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What The Hell Is Dark Money?

To make sure elections in the United States are fair, there are laws to make sure every single dollar that is donated or contributed to a political campaign is accounted for. The United States is a democracy where the citizens of this nation elect our representatives through voting. To make sure this isn't a kleptocracy or that money isn't flowing in from nefarious sources, Congress and the Supreme Court have put measures in place to make sure the public knows who is funding the candidates we vote for in our local, regional and federal elections. This way, we, the citizens of the United States of America, know that the candidates we vote into public office have our best interests in mind and not that of corporations and wealthy donors.

DAMN IT!!! Most of that wasn't true?! You mean to tell me, that our elections have millions of dollars that are unaccounted for? That our candidates for Congress and the Presidency are accepting money from people, corporations and organizations that could not have the nations best interests in mind? Yep.

What are some campaign finance terms I should familiarize myself with? (This part can get dry and boring but it will help you better understand campaign finance and this article. You can skip but will be hard to follow the rest of the article)

  • FEC - The Federal Election Commission is an independent regulatory agency whose purpose is to enforce campaign finance law in United States federal elections.

  • Contribution Limit - These are the limits on contributions to candidates and political groups from individuals, organizations, political committees, etc.

  • Hard Money - Money contributed directly to a candidate, party committee or PAC. It is regulated by the FEC, meaning it is subject to certain prohibitions (like limits) and can only come from an individual or a PAC. This money can be used to directly on the support of candidates, such as advertising, yard signs and more.

  • Soft Money - Money contributed to a party, candidate or outside group without being subject to limits. Traditionally, these funds have been used for get-out-the-vote efforts, party building and similar activities, not the direct advocacy of specific politicians. Soft money can also come from corporations, unions and other entities that are either banned or restricted in their political giving.

  • PAC - (Political Action Committee) Term for a political committee organized for the purpose of raising and spending money to elect and defeat candidates. PAC's can contribute up to $5,000 to a candidate per election

  • SUPER PAC - These are “independent expenditure-only committees,” organizations registered with the FEC that don’t contribute DIRECTLY to candidates but do make independent expenditures. They can take UNLIMITED donations from individuals, other PACs, corporations and unions. They do have to disclose their donors, but they can take money from 501(c)(4)s and LLCs that don’t disclose their donors.

  • 501(c) Group - These are nonprofit groups regulated by the IRS that are tax exempt. The amount of political activity each group can engage in varies based on its type under the tax code.

  • 501(c)(4) - These are non-profit groups where their main objective CANNOT be politically motivated. Meaning more than 50% of their time can't be focused on elections or politics. HOWEVER, they are allowed to raise unlimited amounts of money from any individual, organization, corporation, literally anything without having to disclose who is contributing that money.

I am so confused reading all those definitions. Please try to explain to me in the simplest terms.

Trying to explain campaign finance is like trying to understand astrophysics 10 beers deep. It's complicated but at a high level, it's pretty simple. Individuals can contribute directly to a candidates campaign up to a certain amount ($2,800). They can also contribute to a national committee up to a certain amount (ex - donating $X amount to the Republican or Democratic National Committee). Corporations and trade unions CANNOT contribute directly to a candidate or national committee but it can donate to Super PAC's and 501 (c) groups. And that's where the fun begins.

Okay, so people can donate up to a certain amount to a candidate but corporations aren't allowed to donate to candidates directly. Yet, through Super PAC's, wealthy individuals and corporations can donate as much as they want?

Yes, and this is where the waters start to get murky. The government tries to have accountability on the individual contributions directly to a campaign, committee or PAC but when it comes to a Super PAC, the government does not put a contribution limit. This means if there is a Presidential Candidate who if elected would open up federal lands to be drilled for oil in Alaska, Exxon Mobil could donate $1B dollars to a Super PAC that supports that Presidential Candidate. Donors to Super PAC's must be disclosed to the FEC monthly or quarterly.

How does the Super PAC use that money to get the candidate elected?

Remember, Super PAC's can't directly coordinate with a candidates campaign but they can do things on their own. They can create and buy digital, newspaper and TV ads. They can buy signs and put them on your lawns. They can go door to door and try to convince you why the candidate they support is the one you should vote for. It's basically one HUGE loophole. Usually, these Super PAC's are run by former staffers on a candidates campaign or by someone who is close to the candidate. Even though they are technically not coordinating with the official campaign of a candidate, they are doing activities the official campaign would do anyway.

The title of this article is "What the Hell is Dark Money?". So....what is it?

Dark money refers to political donations that are made without knowing who or what contributed. That means in theory someone could contribute $10B to have a particular candidate elected for President or Congress without having their identity known. But how can this happen if all donors to Super PAC's must be disclosed? In comes the good ole 501(c)(4)'s.

501(c)(4)'s are non profit groups who are allowed to raise unlimited amounts of money from individuals, organizations and corporations. And unlike Super PAC's, they DO NOT have to disclose who is donating/contributing. They cannot directly coordinate with a candidate's campaign but like Super PAC's, they can buy ads, go door to door, hold fundraisers, etc.

501(c)(4)'s are non profit groups whose main objectives can't be political. This means 50% or more of their organizations time has to be spent doing something that has nothing to do with politics or elections. Examples of these organizations are the NRA, ACLU, Planned Parenthood. As long as they meet that requirement (and it's very hard for the FEC or IRS to dispute their 50% claim) then they can raise as much money as they want from whoever (as long as it's not foreign money, how the FEC monitors that is up in the air).

Super PAC's have a better infrastructure to buy TV ad's and other election operations so what happens a lot of the time are these 501(c)(4) groups donate the contributions they receive to Super PAC's. When it's time for the Super PAC's to disclose who is making these donations, they would list the 501(c)(4) non profit group as the donor. The original donors will remain anonymous since they didn't have to be disclosed to the 501(c)(4) in the first place.

How is this legal? It seems like candidates are being bought

These anonymous unlimited contributions to 501(c)(4)'s from corporations and individuals was not legal until 2010. The Supreme Court ruled in the case of Citizens United v. Federal Election Commission, that corporations and similar like organizations were allowed to donate as much as they want due to the first amendment, freedom of speech.

The court decided if they limited the contribution amount corporations made to outside groups (Super PAC's) they would be violating their first amendment rights. The Supreme Court ruled corporations have the same rights as people.

What has been the aftermath of the Citizens United v. Federal Election Commission Ruling?

Dark money and money being contributed to Super PAC's have skyrocketed. Corporations and wealthy donors are throwing money at elections like never before and now have the backing of the Supreme Court to keep their donations anonymous. Right after the Supreme Court decision in 2010, dark money rose more then 300% in the 2012 election.

Conservative groups over the past 8 years have been the main beneficiary of Super PAC and dark money spending but that trend flipped in 2018 which saw liberal leaning groups outspend conservative groups in terms of dark money.

Our elections are supposed to be decided by the people and our government is supposed to work for us and not the lobbyists and special interest groups in Washington. However, all this money being thrown into our elections to persuade voters has to make us step back and really think about the candidates we choose and think about the laws we have in place.

Does it really make sense for corporations and wealthy individuals to make unlimited contributions to political campaigns? On top of that, does it make sense for some of these donations to be completely anonymous to the American public? How can we be sure there is no corruption? Bribery? All questions that should be asked heading into the 2020 Presidential Election.

1 comment

1 Comment

Feb 26, 2020

Great read.

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