Dark Money

Introduction

Five years after the U.S. Supreme Court legalized unlimited secret donations to political campaigns, demonstrators outside the White House protest the 2010 decision, which they say gave corporations and the wealthy too much sway over elections. Proponents say it protects donors' free speech rights. (AFP/Getty Images/Nicholas Kamm)

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Overview

When the incumbent in western New York's 23rd Congressional District decided not to run for re-election last year, real estate mogul Carl Paladino thought he had a chance to win the seat. An outspoken former Republican nominee for governor, Paladino had been labeled “Buffalo's Donald Trump” and appeared poised to capitalize on the former president's strong support in the Republican-leaning district.

But as the August GOP primary approached, Paladino was hit by a wave of negative ads blasting him for having once donated money to Democrats such as former Sen. Hillary Clinton and Sen. Chuck Schumer. Other ads portrayed him as a con artist for taking economic development tax incentives, which he says are commonly used by real estate developers. These ads did not come from Paladino's primary opponent, state Republican Chair Nick Langworthy, but from an opaque group called American Liberty Action PAC.1

Carl Paladino, left, a developer and Republican candidate for New York's 23rd Congressional District seat, lost his primary to state GOP Chair Nick Langworthy, right, after ads from a “dark money” super PAC, whose donors remain anonymous, portrayed Paladino in an unfavorable light. (Getty Images/Neilson Barnard; AP Photo/Seth Wenig)

Langworthy “is bought and paid for by the D.C. swamp,” Paladino protested on Twitter at the time.2

If so, the swamp won: Paladino lost the primary by just 1,847 votes. American Liberty Action's ads may have been decisive: After the primary, Federal Election Commission (FEC) data revealed the group had spent $1 million on ads hammering Paladino and bolstering Langworthy — more than double what Langworthy himself had spent on the entire race. In the November general election, he easily beat a Democrat to win the seat.3

So, who helped Langworthy win? The answer is unclear, because American Liberty Action is a so-called super PAC, funded mainly by “dark money” groups that spend millions to shape U.S. elections without publicly disclosing their donors. Such secretive spending has rapidly proliferated since the U.S. Supreme Court's 2010 decision in Citizens United v. FEC. The landmark case opened the floodgates to political spending by corporations in federal elections — including dark money groups — set up to shield the identity of their wealthy funders.4

Six election cycles after Citizens United, it is clear that dark money is transforming federal campaigns, permanently altering how they are conducted. In 2020, dark money groups — funded by individuals, companies, labor unions and even potentially foreign governments — spent more than $1 billion on federal elections, according to OpenSecrets, a group that tracks campaign spending. In the run-up to the 2022 midterm elections, super PACs and hybrid PACs, two types of political action committees that can accept unlimited donations, reported receiving $400 million from dark money groups — a number likely to rise after more groups issue their final reports. Not included in the $400 million: tens of millions of dollars that dark money organizations spent on ads purchased directly from broadcasters and social media companies, says Anna Massoglia, a dark money researcher for OpenSecrets.

The continued increase in political donations highlights several controversial issues, such as how decisive dark money is in determining which party controls Washington, as well as the extent to which it increases the risk of corruption and enables foreign influence in American elections.

Campaign finance experts also debate whether efforts by President Biden and congressional Democrats to end the use of dark money would meaningfully improve public confidence in American democracy. Although state elections are governed by separate campaign finance rules, secretive donations are also becoming an increasingly important factor in those races, such as campaigns for judges and regulatory commissioners whose decisions can affect the fate of individuals or companies.

Critics of dark money, including groups advocating greater government transparency and many Democrats, say its spread is nothing short of a disaster.

“At its most fundamental level, it deprives the public of the ability to hold their elected officials accountable,” says Robert Maguire, the research director of the watchdog group Citizens for Responsibility and Ethics in Washington (CREW). “In general, these candidates know who is getting them into office and they know who is behind these dark money groups. The voters have no way of saying, ‘Is this just payback for the people who got you in?’”

