Thomas Holyoke: Let’s shine a light on ‘dark money’

The 2014 mid-term election is over. Ballots are counted, winners are finding their offices, losers are pointing fingers of blame, and everyone is filing their campaign finance paperwork.

Yet some of what is called “outside spending” will never be accounted for. Outside spending is money spent by parties, traditional political actions committees (PACs), or other organizations unconnected to a candidate’s campaign to create and distribute advertisements raising issues attacking candidates. The Center for Responsive Politics estimates there was $736 million of it this election, tipping senate races in Iowa, Colorado and North Carolina.

Increasingly outside spending comes from Super-PACs because a wave of court rulings permits them to spend without limits. In 2010 the U.S. Supreme Court held in Citizens United v. FEC that any law prohibiting political spending by people, corporations, or unions violates the First Amendment’s free speech clause. Soon afterward, the Court of Appeals ruled in SpeechNOW.org v. FEC that these same organizations could contribute without limits to PACs specializing in attack ads, and Super-PACs were born. This year they spent an estimated $339 million on mostly negative attack ads.

Yet something even more disturbing than Super-PACs emerged this election cycle. Citizens United also allows contributors to give unlimited amounts of money to nonprofit organizations specializing in attack ads and other forms of electioneering. Some of these are well known, like the U.S. Chamber of Commerce, but most are new and are organizing as 501(c)(4) nonprofits, which permits them to spend money on anything that might be called “social welfare.” Apparently that includes political attack ads. Nearly half of the ads seen in 2014 were sponsored by these nonprofits.

What makes these (c)(4) nonprofits more disturbing than Super-PACs is that while the latter must disclose their contributors (after election day), these nonprofits have no similar obligation. Designed to operate only a few months, they are essentially sham organizations providing cover for people or other organizations that prefer to make massive contributions in comfortable anonymity. They do not even have to reveal themselves to the government until months after they start operating, unlike Super-PACs that almost immediately must file with the Federal Election Commission. This is why the approximately $170 million spent in 2014 by these nonprofits is called “dark money”.

These dark money groups were thrust into the news because congressional Republicans, who benefited from dark money in 2014, cried “scandal” when the IRS questioned whether several right-leaning organizations applying for (c)(4) status really had social welfare missions. The only scandal is that the IRS did not come down just as hard on left-leaning applicants.

Unfortunately, as the IRS crafts a more even-handed rule, it is being threatened by one of these nonprofits, American Commitment, which the Center for Public Integrity thinks is largely funded (at $13 million) by another organization called Freedom Partners, itself apparently funded by the Democrats’ poster-children for everything wrong in politics, Charles and David Koch.

Should dark money concern us?

The Supreme Court says dark money groups are only exercising their free speech rights, just as lobbyists claim protection under the First Amendment’s right to petition government clause. The difference, though, is that lobbyists must publicly disclose who is paying them. Even Super-PACs must reveal their contributors eventually. We may not like their contributors’ ideas, but at least we know who they are. Dark money groups do not have to reveal their contributors, so we have no idea who is using them to reshape the ideological disposition of Congress by manipulating elections. At the very least everyone in a representative democracy should know whose interests their elected officials are potentially representing.

How can we solve this problem? In California tens of thousands of people signed a petition supporting the new law SB 27 requiring dark money groups to disclose their donors, and other states are considering similar laws. But this is a national problem. If the Supreme Court refuses to prohibit unlimited contributions, then we must insist that Congress and the FEC require original disclosure on all political attack ads, a complete listing of everyone who originally contributed money before it passed through dark money organizations. At least this would shine a little light dispelling the darkness around the money’s origins.