Dark Money “Ground Zero”

The effort to get a law like Prop 211 passed in Arizona dates back years. Led by Terry Goddard, a former Arizona attorney general and dark money transparency advocate, a coalition called Voters’ Right to Know first tried to get a dark money disclosure measure on the Arizona ballot in 2018.

At the time, Arizona was considered “ground zero” for dark money in politics. The swing state had seen one of the biggest increases in dark money spending of any state after Citizens United, studies showed. Voters’ Right to Know wanted to intervene and unmask the dark money suddenly pouring into state elections.

The first attempts to get the ballot measure before voters were foiled by administrative errors and then the pandemic. But in 2022, the group succeeded in landing Prop 211 on the November ballot. It passed that year with overwhelming support from voters, winning 72 percent of the vote — a rare bipartisan victory in politically divided Arizona.

Prop 211’s success at the ballot box “sends a message to other states that this is politically popular — that in a time of extraordinary division, people agree about transparency,” Goddard said in an interview on the Lever’s weekly podcast, Lever Time, shortly after the measure passed.

Prop 211 also provided a model for other states crafting dark money transparency laws. “There are other states who are watching. You know, ‘That’s an interesting law. Should we do it too?’” said Kolker with Campaign Legal Center.

Any group in Arizona that spends more than $50,000 on advertising in statewide campaigns or $25,000 in local races is subject to new disclosure requirements under Prop 211. The law requires that these groups disclose any donors that contributed over $5,000 to their campaign efforts.

Crucially, the groups must not only disclose their donors, but they must reveal the original source of that money. This requirement prevents political spenders from using shell companies or secretive nonprofits to hide the funding’s provenance.

“Traditional disclosure laws require people who pay for election ads to report their donors or some of their donors,” Kolker explained.

But in the age of dark money, disclosure requirements that only target the most recent source of the money are easily evaded by groups who want to stay anonymous.

“If that direct donor to the spender is just some front group — ‘Americans for Apple Pie’ — it’s meaningless to the voters,” Kolker said. Prop 211 moves beyond these front groups, lifting the curtain on dark money spending.

So far in Arizona, despite some technical difficulties with the rollout, the law has undoubtedly shone a light on state campaign spending. Records from the Arizona Secretary of State show that forty-six different interest groups have filed reports under the law, providing a glimpse into the donors behind powerful lobbying groups like the Arizona Chamber of Commerce, which now must disclose in its advertising materials that its top donors are the gas station chain QuikTrip and a construction company.

The law has also provided additional transparency around the fight to protect abortion rights in the state. A measure on the ballot in Arizona this fall would establish a fundamental right to an abortion, doing away with the state’s current fifteen-week abortion ban. The group leading the opposition to the measure has had to disclose its three top donors — apparently three wealthy businessmen — and the fact that more than 20 percent of its funding comes from out-of-state groups.

Still, the law only extends to state and local races. Arizona’s consequential Senate race, a federal election not subject to the state law, ranks among the top elections for dark money spending, reflecting that secretive interest groups are still operating in the state.

“Government Doxxing” and “Cancellation”

Prop 211 has faced an onslaught of legal challenges from right-wing and corporate-backed groups since it passed in November 2022. Two legal cases attempting to strike down the law are working their way through state court in Arizona — though so far, judges have upheld the statute.

The Goldwater Institute, a right-wing Arizona organization bankrolled by corporate interests, is representing several conservative Arizona organizations in one of the state challenges — arguing that the law harms potential dark money donors, and violates their speech rights. The group claims the law “will open up donors, especially those who support unpopular causes, to violence, harassment, and the risk of ‘cancellation.’”

Meanwhile, the Koch network is trying to strike down Prop 211 in a separate case in federal court — claiming that the law violates the First Amendment rights of political donors.

Americans for Prosperity, which brought the federal case against Prop 211, has long-standing ties to the Koch network; the organization’s foundation was chaired by David Koch before his death in 2019. The group has spent tens of millions of dollars on political causes on behalf of its corporate benefactors over the last two decades.

Americans for Prosperity has been active in trying to strike down disclosure laws across the country. The group recently submitted an amicus brief in a federal challenge to a similar, though less expansive, law in San Francisco.

The fact that corporate-backed interest groups so vehemently oppose laws like those in San Francisco and in Arizona make clear that “the true agenda here is to hide their money,” said Jon Golinger, the democracy advocate for Public Citizen, a progressive policy advocacy group, who coauthored and fought to pass the San Francisco law. “They want to give as much as they can, and they want no one to know what they’ve done.”

“And that raises obvious questions of, ‘What are they so afraid of?’” Golinger said.

In its lawsuit over Prop 211, Americans for Prosperity claimed that the statute “subject[s] countless Americans nationwide to governmental doxxing for doing nothing more than supporting their chosen non-profit organizations and charities,” and “discourage[s] contributions to non-profit organizations,” all of which amounted to a First Amendment violation.

In March, a federal judge was unconvinced by these arguments, ruling against the organization and upholding the law.

Now, Americans for Prosperity has appealed the case to the Ninth Circuit Court of Appeals — just one step away from the Supreme Court. In September, the Institute for Free Speech, a right-wing group that fights against campaign finance reform, submitted an amicus brief in the case, raising similar First Amendment arguments to challenge the law.

While Kolker said he felt “optimistic” about the chances that the transparency law would prevail, he emphasized that the “stakes were high.” For years, the Supreme Court has stripped away limitations on campaign spending. For longtime campaign finance reform advocates like Kolker, disclosure laws are a new strategy to fight back.

“Disclosure is the main piece that we have left in the statutory scheme, in terms of preventing corruption,” he said. “To lose this piece would be quite devastating.”

While no law has gone quite so far as Arizona’s, other recent disclosure laws so far have won their own court battles.

Voters in Alaska passed a similar disclosure initiative in 2020, as part of a package of election reforms. Like the Arizona law, Alaska’s measure requires campaign spenders to reveal the source of their large contributions and also requires disclosures of political ads that are funded with out-of-state money.

Groups representing business interests in Alaska, with support from the Koch-backed Liberty Justice Center, challenged Alaska’s law. While both a federal judge and a panel of Ninth Circuit judges upheld the law, the groups are now asking the US Supreme Court to review the matter.

And another recent victory came when the Supreme Court declined to take up Americans for Prosperity’s challenge to San Francisco’s donor transparency law earlier this month, letting it stand.

Yet for transparency advocates, the corporate challenges — and attempts to evade the new laws — can seem never-ending.

“Dealing with corruption is often like whack-a-mole,” said Golinger with Public Citizen. “You just keep at it, and they keep coming up with ways to hide it. And we keep trying to come up with solutions.”