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How dark money works
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When donors give money directly to a campaign, political party, or super PAC, their names and the amounts they have given must be disclosed.

But dark money is different.

It comes from groups—typically limited liability corporations (LLCs) or politically active nonprofits—that do not have to disclose their donors. As a result of U.S. Supreme Court decisions in 2007 and 2010, those groups can receive unlimited amounts of money from individuals, corporations, and other organizations.

They can then use that money to pay for television ads and other efforts to influence voters. Often the public doesn't know who is funding those efforts or why they are trying to affect the outcome of an election. That’s why it’s called “dark money.”

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how dark money works

Donors—individuals, corporations, organizations—give money to LLCs or politically active nonprofits. Most dark money comes from contributions to those nonprofits.

The politically active nonprofits and LLCs then spend that money on ads, mailers, and robocalls aimed at influencing voters. Those groups can also contribute money to super PACs without disclosing their donors’ identities.

There are no limits on the amount of money donors can give to LLCs and politically active nonprofits, and there are no limits on how much money LLCs, politically active nonprofits, and super PACs can spend. There are, however, limits on how much money donors can give directly to candidates and political parties.

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LLCs, politically active nonprofits, and super PACs

LLCs (limited liability companies) are private companies whose owners are protected from certain legal and tax liabilities. Their owners are often difficult to trace.

Politically active nonprofits are tax-exempt groups that include social welfare organizations and trade associations. They are often referred to by their respective tax code classifications as 501(c)(4) and 501(c)(6) organizations. According to the Internal Revenue Service, these groups can engage in some political activity, as long as it isn't their primary purpose. However, the tax agency has not specified how much political activity is too much.

LLCs and politically active nonprofits can spend money on what the Federal Election Commission calls "independent expenditures"—commercials, mailers, and robocalls to support or oppose a candidate. The groups can also pay for ”electioneering communications”—ads that mention federal candidates and air within 30 days of a primary or 60 days of a general election.

Because these purchases are not made by campaigns—and are not supposed to be coordinated with campaigns—they are also known as “outside spending.” LLCs and politically active nonprofits can engage in outside spending without disclosing the names of their donors.

LLCs and politically active nonprofits can also contribute to super PACs, which are officially known as “independent expenditure-only committees.” Super PACs cannot give directly to campaigns, but can spend as much money as they want to advocate for or against a candidate. Federal law requires that super PACs disclose the names of groups funding their political activities—but not the identities of donors who contribute to those groups.

For example, if you contributed to an LLC which then contributed to a super PAC, your identity and the amount of money you gave would not be disclosed. The super PAC would only disclose the name of the LLC, not the original donor.

LLCs, politically active nonprofits, and super PACs are not supposed to coordinate their spending with campaigns, but they often do. The Federal Election Commission is responsible for enforcing campaign finance laws, but last year, commissioner Ann M. Ravel told The New York Times, “The likelihood of laws being enforced is slim.”

To learn more about the terms used in campaign finance, visit this glossary from The Center for Responsive Politics.

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How much dark money is in elections?

Most of the money spent during the last three elections came from candidates and political parties, which have to disclose their donors. But the role of dark money is growing.

In 2008, groups that don’t have to reveal their donors spent $102.4 million. In 2012, such groups spent $308.7 million.

During the last three election cycles, 30% or more of the outside spending on federal elections came from dark money groups.

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find clues to dark money
IRS

You can see what politically active nonprofits do—and don’t—disclose by examining their IRS Form 990 filings on Guidestar, a site that compiles information on nonprofits.

Federal Election Commission

You can find out whether a super PAC received money from a politically active nonprofit or LLC by looking at the PAC’s filings with the Federal Election Commission. You can also check the PAC’s expenditure records to find out whether it made contributions to politically active nonprofits.

Federal Communications Commission

You can find out whether politically active nonprofits bought ads by searching radio and television stations, television networks, and cable and satellite systems in the Federal Communications Commission’s Public Inspection Files. The political files include information on the ads and the officers of the organizations that purchased them.

