Outside groups have become a potent political force in the 2012 election campaign. Unleashed by the Supreme Court ruling in the Citizens United case and subsequent lower court rulings, such groups can raise unlimited sums from individuals and corporations for ads and other spending that is not “coordinated” with a candidate. The most dramatic example: more than $500 million dollars has been spent on radio and television ads relating to the 2012 Presidential race, with almost half coming from Super PACs, 501(c)(4)’s, and other outside groups. 

With limits on political spending off the table, the battle over campaign finance regulation is now being waged over disclosure. This debate is being driven in part by election-year views about which party will be more affected in the short term by enhanced disclosure rules. The debate has also sparked concerns that some of the more aggressive proposals are designed to curb corporate speech that legislatures may no longer restrict directly.     

At the federal level, efforts to pass new laws and regulations have stalled. The DISCLOSE Act, blocked last month by Senate filibuster, would require outside groups funding political ads to disclose all of their donors, list top donors in their ads and include a statement from the group’s highest ranking official that the group approved the ad, and provide shareholders or members with information about political spending. Likewise, the Federal Election Commission has declined to issue new disclosure rules for organizations funding ads that expressly advocate the election or defeat of a federal candidate. And the IRS has pledged to study the need for new rules for 501(c)(4)’s, although any action is likely to come well after the 2012 election.

The picture is quite different at the state level. Many states have adopted or are considering new disclosure rules that affect groups running political ads in state elections. Here are some examples:

  • Alaska requires that an independent expenditure group list its top three donors for an ad by name and address;
  • California requires ads paid for by independent expenditures to disclose the two highest contributors who have given at least $50,000;
  • Colorado requires that political ads disclose the entity paying for it, and if the entity is a business, a natural person who could be contacted;
  • Connecticut requires chief executives to make a statement stating they are responsible for the ad when business entities pay for ads;
  • Maryland requires corporations to disclose independent expenditures and electioneering communications to its shareholders and members either on its website or in a mailing.
  • New York proposed rules earlier this year requiring groups running ads that expressly advocate for the election or defeat of a candidate to register and file reports, and submit copies of scripts, Internet and print ads, and other materials.

While it remains to be seen whether new federal rules are in the offing, states and localities are certain to continue demanding more transparency from politically active organizations, and the individuals and companies that donate to them. Before making a contribution, it is essential that donors and outside groups understand exactly what information will have to be publicly disclosed, and how and when such disclosure is required.