Polls show that much of the public agrees. A CBS News poll in August found that 86 percent of Americans say democracy is threatened by the influence of money in politics, higher than the percentage who saw the potential for political violence or attempts to overturn elections as a danger. In a Gallup poll released in 2020, just 23 percent of those sampled said they were satisfied with the nation's campaign finance laws. As for dark money: A 2019 poll found that 83 percent of voters support the public disclosure of contributions to organizations involved in elections.5

Those who support allowing secretive donations, including congressional Republicans and Republican-leaning and libertarian advocacy groups, say banning anonymous political spending infringes on First Amendment rights to freedom of speech and freedom of association. They also say that requiring donors to all outside political groups to disclose their identities puts them at risk of harassment by opponents.

“A lot of people just don't want the hassle and the heat from being in the limelight,” says Bradley Smith, a Republican lawyer and former FEC commissioner who now chairs the Institute for Free Speech, a conservative legal advocacy group. Smith says disclosure advocates want to silence unpopular or controversial voices and “to intimidate people from speaking … that's part of this cancel culture.”

Campaign finance regulation historically was anchored in two main pillars: limits on how much donors can give to a candidate or political committee and public disclosure of donors' identities. The federal courts upended both in Citizens United and a related case, SpeechNow.org v. FEC.

Currently, the federal campaign system has different rules regarding limits and disclosure of political donations, depending on who is giving and who is receiving money. There are at least five different vehicles for funding elections.

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The first three entities have existed for decades. They are candidate campaign committees, traditional political action committees (PACs) and party committees. Such groups can donate to each other, and candidates can have direct influence over how this money is spent. However, the amount these so-called hard money groups can receive from any one donor is capped. For example, candidate committees could accept no more than $2,900 per election from any one donor during the 2022 election cycle.

The maximum an individual could give to a PAC was capped at $5,000 per year, while donations to a national party committee were limited to $36,500 annually. Contribution limits are indexed to inflation and will rise in 2023.

While individuals were subject to the $36,500 limit, they also were allowed to give up to $109,500 to each of three specific national party accounts: one for presidential nominating conventions, one to support election recounts and other legal expenses and one to pay for party headquarters buildings.6 Corporations and unions cannot give to any of these three groups, which must disclose to the FEC the name, address, occupation and employer of anyone who gives more than $200 per year.

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After Citizens United, two additional groups emerged: super PACs and dark money groups. These are governed by quite different rules. Super PACs can accept unlimited “soft” donations from U.S. companies, unions or individuals but are legally required to operate independently from a candidate. Since they cannot be controlled by a candidate, they are sometimes called “outside” or “independent expenditure” groups. In practice, however, these groups often are run by political operatives with deep ties to a particular candidate or political party. A hybrid PAC is a group that operates both a super PAC and a hard-money political action committee. Such groups are required to keep super PAC donations in a separate account from PAC funds.7

Under campaign finance laws, super PACs such as American Liberty Action PAC are required to disclose their donors in regular reports to the Federal Election Commission. However, a major loophole exists: Since super PACs can accept money from corporations, donors can mask their identity by passing the money through a shell company.

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Corporate entities that hide the true source of political donations are known as dark money groups. These can be limited liability corporations or other corporate structures but are usually organized as 501(c)(4) nonprofit groups, named after the section of the tax code under which they are exempt from some taxes. Technically, 501(c)(4) groups are supposed to have a social welfare mission that is not “primarily” political. However, due to lax enforcement, this requirement appears to be often ignored.8

Indeed, the lawyers and accountants that create such dark money groups often organize them via complicated networks that pass money between several different organizations before it ends up with a super PAC or is spent directly on ads or other political expenses. Critics say these networks help obscure how each group operates.

For example, such strategies were used last July — just weeks before Paladino's primary — to fund American Liberty Action PAC. The group was created by Massachusetts-based Bulldog Compliance, a company that specializes in accounting and financial administration for Republican political groups. Its sole listed officer is Charles Gantt, a chartered financial analyst with Bulldog's parent company, who is listed as the treasurer of numerous other super PACs on FEC reports. Gantt did not return messages from CQ Researcher requesting comment.

The American Liberty Action PAC disclosed to the FEC two donors, who gave a total of $5.9 million to the group. American Prosperity Alliance, a 501(c)(4) corporation established in May at an office in Reston, Va., a Washington suburb, donated $4.3 million. The sole person listed on its incorporation documents is a D.C. lawyer who specializes in creating political nonprofits.

