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Who’s paying for those political ads? Dark money is tough to track in Colorado

The elections for governor and state Senate are flooded with big money from groups that don't disclose donors, and the state law is partly to blame.

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It’s not easy to figure out who paid for a political TV ad or mailer in Colorado.

The presence of “dark money” — campaign cash that can’t be traced to its original source — is now a staple each election season. It’s particularly prevalent in the race for governor and battleground state Senate districts. And Colorado’s campaign finance laws allow it to happen.

“It’s been happening for the past decade,” said Caroline Fry, Colorado Common Cause outreach director. “Messages where you can directly tie the funding from those messages to real living, breathing human beings are just becoming a thing of the past.”

MORE: A look at the outside money flowing into the Colorado governor’s race.

Here’s a look at some of the ways the limited disclosure is impacting the 2018 midterm elections.

Who paid for this TV ad? It’s hard to know

The difficulty in tracking political money is not just the source but also how it is spent. The political interests that deliver campaign literature to your doorstep or mailbox isn’t always clear. In part, that’s because of a loophole in the state’s campaign finance laws.

Only official political committees or issue committees must identify themselves on campaign literature. State law doesn’t even require candidates to identify their campaigns on such materials.

As for TV ads, some of them may appear to come from a candidate, but if you take a look at the fine print at the end, you’ll learn they came from a super PAC. A super PAC is a political action committee that can accept unlimited donations, unlike candidate committees that are restricted to certain limits.

The only way to find the source is the fine print on the screen, which often appears for only seconds. There’s no requirement at the state level that the advertiser be audibly announced.

This flier attacking Republican state Sen. Beth Martinez Humenik, R-Thonrton, is from Colorado Values Project, a group that doesn’t disclose its donors.

How political nonprofits skirt the disclosure laws

An organization registered with the Internal Revenue Service as a nonprofit may spend money on politics up to a certain point — as long as its messages don’t urge people to vote for or against a candidate. But if they urge people to vote a certain way, they’d have to register as a political action committee.

As long as the committees are coloring within the lines, and not urging people to vote one way or another, “there isn’t any requirement that they disclose where they got their money and what they’re spending it on,” said Christopher Jackson, a Denver appellate lawyer who specializes in elections law.

One example of how this works came earlier this year, when Health Care FAQs and Colorado United for Families, two groups affiliated with national nonprofit Sixteen Thirty Fund, spent nearly $645,000 on TV ads in the 3rd Congressional District, which covers much of the Western Slope.

The commercials criticized Republican U.S. Rep. Scott Tipton on health care issues and were designed to help his Democratic opponent, former state Rep. Diane Mitsch Bush. But because they didn’t mention the election or suggest voting against him, the groups didn’t have to disclose to the Federal Elections Commission what they spent or where their money came from.

Nonprofits do have to report political spending to the Colorado Secretary of State’s office, but not in every instance.

If a candidate’s name is mentioned within 30 days of a primary or 60 days before the general election, Colorado requires groups to file “electioneering” reports — even if the materials don’t suggest voting for or against a candidate.

Consider nonprofit Colorado Economic Leadership Fund, which is affiliated with nonprofit business association Colorado Concern. It isn’t registered as a political committee, so it doesn’t report spending or donors.

But by tracking cable TV ad contracts it’s evident that the leadership fund spent at least $619,000 on ads on behalf of Republican candidates in four state Senate districts that aired from late August through mid-September.

This image of a flier touting Republican state Sen. Tim Neville, of Littleton, does not include information about who paid for it.

The only disclosure the group makes appears in the Secretary of State’s supplemental report section, which shows nearly $418,000 in reported electioneering expenses, about half of which paid for TV ads. Other ad spending occured before the disclosure requirements and remains hidden.

Where’s the money really coming from?

Take the case of the Colorado Values Project, which sent mailers favoring Democrats in several Senate districts before the electioneering reporting requirement kicked in. There’s no way to know where the money comes from.

Another example is Americans for Prosperity. The group’s purpose is to support Republicans Walker Stapleton for governor in his race against Democrat Jared Polis, as well as Tim Neville and Christine Jensen for state Senate.

