It wasn’t so long ago that “dark money” groups were a frequent target of progressive scorn. Organizations classified as 501(c)(4)s are nonprofits, but they may engage in political advocacy, even partisan campaign work, as long as it is not their “primary” activity. That stipulation is vague enough that critics say c4s are little more than ways for political donors to conceal their giving; while donations to c4s aren’t tax-deductible, their donors also aren’t subject to public disclosure.
These organizations have been repeatedly denounced, with critics suggesting c4s be required to remain apolitical or simply be abolished altogether. Partisan political activity by its nature can’t be a pure social good, the argument goes, and therefore, there’s no reason to allow charitable groups to engage in it. And since c4s conceal their donors’ names, they serve as a cloak of secrecy for wealthy people who want to wield influence without leaving any fingerprints. Some c4s have been attacked for using that status as a fig leaf while operating essentially as partisan operations, and the IRS, underfunded as it is, is unable to properly police c4s that run afoul of the poorly defined rules (which were weakened by the 2010 Citizens United Supreme Court decision).
Closing the dark money gap
Conservatives jumped on the new era of big-money politics first. In the 2010 election cycle, 88% of dark money spending came from conservative sources, according to the Center for Responsive Politics, and in 2012, conservative non-disclosing groups outspent liberal ones at a factor of eight to one, helping Republicans maintain control of the House. Democrats have been working to reform this system, proposing legislation that would increase disclosure standards. Democrats during President Barack Obama’s first term introduced legislation called the DISCLOSE Act to require groups making political ads to disclose their donors, but the effort fell flat, and by 2014, liberals were starting to build their own arsenal of dark money.
One early ally was America Votes, a liberal organization with reported ties to Hillary Clinton, which brought in a majority of its $13.4 million in fundraising between 2014 and 2015 from 11 anonymous donors, according to tax documents reviewed by the Center for Public Integrity. America Votes made donations to more openly political organizations active in the 2014 midterms, like the Vote Vets Action Fund. Other early entrants into liberal dark money included the League of Conservation Voters and Patriot Majority USA, which paid for countless ads promoting Democrats and slamming Republicans in congressional races.
Going into the 2016 election cycle, Democrats were able to compete with Republicans on dark money while continuing to insist they wanted to reform campaign finance.
“What I struggle with, and what many of my colleagues struggle with, is, we have Senate rules that we believe should be changed. But until they are changed, how much unilateral advantage do we give to Republicans?” Democratic Oregon Senator Jeff Merkley told Vox ahead of the 2016 election. “I work like crazy to have small-dollar donations and as big an email list as we can possibly get. But I’m not sure we could win 51 or a sizable majority if we abandoned the calls for fundraising to the Republicans.”
Merkley expressed a view that has since become a standard progressive talking point. As the Koch brothers and their right-wing allies established a network of ideological dark-money nonprofits during the Obama years, many Democrats believed it would be political malpractice for their side to refuse to do the same—even as they continued to decry dark money and call for reform. (This tricky balancing act was on comic display in 2015 when Harry Reid inveighed against “the flood of dark money” in an ad produced by a dark money group.)
But the Democrats’ have-it-both-ways approach seemed to backfire. Polling from 2016 showed the looming mistrust of Wall Street following the financial crisis and the Democrats’ inconsistent approach to money in politics allowed Trump’s “drain the swamp” messaging to position him as the anti-corruption candidate. Clinton’s courting of dark money and super PAC donations disappointed many progressives at the time, especially given her primary opponent Sen. Bernie Sanders had demonstrated how to fund a campaign effectively with small donors.
“In a way, the Koch brothers have more credibility than Clinton on election money issues—they’re at least upfront about how they want to use money to buy politics,” writer Dylan Ratigan told the Center for Public Integrity ahead of that election.
All-in
In the Trump era, Democrats seemed to abandon their dark money reform goals in favor of an all-hands-on-deck approach to counter Trump and the Republicans. Of the $150 million spent from dark money groups in the 2018 midterms, more than half was spent by liberal groups, marking the first election cycle they’d outspent conservatives. Among the leading groups was Majority Forward, an affiliate of the Democrats’ Senate Majority PAC and a key source of cash for certain Senate races that year. Another group that rose to prominence that cycle was the Sixteen Thirty Fund, which pumped $141 million into left-leaning causes like resisting Supreme Court Justice Brett Kavanaugh’s nomination—tax filings reviewed by Politico the following year found anonymous donations comprised the bulk of the group’s funding, including one $51.7 million gift from an unknown donor.
The Kavanaugh battle underscored the growing embrace of different kinds of c4 spending by progressive donors, including by a growing number of philanthropists looking to diversify how they advance their chosen causes. If your 501(c)(3) giving is devoted to expanding the number of Americans with access to healthcare, you can only back so much research and advocacy before you decide that political campaigns—either for Medicaid expansion ballot measures or directly toward Democratic candidates—is the only way that increased healthcare access is possible. In California, Mark Zuckerberg and Priscilla Chan have turned to c4 giving for county and state ballot initiatives to address the housing crisis and other challenges. On a host of issues, it’s possible to conclude that the advancement of the public good involves winning victories at the ballot box. While many donors are fine about making their c4 giving public, others see good reasons to keep it secret—and the law makes that easy to do.
Recent years have seen a flourishing of left-of-center c4s, which ironically may have gotten a boost from recent Republican-led changes to the tax code. The 2017 Tax Cuts and Jobs Act increased the standard deduction, meaning that fewer taxpayers can itemize charitable giving and therefore receive tax breaks for donations to c3s. That could make donating to c4s a more attractive option for those deciding how to break down their yearly giving.
Liberals maintained their lead on dark money in the 2020 cycle with nearly $260 million, according to OpenSecrets.org. The Democratic Party’s outside money apparatus was on full display this cycle, with groups like Sixteen Thirty Fund and other dark money allies funneling cash to ad buys and pop-up super PACs that strategically avoided disclosure deadlines until after voters cast their ballots.
All this coincided with a year in which Democrats proved, as Sanders had four years earlier, that they don’t actually need all that outside money: small donors—those giving $200 or less—gave an estimated $1.8 billion to federal candidates in 2020, with Democratic Senate candidates taking in 41 percent of their money from small givers.
“Dark money” is still a pejorative term. When the American Prospect pointed to c4 money flowing to support Elliot Engel, the New York Democratic congressman ultimately unseated by left-wing challenger Jamaal Bowman, the implication was that that c4 cash was dirtier than the money spent by the Justice Democrats’ super PAC to back Bowman. But in practice, pretty much the entire political spectrum has come to peace with the realities of c4 spending. As Mark Riddle, the executive director of Democratic c4 Future Majority, put it in a 2019 interview with NPR: “On election night 2018, I didn’t hear anybody go, ‘Oh jeez, we won! But gosh, wasn’t all that stuff really bad that helped everybody win?’”
Now with control of Washington, Democrats are poised to finally live up to the promise of combating dark money. The For the People Act, known as H.R. 1 in the House and S.R. 1 in the Senate, is a collection of campaign finance and voting rights bills that would dramatically reduce the influence of big money in elections. Among the package of bills taking aim at gerrymandering, voter registration and public funding of campaigns is the DISCLOSE Act, first introduced in 2010.
If passed, it would require political nonprofits to disclose the source of any donation over $10,000 and the source of funds for any election-related spending exceeding $10,000. With the urgent pandemic and economic crises at hand, many Democrats hope the For the People Act will also be a first-year priority for the new Biden administration.
