Corporate Campaign Donors Identify Themselves Thanks to New York Focus Nudge
Following an article that found the Board of Elections failed to enforce a 2019 transparency law, the board sent donors a letter requesting that they comply with the law’s requirements. Thousands did within weeks.
This story was published in partnership with New York Focus, an independent, investigative news site covering New York state and city politics. Sign up for their newsletter here.
In the wake of reporting by New York Focus into the state Board of Elections’s failure to enforce a landmark 2019 campaign finance law meant to limit corporate dark money in New York elections, the Board began enforcing the law in March. That yielded rapid results, recent figures show: compliance with the law’s disclosure requirements has increased more than threefold since the Board took action.
The law required limited liability companies, or LLCs, that make political donations to submit a form listing their owners and how much of the company each one owns. That was meant to combat a notorious strategy that corporations and those who control them used for years to pour anonymous cash into elections: using LLCs with generic-sounding names to pass their contributions through.
But the vast majority of donors who gave via LLCs were not aware of or simply ignored this requirement. Only 10% of LLC donors submitted the required form last year, New York Focus reported in February. In the wake of that reporting, the Board took action: for the first time, it notified delinquent LLCs that they were in violation of the law and instructed them to make the required disclosures.
Most chose to comply. As of last month, the Board had received almost 3,500 disclosure forms from LLCs, up from just 930 in February, according to numbers cited by Michael Johnson, the Board’s chief enforcement lawyer, at a meeting last week. Three-quarters of the LLCs that have made political contributions since the law took effect in early 2019 are now in compliance with their disclosure requirements, up from just one-fifth in February. (The disclosures have not yet been made publicly available.)
“There have been many LLCs who were simply unaware of the disclosure requirements. Once those LLCs received the letter, the majority of the LLCs came into compliance by submitting” the forms, Johnson said in a statement to New York Focus.
“It’s really fantastic that the Board of Elections is acting on this and more LLCs are complying with the law,” said David Imamura, an attorney at the law firm Abrams Fensterman who co-authored a forthcoming book on election law. “New York State campaign finance laws haven’t historically had high compliance.”
It’s not clear what the board’s plans are to address the remaining quarter of LLC donors that haven’t disclosed their owners. It does not have the authority to punish delinquent LLCs, a fact that Board co-chair Peter Kosinski called a “huge failing” of the law. Board members have repeatedly called on lawmakers to give the board that authority, which Johnson said “would go very far in alleviating a lot of the issues that we have come up against.”
At its meeting, the Board did not discuss whether it plans to take action to address violations of the other key plank of the 2019 reforms: a cap on LLC contributions at $5,000 per year. Most LLCs have respected that limit, but dozens have violated it, with some donating as much as $40,000 in a single year, New York Focus reported in March. Last year, LLCs donated over $350,000 in excess of their legal limits.
Asked if there are plans to encourage full compliance with the law, Johnson said that his office is still addressing “reoccurring issues” such as “errors in reporting LLC names.”
“Once we have determined all the issues involved, we can move toward the next steps in the enforcement process,” Johnson said.
At the meeting last week, board officials called for the legislature to update the law to address another problem: the end-of-year deadline for LLCs to disclose their owners.
LLCs are not required to submit their information until December 31 of the year in which they donate, which means that the disclosures can come weeks or even months after elections. Candidates, by contrast, have to disclose the donations that they receive before their elections occur.
The late disclosure deadline blunts the force of the law, said Robert Galbraith, a researcher with the government accountability nonprofit LittleSis.
“It’s a good thing that the Board of Elections has been able to achieve some compliance,” Galbraith said. “But if the purpose of the law is to reduce the power of anonymous money in politics, then getting 75% disclosure months after the relevant election is still a complete failure.”
Sen. Zellnor Myrie (D-Brooklyn) and Assemblymember Latrice Walker (D-Brooklyn), who chair their chambers’ respective Elections Committees, did not respond to questions on the changes requested by the board. Neither committee has considered any bills related to LLC contributions this year.
In March, Sen. Brad Hoylman (D-Manhattan) and Assemblymember Emily Gallagher (D-Brooklyn) introduced a bill that would require all LLCs operating in New York — even those that don’t make political contributions — to disclose their names and owners to the Department of State. That bill is still in committee in the Senate and is awaiting a floor vote in the Assembly.
Galbraith and other government watchdogs have called for a simpler way to deal with LLC cash in New York’s elections: ban it. Corporate contributions to campaigns are already banned at the federal level, over 20 states, and in New York City.