What is Dark Money in Politics?
“Dark Money” might sound like the name of a fictional spy thriller, but in the world of politics, it has a very real and often controversial impact on elections — including this year, ahead of the 2022 midterm elections.
The term “dark money” refers to political spending in which the funding source is not disclosed. Like all political contributions, it is designed to influence policies, party platforms and electoral outcomes.
Dark money groups spent about $1 billion to influence elections in the decade since the 2010 Citizens United v. FEC Supreme Court ruling that helped boost politically active nonprofits, according to Open Secrets, a nonprofit and non-partisan research group that tracks political spending in the United States. Most of that money went to TV and online ads and mailers.
Not everybody is happy about all that dark money pouring into the political system. The Campaign Legal Center (CLC), a nonpartisan organization that advocates for all voters to “meaningfully participate” in the democratic process, said on its website that “voters have a right to know who is trying to influence their vote and who is working to influence” the government.
“Transparency about the sources of funding for our elections and candidates and how that money is spent is central to the free and fair functioning of our democracy,” the CLC said. “Increasingly, however, our elections are being drowned in secret spending — spending where the true source (who is spending the money) is unknown.”
Dark money typically enters elections through secret donations that are routed through 501(c)(4) social welfare organizations or 501(c)(6) trade associations, according to the CLC. They are named after the sections of the Internal Revenue Code that grant tax exempt status to organizations.
As Open Secrets noted, groups such as 501(c)(4)s are “generally under no legal obligation to disclose their donors even if they spend to influence elections.” Those that choose not to reveal their sources of funding are considered dark money groups.
Many organizations can operate in the world of political dark money, including Super Political Action Committees (Super PACs), Hybrid PACs, Limited Liability Companies (LLCs) and shell companies.
“Opaque” nonprofits and shell companies can give unlimited amounts of money to Super PACs, according to Open Secrets. It said that although Super PACs are legally required to disclose their donors, some of these groups “are effectively dark money outlets” when the bulk of their funding can’t be traced back to the original donor.
According to the CLC, many of these groups also have “vaguely defined” limits on how much election-related activity they can engage in, although these limits are “virtually never enforced” by federal regulators.
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Many organizations and lawmakers have tried to push back against dark money in politics, but so far their efforts haven’t had much impact. That’s the case even as the U.S. Supreme Court “has consistently upheld political disclosure laws, explicitly acknowledging that political transparency is essential for meaningful participation in our system of democratic self-governance,” according to the CLC.
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