The 2016 presidential race is already awash in money on a historic scale.
More than ever, candidates are running on large, undisclosed donations, known as “dark
money”.
So, what is dark money, and how does it influence elections?
Well, any election funding that comes from groups who don’t need to disclose their
donors is described as “dark money”.
Shady donor groups generally come in two forms: politically active nonprofits, like social
welfare and trade organizations, or Limited Liability Corporations, also knowns as LLCs.
Like SuperPacs, dark money groups can funnel an unlimited amount of money to any political
cause or candidate.
However, because of their position in the federal tax code, they are not required to
publicly disclose the source of that money.
This particular tax exemption has existed for more than a century, and only applies
to organizations that “further the common good and general welfare of the community.”
The law was later amended to include political causes, however these organizations still
had to devote at least half of their budget to actual social welfare.
With this somewhat unclear language, political groups are able to get away with mass amounts
of unregulated and unreported campaign spending, as long as they are registered as a 501(c)(4).
Before 2010, dark money groups could not legally spend donor money on “advocacy communications”,
like TV ads promoting a political candidate or cause.
But that all changed with the Citizens United Supreme Court decision, which not only removed
the cap on political donations, but freed up corporations and nonprofits to funnel money
into political communication.
That year, the IRS saw a sharp increase in 501(c)(4) applications and campaign contributions
from nonprofits, overwhelming their ability to effectively regulate them..
The IRS has since attempted to rewrite the tax code to prevent further abuses; however,
their efforts have been repeatedly blocked by the Republican-led senate.
This is likely why the 2012 presidential election saw more dark money expenditures than any
US election in history.
In 2012, political nonprofits, like the Koch Brothers’ Americans for Prosperity, spent
more than $300 million dollars in total to boost their preferred candidate.
By comparison, less than $70 million dollars came from dark money groups in the 2008 election
And experts predict that the 2016 cycle will see more undisclosed funding than ever before.
In fact, as of November 2015, roughly $5 million dark money dollars had already been spent,
which is more than 10 times the amount spent at that point during the 2012 cycle.
Dark money spending is multiplying and thriving to benefit candidates on both ends of the
political spectrum.
That said, in 2012, conservative dark money groups spent about eight times more than their
liberal counterparts.
And republican politicians have since rallied against regulations on campaign spending,
particularly from nonprofits.
Whether these groups will get a return on their investment in the 2016 election is yet
to be seen.
To learn more about the other side of unlimited election funding, you can watch this video
up top about Super PACs.
And if you want to know how morals influence your political beliefs check out this video
from our friends at Fig. 1.
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