In 2024, the last election year, the largest single donation to a political candidate running for state office did not come from a person. It came from a housing development company.
Senate Judiciary Committee Chair Karl Rhoads said he wants to get corporate spending in elections under control. He’s introduced two bills that explore a new legal approach aimed at effectively barring corporations from donating to Hawaiʻi political campaigns at the local, state and federal levels.
If passed by Hawaiʻi lawmakers, the measure would make the state the first in the country to do so.
“The goal is to have at least regulated campaign spending,” Rhoads said. “No matter what you do, the wealthy will always have disproportionate influence. It's just this grotesquely disproportionate influence that I'm aiming at.”
Lawmakers at both the federal and state levels cannot outright ban companies from donating to campaigns. The 2010 U.S. Supreme Court decision Citizens United v. Federal Election Commission ruled that regulating the right of corporations to spend independently in elections was unconstitutional, a violation of free speech.
“Every approach that has gone with the regulating rights side of things has failed. It's a total roadblock. This is a brand new approach,” said Tom Moore, a senior fellow at the progressive Center for American Progress.
He’s pushing states to adopt a law that would get corporations out of politics without violating the Citizens United opinion.
Redefining a corporation
Moore explained that states have the authority to define what constitutes a corporation — and its powers. States also have the ability to change that at any time.
“It's just that no state has. So what Hawaiʻi is doing with this approach is saying, ‘Hey, we don't want to give you the power to spend in politics anymore. We don't have to, so we're not going to,’” he said.
“It takes the list of powers that Hawaiʻi grants to the corporations that it creates and just shortens it a little bit. And because you're not regulating the rights of the corporations, you're redefining literally what they are, that actually works.”
If the Constitution gave people the right to fly, it would still be impossible for people to fly because humans don’t have the natural ability to fly, Moore analogized.
“We still can't fly regardless of what a court says about our right to do it. And it's the same for corporations. If a state decides to redefine a corporation or all of its corporations as entities that don't have the power to spend in politics, then the rights to do it doesn't have anything to attach to,” Moore explained.
That’s what Rhoads’ bills aim to do. It goes to the section of Hawaiʻi law that grants corporations, nonprofits and other business entities the same powers as individuals – and redefines it.
In the provision that says the entities can make donations and payments, it adds a clause that says it does not grant the power to participate in elections.
“This is a way to limit the just huge flow, the huge dollar amounts of black money that pour into campaigns where you can't really tell where they came from,” Rhoads said. “A lot of it is corporate money, so it won't solve the whole problem, but it does solve part of it.”
One of the most egregious forms of this is the 501(c)(4) designation, a category of nonprofits that do not have to disclose their donors, but can donate to a political campaign. They're are often referred to as “dark money groups.”
In the federal 2024 election cycle, dark money groups broke records, pouring $1.9 billion into campaigns.
Moore explained that Rhoads’ bills would address those groups, and corporations out-of-state, because Hawaiʻi has a law that says out-of-state companies cannot exercise any powers that local companies don’t have.
Some lawmakers have voluntarily restricted campaign contributions
U.S. Rep. Jill Tokuda has stuck to her pledge not to accept corporate PAC money — although she does accept other types of PAC money, like from labor unions. She’s the only member of the state’s congressional delegation that has made this commitment. She supports the bills moving through the Legislature.
“We can't just talk about restoring trust in government, ending corruption, returning power to the people, and then continue with the other hand to take money from corporate PACs that we know are simply trying to buy out our elections. And so for me, not taking corporate PAC money is about walking the walk,” she said.
“To your point that Hawaiʻi might be one of the first, I would reemphasize that we can't just wait to overturn Citizens United. We have to be looking at every possible way at both the state and federal level that we can restore that trust in government.”
When her campaign receives donations from corporate PACs, it promptly refunds them.
Our Hawaiʻi, a progressive political action group, has a pledge for candidates to commit to refusing campaign donations of over $100 from corporate sources. Founder Evan Weber pointed to seven members of the state House of Representatives who have signed.
“People are sick and tired of money in politics, and they want people who are going to run clean campaigns,” he said. “That's something that our candidates can use to get more votes, as well as those small grassroots dollar donations that are a better way to power your campaigns.”
Weber explained that in the past, Our Hawaii Action, a 501(c)(4), was used to raise funds without disclosing donors, but decided it was better to focus on grassroots donations instead.
“We've never been pure about having to kind of not get engaged in politics and not taking opportunities that are available,” he said.
“But we're clear-eyed that the power of ordinary people is never going to come from big money. It's going to come from big-many, and many of us joining our voices and giving our time and our other kinds of resources that we have to change this system and to help ordinary people get elected.”
Would the measures survive court challenges?
Similarly in Montana, residents are trying to get a constitutional amendment question posed on the ballot in November to address corporate spending in politics.
Moore explained that the other avenues available would be an amendment to the U.S. Constitution or the U.S. Supreme Court overturning the Citizens United decision – both of which are extremely unlikely.
The Hawaiʻi state attorney general’s office testified on both of Rhoads’ measures at the Senate Commerce and Consumer Protection Committee with concerns on how the measure would fare if challenged in court.
“It remains the law of the land, and it is our duty and the State of Hawaiʻi's duty to follow that ruling,” Deputy Attorney General Ashley Tanaka said.
“Besides constitutional concerns under the First Amendment, we did also address that there is a substantial risk of adverse litigation should this bill pass into law.”
Moore was almost positive that the measure would be challenged in court, but he emphasized that it hasn’t yet been tested.
“It has not been tried before. This is not something that has ever been rejected by a court. So it is untested, but it is based on a much more solid grounding than anything else that's been tried since Citizens United was decided,” Moore said.
The Senate Commerce and Consumer Protection Committee is scheduled to decide on the measures next week.
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