public disclos­ure and other over­sight that would apply if they were doing that during campaign season. If we continue to let these groups oper­ate in secrecy, we risk further allow­ing shad­owy fund­ing to domin­ate our polit­ics.”

Elec­ted Offi­cials, Secret Cash comes on the heels of recent reports that a nonprofit affil­i­ated with Pres­id­ent Trump, Amer­ica First Policies, has conduc­ted expens­ive polling  that would typic­ally fall to the Repub­lican National Commit­tee – but unlike the RNC, the nonprofit does not disclose its donors. Amer­ica First Policies had already drawn atten­tion earlier when founder Rick Gates pleaded guilty in Robert Mueller’s invest­ig­a­tion of Russian inter­fer­ence in the 2016 elec­tion, rais­ing the possib­il­ity of an unusu­ally acute risk: secret foreign influ­ence over U.S. polit­ics, channeled through secret­ive nonprofits.
 
Draw­ing on case stud­ies from across the nation, Elec­ted Offi­cials, Secret Cash shows how donors and politi­cians have used nonprofits to turn millions of outside dollars into publi­city jugger­nauts. Among the report’s find­ings: 
 

  • Office­holder-controlled nonprofits have multi­plied in recent years, with elec­ted offi­cials includ­ing Donald Trump, Bernie Sanders, and Barack Obama profit­ing polit­ic­ally from these organ­iz­a­tions’ efforts.
  • Office­holder-controlled nonprofits can take unlim­ited amounts from wealthy donors who, in most cases, remain anonym­ous to the public.
  • Often these wealthy donors hold economic interests that the office­holder they are finan­cing has the power to affect. In New York state, for example, gambling compan­ies donated $2 million to a nonprofit affil­i­ated with Governor Cuomo just before the governor declared his support for increas­ing gambling in his 2012 State of the State address. 

 
Finally, the report proposes a straight­for­ward roadmap for laws that could help bring trans­par­ency to the activ­ity of these nonprofits: 

  • Identi­fy­ing the entit­ies that post the most seri­ous risk of corrup­tion. The report proposes a two-factor test that iden­ti­fies the groups that pose the greatest risk of corrup­tion: how closely affil­i­ated their lead­er­ship is with an office­holder, and how much they spend to promote the office­hold­er’s name and image in their advert­ising. 
  • New regu­la­tions for highest-risk nonprofits. For the nonprofits that meet the threshold test, the Bren­nan Center proposes two rules that are stand­ard compon­ents of campaign finance and conflict of interest laws: donor disclos­ure and dona­tion limits.    

 
Read the full report, Elec­ted Offi­cials, Secret Cash.
Read more about the Bren­nan Center’s work on Money in Polit­ics.

To set up an inter­view with any of our experts, please contact Beat­riz Alde­reguia at (646)292–8369 or alde­reguiab@bren­nan.law.nyu.edu.

*This press release has been updated.