What is 'Dark Money'

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


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.

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 has already been 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.

  1. Political Action Committee / Super ...

    Political action committees (PACs) privately raise money to donate ...
  2. Decentralized Dark Pool Trading ...

    Decentralized dark pool trading platforms are venues for anonymous ...
  3. Hard Money

    Hard money is an ongoing funding stream versus a one-time grant ...
  4. Restricted Fund

    A restricted fund is a reserve of money that can only be used ...
  5. Nonprofit Organization

    A nonprofit organization is a business entity that pays no income ...
  6. Unrestricted Net Assets

    Unrestricted net assets are assets donated to nonprofit organizations ...
Related Articles
  1. Insights

    Where Presidential Candidates Get Campaign Funding

    American citizens of every political persuasion may justifiably wonder where all that money comes from and how it's spent.
  2. Insights

    What Is the Dark Net?

    The Dark Net (or Darknet) is a subset of secret websites that exist on an encrypted network.
  3. Insights

    Where Do Campaign Contributions Go After Elections?

    Learn about what those contributions are used for when the candidate is no longer running.
  4. Personal Finance

    Dark Pools: The SEC Is Moving to Tighten Oversight

    The agency is concerned that dark pools' lack of transparency could disrupt the markets
  5. Tech

    The Number Of Dark Pools In Cryptocurrency Trading Is Increasing

    Dark pools, which conduct trades away from cryptocurrency exchanges, are increasing in crypto trading.
  6. Insights

    Money And Politics

    Learn about the progression of events and legislation that shaped and influenced today's political environment.
  7. Insights

    Clinton Defeated Despite Outspending Trump

    For those looking for answers about what happened this election, the details of campaign donations may offer some clues.
  8. Tech

    Litecoin Gains Ground On Bitcoin In The Dark Web

    Litecoin may soon surpass bitcoin as the most popular cryptocurrency for e-commerce transactions on the dark web.
  9. Insights

    Trump's Contributions Covered 20% of His Campaign's Spending

    President-elect Donald Trump has contributed $66 million toward his campaign.
  10. Insights

    How Bernie Sanders Has Avoided Big Money (Mostly)

    Bernie Sanders hasn't entirely avoided PACs with his fundraising, but he has gotten a lot of bang for the buck
  1. Why is the Dark Cloud Cover pattern important for traders?

    Learn the significance for traders of the dark cloud cover candlestick pattern, a bearish indicator closely related to the ... Read Answer >>
  2. Do nonprofit organizations have working capital?

    Discover why financial reserves in the nonprofit world are equivalent to working capital used by for-profit businesses, and ... Read Answer >>
  3. Do nonprofit organizations pay taxes?

    Section 501 of the IRS tax code exempts qualified nonprofit organizations from federal taxes if it meets certain rules. Read Answer >>
Hot Definitions
  1. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  2. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
  3. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
  4. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative ...
  5. Internal Rate of Return - IRR

    Internal Rate of Return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.
  6. Limit Order

    An order placed with a brokerage to buy or sell a set number of shares at a specified price or better.
Trading Center