What Is Dark Money?

Dark money refers to the funds donated to nonprofit organizations that are in turn spent to influence elections. These nonprofit organizations can receive an unlimited amount of donations, and they are not required by law to disclose their donors. The opacity of this donation process often allows these organizations to significantly influence the election process.

Key Takeaways

  • Dark money refers to political donations made using a nonprofit organization as an opaque interlocutor.
  • Often associated with political action committees and super PACs, dark money groups differ in that they are regulated by the IRS and not the Federal Election Commission.
  • Because of legal rulings in the U.S., dark money contributions are legal, if ethically questionable, and allow for a great deal of political influence.

Understanding Dark Money

Dark money groups are similar to political action committees (PACs) and super PACs in some aspects: They can spend unlimited amounts of money on a campaign and are not directly affiliated with the candidates. However, dark money groups are regulated by the IRS, while PACs are regulated by the Federal Election Commission (FEC), which gives them different allowances.

Super PACs must disclose their donors, while dark money groups are exempt. Super PACs are also required to disclose their expenses, while dark money groups must also do so through taxes, the process is often delayed until a year or more after the elections. However, while Super PACs can be formed purely for political reasons, dark money groups cannot spend the majority of their funds for political purposes.

Corporations cannot contribute directly to a campaign; however, the 2010 Citizens United v. FEC case made it legal for corporations to support a PAC. 

The Political Influence of Dark Money

In recent years, dark money groups have surpassed even traditional PACs and super PACS in election spending. One of the largest and most well-known entities is the network of the Koch brothers, Charles and David Koch, conservative business moguls whose spending accounted for about a quarter of the dark money used to influence the 2012 elections.

While the 2010 and 2012 elections saw enormous dark money contributions, the 2014 midterm elections saw the highest amount of dark money spent in a congressional election to date. This money was largely spent in swing states, or those with the most competitive races. Dark money was also used in significant amounts in the 2016 elections.

Laws Surrounding Dark Money Groups

Two U.S. Supreme Court decisions contributed greatly to the rise of dark money groups. In the 2008 case FEC v. Wisconsin Right to Live Inc., the Supreme Court held that issue ads, or ads that pair a candidate's name with a specific issue, may not be banned during the months preceding an election. This means that as long as the ad does not explicitly express support or opposition to a candidate, it can be aired during this "blackout period." This decision opened the doors to dark money groups to advertise throughout the election season in order to spread influence.

In the 2010 case Citizens United v. FEC, the Supreme Court ruled that it was unlawful for the government to restrict political spending by a nonprofit corporation, which gives them the freedom to spend unlimited amounts in order to support or oppose a political candidate and influence the election process. This case was also extended to for-profit corporations and other entities.