This Article offers a case study of Democratic Governors Association (DGA) and the Republican Governors Association, two central financial actors in recent state elections. Between 2002 and 2010, the period that this Article will cover, the Governors Associations participated in gubernatorial elections in forty-eight of fifty states and spent nearly half a billion dollars, yet they have largely escaped regulation by state elections officials in the very states where they lavish money electing governors. But the simple recipe for how the Governors Associations evade campaign finance regulations is not unique to these two groups. Potentially any multistate group may evade these state anti-­corruption laws in the same way.

The Governors Associations are everywhere, but in a real sense, they are regulated almost nowhere. What little regulation falls on them is not imposed by the fifty states, but rather by the IRS, which requires the Governors Associations to report their income and spending. This IRS reporting reveals that much of the money filling the coffers of the Governors Associations is actually corporate. A majority of the corporate contributions (over 65%) comes from publicly traded corporations, which raises corporate governance issues as well as democratic concerns.

The U.S. is facing the advent of unfettered corporate political expenditures as a result of the U.S. Supreme Court’s Citizens United decision. This decision sets precedence to allow publicly-traded corporations to use vast amounts of corporate treasury money to fund political advertisements in federal election campaigns without any sort of disclosure or shareholder consent. Similar policy concerns have been addressed by U.K. laws in 2000. In this paper, we present evidence on the effect of the 2000 and 2006 Amendments to Companies Act of the United Kingdom that provide shareholders with the ability to consent or object to future corporate political spending and a new dual disclosure system that requires companies to report political spending to shareholders in annual reports, while the political parties to report the source of their funding to the voting public through the Electoral Commission.

We obtain data on management proposals requesting shareholder voting on future corporate political expenditure by Britain’s publicly traded companies and the actual corporate political spending. We show that the U.K. Companies Act has not acted as a ban on corporate political spending. To the contrary, companies that seek approval of political budgets nearly always get them approved by shareholders. However, the political budgets that are sought by managers and approved by shareholders are typically modest – ranging from £50,000 to £100,000. In addition, actual corporate political spending for publicly-traded companies in the U.K. is far below the overall shareholder-authorized amounts. Lastly, our data reveal that since the 2000 Amendments, political spending appears to have migrated from publicly-traded companies to privately-held companies in the past decade.

This article will cover a short but tumultuous period in the history of campaign finance disclosure law from 2007 to 2010 to highlight the dramatic 180 degree turn that the law has taken on the issue of the constitutionality of disclosure within the past four years. First, I will explore the hostility that many lower courts were exhibiting in the short window between the Supreme Court’s decision in Wisconsin Right to Life II (WRTL II) in 2007 and the Supreme Court’s decision in Citizens United v. FEC in 2010. Basically these lower courts made the mistake of applying WRTL II to disclosure laws. This mistake was corrected by the Supreme Court in Citizens United and Doe v. Reed in 2010. After Citizens United and Doe, lower courts all over the country have adopted the Supreme Court’s view that disclosure and disclaimers can be constitutionally applied to advertisements that feature candidates for office directly before an election. And lower courts have gone further to endorse disclosure around ballot measure fights as well. In other words, in the nation’s courts the tide has turned in favor of disclosure of the sources of money in politics.

If the past is prologue, we should anticipate a marked increase in the use of non-profits to mask for-profit money in politics. History shows that for-profit corporations spend through non-profits to enjoy their anonymity while spending without accountability from shareholders or customers. And Citizens United may only expand this corporate habit of spending through intermediaries. If for-profit corporations are purposefully using non-profits to hide the true source of their funds, then it is possible that the degree of disclosure required of non-profits in the future may have an impact on whether for-profits give money to ideological and politically active non-profits.

Citizens United changed many aspects of American campaign finance law. The Supreme Court’s decision ended decades-old restrictions on the use of union and corporate treasury funds to pay for independent expenditures and electioneering communications. But the one area where the Citizens United Court increased the ability of Congress to regulate was the disclosure of the sources of money in politics. Indeed, the Supreme Court found that the Bipartisan Campaign Reform Act of 2002’s (BCRA’s) disclaimer and disclosure provisions could be constitutionally applied to the plaintiff in Citizens United, a 501(c)(4) organization, as well as to its ads and its film entitled “Hillary: The Movie.”

As Citizens United reaffirms, in order for voters to make informed choices at the ballot box, they must know who is paying for each side of a political fight. Campaign finance disclosure and disclaimer laws should be adopted at the federal level to achieve this end, regardless of the tax status of the spender. Yet the question remains, how expansive is this governmental right to mandate disclosure? And in particular, what types of disclosure can non-profit social welfare organizations or trade associations be subject to in the future once they purchase political advertisements? These are the questions that this article will endeavor to answer.