What is ‘dark money’ in politics?
When undisclosed money independent of any particular campaign is used to influence the outcome of an election it is called “dark money.”
Donations from anonymous individuals and groups flow through tax-exempt nonprofits such as super PACs and LLCs. Outside spending refers to political spending made by groups and individuals other than the candidate’s campaigns.
When did ‘dark money’ first appear?
The US Supreme Court’s 5-4 ruling in the 2010 Citizens United v. Federal Election Commission case opened up corporations, including nonprofits, and labor unions to spend unlimited sums to support or oppose political candidates.
Since then, dark money groups have spent roughly $1 billion to influence elections in the decade (see graphic).
Dark money groups, which keep their donors secret, have spent more than $182 million on political ads during the 2020 election cycle. Only a fraction of that spending has been reported to the Federal Election Commission (FEC) during the same period, according to an Open Secrets report from Sept. 11.
Voters, of course, can’t know the motives or credibility of the political messages paid for by undisclosed sources.
What types of ‘dark money’ groups are out there?
Organizations that spend money to influence the outcomes of election and accept funding from hidden sources are many. Here are some of them:
- Nonprofit, tax-exempt groups aren’t political organizations and so don’t have to disclose their donors’ identities to voters, such as:
- 501(c)(3) groups are organizations operate for religious, charitable, scientific or educational purposes, such as the NAACP, and donations to them are tax-deductible.
- 501(c)(4) groups are referred to as “social welfare” organizations, such as the NRA or Planned Parenthood. They are the most common type of nonprofit, dark money groups. They are permitted to engage in political activities as long as it doesn’t become their primary purpose. Donations aren’t tax-deductible.
- 501(c)(5) groups are labor and agricultural groups and are funded by dues from union employees. They are allowed to engage in political activities, but donations to these groups are not tax-deductible.
- 501(c)(6) groups are business leagues, chambers of commerce, real estate boards and trade associations, such as the National Association of Realtors. They are permitted to take part in political activities. Donations to these groups are not tax-deductible.
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