The remaining $1.6 million came from a super PAC called the Eighteen Fifty-Four Fund, established last March with a post office box address in Houston by a Republican operative and former National Republican Senatorial Committee staffer named Les Williamson.9

Moreover, most of the Eighteen Fifty-Four Fund's money came from the Common Sense Leadership Fund, a 501(c)(4) created in Virginia in 2021.10 The source of its money is not listed on any public records, though its corporate filings with the state list a board of directors that shows its close ties to leading establishment Republicans in Congress. The president of the board is Kevin McLaughlin, the former executive director of the Republican Senatorial Committee. Other directors are Williamson; Parker Poling, a former executive director of the National Republican Congressional Committee; Haley Barbour, a former Mississippi governor and former chairman of the Republican National Committee; and Scott Reed, the former presidential campaign manager for Bob Dole and the former political director of the U.S. Chamber of Commerce.

Paladino remains bitter about the role of secret money in defeating him. In an interview, he said he suspects the dark money came from one or more ultrawealthy GOP donors who preferred candidates less closely aligned with former President Trump.

“If they want to give money, put your name on it,” he says. “The system is corrupted.”

As politicians, campaign finance experts and voters discuss issues surrounding the funding of U.S. elections, here are some of the questions they are debating:

Does the proliferation of dark money increase the risks of political corruption?

Soviet-born businessman Lev Parnas gained notoriety during Trump's first impeachment for his role in helping Trump lawyer Rudy Giuliani prod the Ukrainian government to investigate Joe Biden and his son Hunter, a board member of a Ukrainian energy company.11

But it was Parnas’ efforts to use dark money to buy political influence that ultimately landed him in prison. In 2018, Parnas and an associate, Igor Fruman, channeled $325,000 from a loan Fruman had obtained through a shell company to a pro-Trump super PAC called America First Action in the name of a recently formed limited liability company, Global Energy Producers. It was part of what federal prosecutors called a “straw donor scheme.”12 The men later swore to the FBI that the donation was an effort to further the interests of Global Energy Producers' “energy trading” business.

Soviet-born businessman Lev Parnas, shown in a 2019 booking photo in Alexandria, Va., was charged with illegally channeling $325,000 in dark money to a pro-Donald Trump super PAC. (Getty Images/Alexandria Virginia Sheriff's Office)

Parnas and Fruman did not have extensive political contacts, a record of major campaign donations or experience in energy trading. But shortly after the secretive donation, they had dinner with Trump on April 30, 2018, at one of his hotels, and asked him to fire the U.S. ambassador to Ukraine, Marie Yovanovich. As Parnas would later acknowledge, they wanted the ambassador removed because she had been critical of a Ukrainian prosecutor Giuliani had persuaded to investigate Hunter Biden. At the dinner, Trump agreed to fire her, though Yovanovitch would not be recalled from Ukraine until a year later. The successful effort by the two men and Giuliani eventually became a central part of Trump's 2019 impeachment.13

In June, Parnas was sentenced to 20 months in prison for charges related to the campaign finance scheme, as well as wire fraud and a separate campaign finance charge related to funneling donations from a Russian oligarch to U.S. campaigns. Fruman, who faced similar charges, reached a plea deal with prosecutors and was sentenced to a year in jail in January 2022.14

Dark money critics say it would be hard to imagine a better way to enable corruption than a system that allows such donations. “This is a vehicle designed for corruption,” says Fred Wertheimer, a longtime campaign finance reform advocate who is now president of the election reform group Democracy 21. “There is every reason to believe that lots of folks are taking advantage of it.”

Dark money has also played a key role in other recent scandals. In Ohio, the state's former House speaker is scheduled to go on trial this year as part of an alleged $61 million bribery scheme in which a dark money group run by his allies received donations from a power company, FirstEnergy Corp., seeking a $1 billion bailout from the state. (See Short Feature.) And in Florida, three people were charged or fined as part of a “ghost candidate” scheme, in which a dark money group linked to political operatives from a major public utility, Florida Power & Light, promoted independent candidates who would siphon votes from Democrats running for the Legislature in 2020.15

Those who support allowing secrecy in political donations say critics overstate the risks of corruption from dark money, and that corruption and bribery scandals long predate Citizens United or the creation of today's dark money groups.

