Virginia Has No Campaign Contribution Limits — And It Shows

by James C. Sherlock

Did anyone notice the reporting last year that Virginia’s 2019 state election drew unprecedented amounts of special interest money from out of state, most of it targeted to turn the state blue? It worked.

Federal laws regulate the use of money in federal elections. The states implement and enforce campaign finance laws for state-level candidates. Virginia is one of only nine states[1] with no limits on any of the five major categories (see below) of political contributions. Virginia’s combination of state elections in years in which there are no federal elections, lack of limits on campaign contributions and our status as a purple state make us the biggest target of all for out-of-state campaign money, before and after elections.

The most widely cited[2] categories of influence-related giving are:

  1. Individual to candidate contributions
  2. State Party to candidate contributions
  3. PAC to candidate contributions
  4. Corporate to candidate contributions
  5. Union to candidate contributions

Money Laundering. Numbers 2 and 3 in the list above represent legalized money laundering. Give a ton of money to a state party or a PAC and those organizations give it to the candidates. To that list I would add candidate-to-candidate contributions rampant in Virginia. Give a ton of money to a candidate who doesn’t need it and he or she will give it to others who do, increasing the donor politician’s influence over the votes of the recipients. I called that “Speaker’s money” in my last essay[3].

That essay exposed the iron grip in which Virginia’s hospitals and health systems hold Virginia laws concerning the business of healthcare. It noted Governor Ralph Northam’s acceptance of $117,500 in “campaign” money from hospital interests after his victory. He is term limited. You also read about Attorney General Herring’s lack of enforcement of the antitrust laws against the actions of Virginia’s regional health system monopolies after he had accepted over $127,000 from hospital and health system donors, including $23,000 since his last election. One state senator outsourced the costs of 20% of his campaign to a lobbyist organization.

The Supreme Court’s decision in McCutcheon v. Federal Election Commission, 134 S.Ct. 1434 (2014), declared that limits on the total amount of money an entity can contribute during an election cycle violate the First Amendment, and are therefore unconstitutional. However, limitations on the amount of money an entity can contribute to a specific campaign can and do remain in place in most states.

Even More Money Laundering. The scandal surrounding hospital and health system political influence in Virginia indicates that this state desperately needs money in politics limits.

That brings us to yet another money laundering operation. Like the others, it is legal. Most Virginia hospitals and health systems are tax exempt as self-declared 501c3 “charitable organizations.” Under federal tax law, a 501c3 “not-for-profit public charity” like some of the biggest corporations in this state (Sentara, Inova, Carilion, others) may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.

When Congress regulated 501c3 political donations, it did not really want them to stop giving, it just wanted to make the collection of those donations more efficient for legislators.

For example, a business league exempt under federal tax code section 501c6 is a membership organization characteristically supported by dues.  The common business interests of such organizations may include “attempting to influence legislation germane to the common business interests of an organization’s members”[4].

“Politically active nonprofits – principally 501(c)(4)s and 501(c)(6)s – have become a major force … The term “dark money” is often applied to this category of political spender because these groups do not have to disclose the sources of their funding. These organizations can receive unlimited corporate, individual, or union contributions that they do not have to make public, and though their political activity is supposed to be limited, the IRS – which has jurisdiction over these groups – by and large has done little to enforce those limits. ”

501c3’s give money to those organizations. The intermediary organizations give it to politicians.

Nonprofit, tax exempt Virginia Hospital and Healthcare Association (VHHA) is a 501c6.  It has a PAC to influence legislation by contributing to state candidates –  HosPAC.

“HosPAC’s purpose is to support state candidates. The HosPAC Board of Directors evaluates candidates on their qualifications for public office, recommendations from local hospital and/or health systems, issue philosophy, voting record, leadership roles, ability to be elected and the need for financial assistance. After weighing these considerations, the Board then disburses money to the campaign committees and candidates who have been determined will best support quality health care initiatives and services that are vital to Virginians.”[5]

Virginia’s tax exempt 501c3 hospitals and healthcare systems give money to tax exempt VHHA. VHHA scrubs it and gives it to state politicians. HCA and LifePoint, for-profit systems, give money directly. In VHHA’s 2015 Strategic Plan[6], there is not a single reference to coordinating or otherwise cooperating with physicians. And it doesn’t.

What to Do? Democracy requires the active support of its citizens. The first obligation is for every citizen to contact his/her elected state constitutional and General Assembly officials demanding they support:

  • Strong and meaningful contribution limits across the spectrum of of influence-related giving that prevent wealthy special interests from having undue influence on state and local governments.
  • Rules that shut down individual-candidate super PACs and effectively prevent coordination between candidates and outside groups. When super PACs can raise unlimited funds and then work closely with candidates, the candidate contribution limits are ineffective.
  • Rules that block candidate-to-candidate money transfers.
  • Oversight that tracks donations and ensures that the same interested entity does not set up multiple PACs to avoid limits.

Tell them to copy Maryland Code Ann., Election Law §§ 13-226 and 13-227 and paste it into the Virginia code: $6,000/candidate limits across all categories of influence-related giving. Add a ban on candidate-to-candidate money transfers. Follow the South Dakota election law challenge making its way through the courts and add a ban on out-of-state money in state elections, including state constitutional amendments, if it will hold up in federal court. The Governor should call a special session to consider this law before we vote on the redistricting amendment.

