Bizarre Rules of Political Campaign Contributions

Q. I asked a candidate for a congressional seat how much I could lawfully contribute to his campaign committee, and he said just $2,700, which would have to be publicly disclosed. But some individuals (as well as corporations and unions) are pouring millions of dollars into political organizations that have no contribution limits and, in some cases, not even donor disclosure. Does this strike you as bizarre?

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A. It sure does. Reasonable people can disagree on the big philosophical issues of campaign finance: Should all elections be publicly financed, with strict spending limits and no private donations allowed? Or, conversely, is campaign finance a First Amendment, free-speech right that shouldn’t be abridged by any restrictions on giving and spending?

But everyone should agree that after court rulings opened the floodgates for “independent” campaign donations—for good or ill—the 1970s-era restrictions on donations to particular candidates are pathetically archaic. We’re left with a patchwork of laws that make no sense—inconsistent, inscrutable and expensive to comply with.

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You are constrained in your giving to a candidate’s campaign. But megarich donors, such as conservative industrialists Charles and David Koch and liberal financiers Tom Steyer and George Soros, can give unlimited amounts to SuperPACs, which operate independently of a candidate’s committee. So can businesses and unions.

The most bizarre anomalies relate to disclosure. It’s required for donors to all traditional campaign committees, plus political action committees (PACs), SuperPACs and even certain nonprofit advocacy groups—which promote causes but do not expressly urge the election or defeat of a particular candidate. But one fast-growing species—501(c)(4) “social welfare” organizations—can collect and spend unlimited millions on general political advocacy, often without revealing the names and donated amounts of supporters.

The most needed reform—-modest but feasible in the current judicial and legislative climate—-would be immediate disclosure of every donation to every political fund of any kind. That’s crucial for a healthy democracy.

Have a money-and-ethics question you’d like answered in this column? Write to editor in chief Knight Kiplinger at ethics@kiplinger.com.

Knight came to Kiplinger in 1983, after 13 years in daily newspaper journalism, the last six as Washington bureau chief of the Ottaway Newspapers division of Dow Jones. A frequent speaker before business audiences, he has appeared on NPR, CNN, Fox and CNBC, among other networks. Knight contributes to the weekly Kiplinger Letter.