- From Open Secrets: What is Dark Money?
“Dark money” refers to spending meant to influence political outcomes where the source of the money is not disclosed. Here’s how dark money makes its way into elections:
Politically active nonprofits such as 501(c)(4)s are generally under no legal obligation to disclose their donors even if they spend to influence elections. When they choose not to reveal their sources of funding, they are considered dark money groups.
Opaque nonprofits and shell companies may give unlimited amounts of money to super PACs. While super PACs are legally required to disclose their donors, some of these groups are effectively dark money outlets when the bulk of their funding cannot be traced back to the original donor.
Dark money groups have spent roughly $1 billion — mainly on television and online ads and mailers — to influence elections in the decade since the 2010 Citizens United v. FEC Supreme Court ruling that gave rise to politically active nonprofits.
- From Open Secrets: How do Dark Money Groups work?
Many laws govern what a 501(c) organization, or Dark Money group, can do with its money and what it is required to report. While some expenditures, such as explicit political spending, must be publicly disclosed, many other expenditures remain off the radar screen.
Most of what we know about spending by Dark Money groups spending is gathered from their annual IRS 990 forms, including their major vendors and the organizations to which they give grants. As the example below illustrates, groups often submit only vague descriptions of their outlays to vendors, such as "media services" or "consulting phone programs." They are not obligated to say what the money purchased with any specificity.
These organizations can spend money on direct political advocacy, but that cannot be their primary purpose, which is usually determined by how much the group spent on politics as a proportion of their overall expenditures. Disclosure requirements mandate that 501(c) groups report direct political expenditures to the Federal Election Commission (FEC). But expenses earmarked as "educational" or "membership building" are considered part of the organization’s primary purpose and (most of the time) need not be detailed.
- Wikipedia: Dark Money:
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In the politics of the United States, dark money refers to spending to influence elections where the source of the money is not disclosed to voters. In the United States, some types of nonprofit organizations may spend money on campaigns without disclosing who their donors are. The most common type of dark money group is the 501(c)(4) (often called social welfare organizations).[3][4] Such organizations can receive unlimited donations from corporations, individuals and unions. Proponents of dark money maintain it is protected under the First Amendment, while critics complain recipients of dark money (as with any contribution) "knows exactly who he owes a favor", but voters are kept in the dark about connections between donor and politician when favors are paid back.[5]
Dark money first entered politics with Buckley v. Valeo (1976), when the United States Supreme Court laid out "Eight Magic Words" that define the difference between electioneering and issue advocacy -- exempting the latter from election finance laws. Dark spending increased from less than $5.2 million in 2006 to well over $300 million in the 2012 presidential cycle, and more than $174 million in the 2014 midterms,[3] $216 in the 2014 midterm elections,[5] The 2010 landmark case, Citizens United v. FEC, marked the turning point when dark money contributions surged, and some political groups began contending that they were not required to register with the FEC as any sort of PAC because their primary purpose was something other than electoral politics.
For more:
- 501(c) organizations:
A 501(c) organization is a nonprofit organization in the federal law of the United States according to Internal Revenue Code (26 U.S.C. § 501(c)) and is one of over 29 types of nonprofit organizations exempt from some federal income taxes. Sections 503 through 505 set out the requirements for obtaining such exemptions. Many states refer to Section 501(c) for definitions of organizations exempt from state taxation as well. 501(c) organizations can receive unlimited contributions from individuals, corporations, and unions.
For example, a nonprofit organization may be tax-exempt under section 501(c)(3) if its primary activities are charitable, religious, educational, scientific, literary, testing for public safety, fostering amateur sports competition, or preventing cruelty to children or animals.
- 501(c)(4) organizations:
A 501(c)(4) organization is a social welfare organization, such as a civic organization or a neighborhood association. An organization is considered by the IRS to be operated exclusively for the promotion of social welfare if it is primarily engaged in promoting the common good and general welfare of the people of the community. Net earnings must be exclusively used for charitable, educational, or recreational purposes.
According to The Washington Post, 501(c)(4) organizations: ...are allowed to participate in politics, so long as politics do not become their primary focus. What that means in practice is that they must spend less than 50 percent of their money on politics. So long as they don't run afoul of that threshold, the groups can influence elections, which they typically do through advertising.