“Average people tend to think there is a lot more corruption than there is,” says Smith, of the Institute for Free Speech. He argues that a wealthy person or company's use of funds to support a candidate that sympathizes with their views or political philosophy is often conflated with bribery, which as a legal matter must involve a quid pro quo payment for an official act. He points out that what most reformers dislike about the current campaign finance system is that it is inegalitarian, but since the Supreme Court has ruled that inequity is not a reason for limiting campaign finance, reform arguments get “shoehorned into corruption.”

Some academic work also casts doubt on the idea that dark money facilitates greater corruption. David Primo, a political scientist at the University of Rochester, has researched state disclosure laws and how they relate to public perceptions of corruption. If disclosure laws were meaningful, he argues, public perceptions of corruption would be lower in states with stronger disclosure laws and higher in states with weaker laws. Instead, Primo's research found that contribution disclosure laws had only a very minor effect on corruption perceptions.16

“In general, there is no evidence that campaign laws on disclosure have huge effects on public perceptions of corruption,” he says.

Primo says there are two reasons for this. First, putting money into political campaigns — even utilizing dark money nonprofits or shell corporations — is just one of many ways of bribing politicians. Second, he says, Americans do not view the campaign finance system as the largest problem in politics.

“They view politics itself as being fundamentally rotten to the core and campaign spending is just one piece of it,” he says. “It's not surprising it doesn't move the needle much.”

Does dark money significantly alter the outcome of U.S. elections?

Political spending of all kinds on the 2020 presidential and congressional races topped $14.4 billion, according to OpenSecrets.17 During the same cycle, The New York Times calculated that the 15 largest Democratic-aligned dark money groups and the 15 largest Republican aligned groups spent a total of $2.4 billion.18

Supporters of secretive political donations argue that such figures show that dark money has a limited effect on outcomes because such contributions represent a small share of overall political spending. “Oftentimes there's a big emphasis on dark money that's really influencing debate,” says Jon Riches, the general counsel of the conservative Goldwater Institute. “When you look at the numbers of what's spent by dark money groups, it's a tiny portion of the overall spending.”

Democrat Amy McGrath raised more than $94 million in her 2020 bid to unseat Sen. Mitch McConnell, the Republican leader, in deep-red Kentucky but won only 38.2 percent of the vote. Research shows campaign spending, whether disclosed or undisclosed, does not necessarily sway elections. (Getty Images/Jason Davis)

Campaign spending, whether disclosed or undisclosed, does not necessarily have a determinative impact on the outcome of a campaign. For instance, Democrat Amy McGrath raised more than $94 million during the 2020 cycle in her effort to unseat Republican Sen. Mitch McConnell in deep-red Kentucky, but she won just 38.2 percent of the vote.19 Two years later, Democrat Charles Booker had raised just 7 percent of McGrath's total in his challenge to Kentucky Republican Sen. Rand Paul, according to campaign finance data disclosed through November 2022.20 Yet Booker's share of the vote was an identical 38.2 percent.21

Research on the effect of money and campaigns has generally found that political spending does not have much effect on who wins general election races, especially for incumbents, while the connection between spending and victories for challengers is somewhat murky. While most of the research focuses on historical campaigns, the effectiveness of ad spending may be even smaller today, given the current hyper-partisan political environment and small numbers of undecided voters.22

However, dark money does appear to affect the tenor of political campaigns. As Paladino's experience indicates, dark money groups and negative politics are related. Groups that do not disclose who is funding them are more likely to run ads that attack a candidate, sometimes unfairly. Since dark money groups are nominally independent of the candidates they support, those candidates often avoid blowback for such ads by saying the ads were not funded by their campaign. One study of 30,000 ads during the 2010, 2012 and 2014 election cycles found that advertisements funded by dark money groups were between 1.5 and three times as likely to be negative as those funded by groups that disclose their donors.23

On a macro level, it has become increasingly difficult to conclude which party benefits the most from dark money. Immediately after the Citizens United decision, Republicans seized a sizeable advantage in dark money donations, fueled in large part by the network of political organizations connected to Kansas oil and gas billionaires Charles and David Koch. By the 2018 midterms, however, Democrats, who initially rejected the use of dark money, had matched or slightly edged their Republican dark money rivals, helped in part by the reluctance of megadonors such as the Kochs to support candidates aligned with Trump.24 By 2020, Democrats opened a yawning advantage in secretive political donations. According to the Times analysis, the 15 largest Democratic dark money nonprofits spent $1.5 billion that cycle, compared to just $900 million from the 15 largest Republican nonprofits.25

“The public position on the Democratic side is [dark money] is terrible and we need to end it, but we can't tie one hand behind our back if the other side is using this currently legal tool,” says Adav Noti, the legal director of the Campaign Legal Center, a group that supports campaign finance reform.