U.S. Department of Labor

You can find out if a labor union has contributed to a politically active nonprofit by examining the annual report the union files with the U.S. Department of Labor.

Corporate Filings

Some corporations voluntarily disclose their contributions to politically active nonprofits. You can find out if a public company has disclosed such contributions by checking the annual report it has filed with the Securities and Exchange Commision.

State Campaign Filings

You can find out whether a state-based political committee contributed to a politically active nonprofit by checking state campaign finance filings and searching the National Institute on State Money and Politics’ database.

Ad Buys

Find out which television commercials were paid for by politically active nonprofits.

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a brief history of dark money

Several U.S. Supreme Court decisions have made it easier for groups that don’t have to disclose their donors to spend unlimited amounts of money on elections, including:

Buckley v. Valeo (1976):

The court overturned limits on independent expenditures by individuals and total campaign expenditures.

FEC v. Wisconsin Right to Life, Inc. (2007):

By a 5-4 vote, the court ruled that corporations and certain nonprofits could pay for issue ads in the 60 days before an election, as long as those ads do not explicitly advocate for a candidate.

Citizens United v. FEC (2010):

By a 5-4 vote, the court ruled corporations and unions can spend unlimited amounts of money on independent expenditures.

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What to do about dark money?

Most Americans—Republicans and Democrats alike—believe the campaign finance system needs to be changed significantly or completely rebuilt.

There are no simple or quick fixes, but campaign finance reform advocates say there are steps the president, Congress, and federal agencies could take to address problems caused by dark money:

What Congress could do:

Congress could pass tougher disclosure laws, requiring corporations, unions, politically active nonprofits, super PACs, and other groups to disclose their donors and political contributions. Recent attempts to pass such legislation, including the 2012 DISCLOSE Act, have failed to gain bipartisan support.

What the president could do:

The president could issue an executive order requiring federal contractors to reveal all of their political contributions.

In January, The New York Times reported that President Barack Obama is “seriously considering” such an order. But congressional Republicans, including Senate Majority Leader Mitch McConnell (R-KY), say the move would be illegal.

The president could also nominate new commissioners to the Federal Election Commission. Four of the six current commissioners’ terms have expired.

In addition, the president could nominate commissioners to the Securities and Exchange Commission who support requiring public companies to disclose their political contributions.

What the Federal Election Commission could do:

The Federal Election Commission could enforce existing campaign finance laws and issue stricter disclosure requirements.

The three Democrats and three Republicans currently serving on the commission—the FEC requires that “no more than three commissioners represent the same party”—cannot agree on most enforcement issues, with key votes divided along partisan lines.

What the IRS could do:

The IRS could set clearly defined limits on political activities by social welfare organizations.

In 2015, Congress passed a bill prohibiting the IRS from defining political activity for social welfare organizations. That ban expires on September 30, 2016.

The tax agency’s efforts to regulate politically active nonprofits stalled, after it came under intense scrutiny for its handling of applications from Tea Party and other groups seeking 501(c)(4) status. A subsequent investigation found ”no evidence … that would support a criminal prosecution.”

By law, social welfare organizations must disclose the identities of donors who contribute over $5,000 to the IRS—but not to the public. Congress is currently considering a bill eliminating that requirement.

What the Securities and Exchange Commission could do:

The Securities and Exchange Commission could issue rules requiring publicly traded corporations to disclose their political contributions. Those rules would have to take effect in the next fiscal year, which begins on October 1, 2016. Congress has prohibited the agency from issuing such rules during the current fiscal year.

What the Federal Communications Commission could do:

The Federal Communications Commission could require all groups, including political nonprofits and LLCs, to disclose their donors when they buy radio and television ads.

The agency currently requires that broadcasters make public information about political ads, including the groups that purchased them. But the requirement doesn’t extend to those groups’ donors.

In January 2016, more than 160 Democratic members of Congress sent a letter to the chair of the FCC, urging the agency to “require disclosure of the actual donors” behind political ads.