On Oct. 1, the group’s independent spending committee reported more than $128,000 worth of in-kind donations in canvassing materials and staff time from the national nonprofit group, which doesn’t disclose donors. But the recent spending report doesn’t say what races or candidates the in-kind donations mentioned.

AFP is affiliated with billionaire industrialist Charles Koch and a network of wealthy donors across the country who support a mostly conservative agenda.

As a nonprofit, it is not required to reveal its donors to the public. Sometimes the donors can be traced through other records, but most of the time it’s virtually impossible to figure out the source of the money.

“The way the regulations are currently made, it isn’t that difficult to hide the source of money,” Jackson said.

Likewise, it’s difficult to trace the money flowing into Colorado issue committees and super PACs from nonprofits. Here are some examples:

  • The national nonprofit Sixteen Thirty Fund has put more than $4.5 million into various Colorado campaigns this year. That includes nearly $1.6 million for an initiative to lower payday loan interest rates; $1.1 million to a super PAC supporting Democratic Senate candidates; and $920,000 to Good Jobs Colorado, a Democratic super PAC opposing Stapleton. The group is also spending big nationally. It’s clear that Sixteen Thirty Fund is a liberal group, but it isn’t clear who is funding the group. The group’s president is Eric Kessler, a University of Colorado graduate, former League of Conservation Voters field director and Clinton administration appointee.
  • Workforce Fairness Institute has donated $1.25 million to the Colorado Campaign for Jobs and Opportunity, a super PAC that supported Stapleton in the four-way GOP primary and is now airing TV ads supporting him in the general election. Workforce Fairness is an anti-union nonprofit and, again, it’s unclear who funds it. Colorado Campaign for Jobs and Opportunity’s only other funder this cycle is Vital for Colorado, a nonprofit that’s received money from Anadarko Petroleum and Noble Energy. It’s unlikely those two companies are the only donors to Vital, however.
  • Education Reform Now Advocacy, a nonprofit that supports charter schools and other reforms, donated $2.3 million to a variety of Democratic causes. That includes $975,000 to the state-level super PAC Raising Colorado, which has supported mostly Democratic candidates; $500,000 to Good Jobs Colorado; and also to super PACs supporting Democratic state House and Senate candidates. The group is reportedly supported by backers of the reforms it supports.
  • Colorado Taxpayers’ Advocate Fund donated $500,000 to Better Colorado Now, a super PAC supporting Stapleton, and $400,000 to super PAC Coloradans for Fiscal Responsibility, which supported Stapleton during the primary. Again, it’s unclear who is funding the Taxpayers’ Advocate Fund.

Colorado’s laws to blame for dark money, experts say

Colorado Common Cause, a nonpartisan group that advocates for transparency on money in politics, is pushing for more disclosure to know the source of campaign cash.

“We need to improve our disclosure of organizations that are trying to directly impact our elections,” Fry said. “We need to find out who is behind all this because right now Coloradans are being kept in the dark.”

She said Common Cause would like to see electioneering reports required for all candidate mentions for the entire time between the primary and general elections, not just current shorter windows. And she said disclosure of the source of the advertising should be required on all political messages, including those from candidates.

And she said the legislature should look for ways to get more disclosure about nonprofit money being spent on politics.

“They didn’t create nonprofit organizations to be essentially shell organizations for political interests that don’t want to disclose their donors,” she said. “When you have a nonprofit organization that exists solely to influence elections, you should have to disclose those donors.”

Denise Roth Barber, managing director of the National Institute on Money in Politics, said there could be way to regulate nonprofits at the state level.

“We, the public, do not need to have access to their membership lists or other kinds of generic income,” she said.  “But when these nonprofits engage in political spending, they should create and maintain a separate account so that they can easily track the money coming into that account and leaving it so that the public can know where that money is coming and going.”

But Jackson, the appellate lawyer, noted that those behind dark money groups have been successful in keeping their methods secret in the past, so new laws may not work.

“Whenever you draw the lines, there are going to be creative people who get right up to it, but don’t quite cross them.”

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