To be sure, the pendulum could swing back toward Republicans in 2022 and 2024, although a more complete picture of dark money in the 2022 campaign will not emerge for some time. Nonprofit groups often file tax returns that include their revenue up to 11 months after the end of each fiscal year. Republicans did recently receive an unprecedented boost, according to an August revelation that Chicago electronics magnate Barre Seid gave $1.6 billion to Marble Freedom Trust, a dark money organization run by conservative legal activist Leonard Leo. It is unclear whether Seid's donation is related to three donations totaling about $930 million in 2021 to Donors Trust, another conservative dark money group.26

Critics contend that while super PAC and dark money spending is a relatively small share of overall political funding, it tends to be concentrated in a small number of close races that can potentially tip the balance of power. “When you look at it relative to the overall total, it's a small fraction,” says Sheila Krumholz, executive director of OpenSecrets. “But it's laser targeted to the most opportune targets, to the swing states and to those races where it is very close. It can have a very influential effect … even decisive.”

Indeed, four dark money groups aligned with each party's congressional leadership spent over $295 million on the 2022 midterms, when control of an evenly divided Senate was at stake.27 The largest of those, the conservative dark money group OneNation, was the biggest donor to a super PAC aligned with Senate Minority Leader Mitch McConnell called Senate Leadership Fund. Of the $245 million the super PAC reported spending through December, over $223 million was spent on just six Senate races: Georgia, Nevada, North Carolina, Ohio, Pennsylvania and Wisconsin.28

A similar pattern developed for Majority Forward, a Democratic dark money group affiliated with Senate Majority Leader Schumer. The group was the largest donor to the liberal Senate Majority PAC, which raised more than $160 million over the same period. Of that, 92 percent was spent on the same six Senate races, according to FEC data obtained from OpenSecrets.29

Dark money can also affect presidential primaries, where one or two large donors can keep a candidate's failing bid afloat for weeks or even months. During the 2016 GOP presidential primaries, for instance, the campaign of Florida Republican Sen. Marco Rubio benefitted from a dark money nonprofit that raised nearly $22 million to support his bid during the cycle — almost all of it from two anonymous donations, according to OpenSecrets.30

Sen. Marco Rubio, R-Fla., benefited from a nonprofit that raised nearly $22 million in dark money, almost all of it from two anonymous donations, to support his unsuccessful 2016 presidential bid. (Getty Images/Chip Somodevilla)

The group, Conservative Solutions Project, conducted extensive polling and voter research and spent $2.2 million on direct mail and telemarketing promoting Rubio or denigrating his opponents. It also spent millions purchasing thousands of TV ads casting Rubio in a favorable light, according to advertiser data obtained by the Wesleyan Media Project.31

Yet, because the group was a nonprofit, it did not have to publicly identify its donors. And since the ads did not overtly call for the election of Rubio or the defeat of his opponents, FEC rules did not require it to disclose its ad spending. Ultimately, Rubio did not win any states, but managed to remain in the race until after the Florida primary in mid-March.

To date, the donor or donors behind the two major donations to Conservative Solutions have not been publicly identified.

Will congressional efforts to end dark money eventually succeed?

In September, Biden called on the Senate to pass a bill that would end large dark money contributions. “There's much, — too much — money that flows in the shadows to influence our elections,” he told reporters at the White House.32

Up for consideration was the Disclose Act, sponsored by Sen. Sheldon Whitehouse, D-R.I., which would require organizations such as 501(c)(4)s that spend money on elections directly or through super PACs to publicly report the identity of donors who give more than $10,000 during an election cycle. The bill would also make it harder to hide donations behind shell companies and would expand prohibitions on foreign money in U.S. elections.