James C. Sherlock, a Virginia Beach resident, is a retired Navy Captain and a certified enterprise architect. As a private citizen, he has researched and written about the business of healthcare in Virginia. 


[1] National Conference of State Legislators, State Limits on Contributions to Candidates, 2019 – 2020 Election Cycle

[2] ibid.

[3] https://www.baconsrebellion.com/wp/how-hospitals-exercise-political-clout/

[4] https://www.irs.gov/charities-non-profits/other-non-profits/examples-of-common-business-interests

[5] https://www.epacmanager.com/pass_sol/sol_vahosp/frmABOUT.aspx

[6] http://www.vhha.com/communications/wp-content/uploads/sites/16/2015/08/2015-2020-Strategic-Plan-FINAL-DRAFT.pdf

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11 responses to “Virginia Has No Campaign Contribution Limits — And It Shows

  1. I think the out-of-state money has been ongoing for a while and yes through dark-money PACs that the IRS did try to rein in – remember the IRS “scandal”?

    The thing is , folks were apparently “ok” with it until the Dems started doing it and making a difference in elections as a result.

    NOW, we got the major hand wringing going on but I have to say – that I’ve still not seen many, if at all, GOP-sponsored bills to rein it in.

    And when Michael Bills from Charlottesville started putting big money on Dem campaigns, it was almost if some folks feared that more than they fear Dominion’s money that had been flowing for years to GOP -and Dems.

    and remember – Citizens United – according to Conservatives/GOP is about “free speech”.

    so, it’s interesting watching the GOP twist and turn on this… now that the Dems have learned how to do it as well!

    I’m all for it. I especially, also, dislike the de-facto money laundering going on. From anonymous dark money to the political party “leadership” fund and from there to candidates is the worst of the worst.

    but no, the Dems did not invent it!

    😉

  2. johnrandolphofroanoke

    I don’t think the average voter in Virginia has the foggiest idea about this.

    • But they DO seem to have very strong opinions on gun rights, abortion, health care and climate… but near zippo on this.

      Is the Virgina General Assembly truly corrupt – i.e. is taking money in exchange for voting for bills they normally would not favor ?

      Are Virginians, on the ground, seeing legislation and law that they feel is wong and and harming them?

      Now, I don’t mean the vociferous minorities – I mean writ large – a majority, most of them – do they think they live in a corrupt state where there is money being exchanged for bad laws?

      open question as to where or not they are “aware” because as said up-thread, it’s not like they are unaware of all issues. Clearly, they are well aware of some.

      Jim S asked how to fix it.

      Good question and it did not sound like DJ had a bullet-proof method either.

      I know, I know, it’s that dang liberal rag – the WaPos fault. If they did theirir job right – everyone would know and care – and the money-grubbing bums would be out on their kiesters…

      Now we bring back to earth………… next real world suggestion….

      • My goal is to get one of the two national newspapers, the Wall Street Journal and the New York Times, with the best healthcare investigative reporting teams to report on this situation in Virginia. See https://www.wsj.com/articles/SB121986172394776997 for a WSJ report on a Virginia hospital system – Roanoke based Carilion – as an example of what can be done and the impact it can have.

  3. I’ve been harping on this point on this blog for a decade. You are exactly right. We need campaign contribution limits. But “The Virginia Way” or more accurately “The Virginia Hallucination” holds that no amount of money in politics will matter because our politicians are genetically honest.

    In this session Chap Petersen once again tried to get legislation passed that would eliminate contributions from regulated utilities in Virginia. Once again it was quietly defeated in the General Assembly. I’m not sure there was even a vote in the house. I recall hearing that liberal stalwart Eileen Filler-Corn killed it herself.

    • DJ, do you have any ideas in addition to the ones I have offered above about how to get the word out and get changes implemented?

      • Politics is a contact sport. It’s time to play “pin the tail on the donkey” and the perfect donkey is Dick Saslaw. He needs to publicly become the poster boy for what’s wrong in Virginia around campaign contributions – especially Dominion. Tilting at the entire General Assembly is warranted but ineffective. People want villainy to have a face and we have a perfect villain in “Dominion Dick”. Even ultra-progressive BlueVirginia won’t defend Saslaw. They see through him as a tool of Dominion. Right thinking observers of Virginia politics from the left and right need to “Bork him”.

        If a Republican politician is needed to pillory in order to demonstrate even handedness I’d suggest Tommy Norment or Terry Kilgore.

        We need to make this personal.

  4. Good suggestion. I have some contacts in the largest mainstream media companies. They are always looking for a story that pins the tail on a senior politician. I will offer them Northam, Herring, Saslaw, Norment, Kilgore and Hanger. Depending on their political leanings, they can use the Democrats or the Republicans on which to pin the tail. Jim

  5. The biggest story is the determining effect of out of state money in turning Virginia blue. Terry McAuliffe has admitted it. Jim

  6. Pingback: 3.11.20 political law links | Political Activity Law/Political Law/Election Law

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