During debate on the bill, Republican Senate leader McConnell said the legislation was part of a liberal effort to rewrite campaign finance rules to favor Democrats while violating free expression rights. “They want Americans who oppose them politically to have to either abandon their privacy or abandon the public square,” said McConnell. “They want conservatives to choose between their livelihoods or their political beliefs. The chilling effect on Americans’ speech is by design, not by coincidence.”33

The Club for Growth, a multimillion-dollar conservative nonprofit that operates a super PAC funded by wealthy donors such as shipping magnate Richard Uihlein and billionaire Jeff Yass, also criticized the bill, saying it would be a “road map for even more political retribution, threats and violence.”34

“The bill would result in less political activity, which will empower the entrenched ruling class led by incumbent senators and representatives that have held public office for decades, as well as an incumbent president,” the group said in a statement.35

The measure did not garner the 60 votes necessary to break a Republican filibuster, with senators in the evenly divided chamber voting 49-49 along party lines.

“Today, Senate Republicans stood in lockstep with their megadonors and secretive special interests to protect the most corrupting force in American politics — dark money,” Whitehouse said after the vote. “The American people are fed up with dark money influence campaigns that rig their government against them and stymie their priorities.”36

The result was no surprise: Democrats had introduced similar legislation in every Congress since the 2010 Citizens United decision. The closest a bill had come to passage was in that first year, when it passed the House and fell one vote short of breaking a filibuster in the Senate.

Noti, of the Campaign Legal Center, disputes Republican concerns about threats against big money political donors. He points out that political violence is illegal and donor disclosure proposals include exemptions for those who face legitimate potential threats, such as, for example, members of the NAACP did during the Jim Crow era.

Indeed, the Supreme Court considered whether disclosure laws could potentially “chill donations to an organization by exposing donors to retaliation” in Citizens United v. FEC. In that portion of the decision, supported by eight of the nine justices, the court acknowledged that donors to certain causes might face blacklisting, threats or other retaliation. However, it said, disclosure requirements would only be unconstitutional if an organization faced a “reasonable probability” that its members would be threatened or harassed. Since the Citizens United group itself had not shown evidence of such reprisals, the court determined it must comply with existing disclosure laws.37

Reformers also take issue with Republican concerns that disclosure will lead to boycotts of companies that take unpopular positions. Noti argues that boycotts of corporations, such as that faced by Hobby Lobby after the arts and crafts retailer challenged a law mandating its health insurance provide birth control to employees, are legitimate forms of expression.

“A boycott is not harassment or a threat, it's a corporation being held to account by its customers,” he says. “If corporations [and wealthy donors] don't like people knowing what they do in the political world, they probably shouldn't be doing it.”

Despite 12 years of failure in Congress, some proponents of disclosure requirements hope Republican opponents will eventually change course. Wertheimer, of Democracy21, says a future crisis could shock lawmakers into changing the system. “You can't predict when the opportunity is going to come along. We may need another scandal like the corporate scandals of the 1890s,” he says. “At some point the system becomes so ugly that the opportunities for reform are there.”

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Background

Early Regulations

Americans have long debated the role of money in politics. Congress enacted the first federal campaign finance law in 1867, which barred federal employees from soliciting campaign money from naval yard workers.38

In the years after the Civil War, campaign donors and party functionaries routinely got government jobs. Congress sought to end that practice by creating the civil service system to insulate federal workers from politics. The law was passed two years after President James Garfield was assassinated by a disgruntled supporter who had been denied a government job.39

During the Gilded Age of economic expansion and growing income disparity in the late 19th and early 20th centuries, Republicans dominated national politics. They were aided by Mark Hanna, a senator and chairman of the Republican National Committee, known as America's first great political fundraiser. Hanna sparked public concern by helping GOP nominee William McKinley raise $16 million for the 1896 presidential election, equivalent to more than a half a billion dollars today. “There are two things that are important in politics,” Hanna reportedly said. “The first is money, and I can't remember the second.”40

President Theodore Roosevelt. (Getty Images/Bettmann/Contributor)

McKinley's successor, Theodore Roosevelt, won election in 1904 with the financial support of tycoons, such as J.P. Morgan.41 Yet Roosevelt, who faced his own campaign finance scandal after it was revealed that large insurance companies had given vast donations to the Republican Party to support his run, soured on the role of big money in politics. With his support, Congress, in 1907, passed the Tillman Act, banning corporate donations in campaigns.42

In 1910 and 1911, Roosevelt's successor, William Howard Taft, signed the Federal Corrupt Practices Act and amendments to it. These established campaign spending limits for political parties in House and Senate races and required the first financial disclosures. The act was strengthened in 1925 after the Warren G. Harding administration's Teapot Dome bribery scandal, in which publicly owned oil reserves were sold to private companies in return for payoffs, for the first time requiring quarterly disclosures from campaign donors.43

Labor unions became a key source of funding for Democrats during the Great Depression. In 1943, southern Democrats and Republicans united to ban contributions from labor organizations. In response, the Congress of Industrial Organizations (CIO), a labor federation, created the first political action committee. It eluded the union ban by creating a distinct entity funded by $1 contributions from union members. Although nominally separate from the unions themselves, the PAC was hardly independent: The CIO paid to establish it, and its officers were all union officials.44 In the ensuing decades, PACs would explode in popularity as corporate America adopted them to gather individual donations from employees.

Today's dark money groups have their roots in a 1959 rule issued by the Treasury Department. In 1913, Congress granted tax exempt status to “civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare” under section 501(c)(4) of the tax code. Groups such as volunteer fire companies and Rotary Clubs were soon using the designation and were not required to disclose their donors. In 1959, the Treasury Department determined that such groups must work only “primarily,” rather than “exclusively,” on social welfare, opening the door for them to engage in politics. The word “primarily” came to be defined as using more than half their funds for such purpose.45

By the late 1960s, campaign expenditures were skyrocketing, fueled by the costs of televised political ads. Concern about the role of big money in politics was also increasing, setting the stage for the 1971 passage of the Federal Election Campaign Act, or FECA.46

The law limited what candidates could spend on television ads and how much they could donate to their own campaigns. It also required party committees, PACs and campaigns to file reports on contributions and spending every three months.

Post-Watergate Reforms

In 1972, a burglary of Democratic National Committee headquarters at the Watergate complex in Washington metastasized into a scandal that eventually brought down President Richard M. Nixon, whose re-election committee had employed the burglars. Among the many misdeeds exposed in the scandal were a raft of illegal contributions to Nixon's campaign that helped fund the abuses.47

In the wake of these revelations, in 1974, Congress strengthened the FECA, requiring more robust disclosures and limiting individuals to contributing only $1,000 per election. The amendments also created a scheme for public financing of presidential campaigns and created the FEC to enforce campaign finance laws.48

Evidence is displayed from the 1972 burglary of the Democratic National Committee's Watergate headquarters in Washington by operatives working for the Republican Party, a scandal that eventually brought down President Richard M. Nixon and led to tougher restrictions on campaign contributions. (AFP/Getty Images/Paul J. Richards)

The law was immediately challenged on two fronts. Some opponents, including Sen. James L. Buckley, a Conservative Party member from New York who caucused with the Republicans, and Sen. Eugene McCarthy, then a Democrat who would later run for president as an independent, viewed the new limits on donations and spending as favoring incumbents. Others, led by the American Civil Liberties Union, worried that the new law would restrict electioneering and hence political speech.

The Supreme Court's 1976 decision in Buckley v. Valeo at first appeared to be a compromise between campaign finance reformers and their opponents. It upheld the 1974 law's limits on how much an individual could contribute to a campaign on the grounds that the risks of bribery or public perceptions of corruption outweighed contributors’ First Amendment rights to express themselves through large campaign donations.

However, the court overturned limits on political spending, reasoning that restricting political messaging was an unconstitutional constraint on free speech. For the first time, the Supreme Court determined that the only basis for infringing First Amendment rights through campaign finance restrictions was the government's interest in deterring corruption or the appearance of it. The court ruled that a key argument for limiting spending — to prevent the ultra-wealthy from drowning out other voices — was unconstitutional. To its critics, the Supreme Court had determined that money equals speech.49

Although the restrictions on campaign contributions were upheld, corporations and unions soon found a workaround. By 1979 they began donating “soft money” to political parties. Since this money was not supposed to directly fund campaigns, there were no limits on contributions, which were vaguely restricted to “party-building” activities. These soft money contributions were often undisclosed, and the sums being donated this way grew rapidly in the 1980s. For a time, much of this “soft money” was used for permissible activities, such as voter registration and turnout drives. But later, that would change.

In 1986, the Supreme Court chipped away at the legal prohibition on corporate spending. The FEC had sued an anti-abortion nonprofit corporation called Massachusetts Citizens for Life for distributing campaign flyers identifying candidates’ positions on abortion and urging recipients to “vote pro-life.” The court sided with the anti-abortion group in a 5-4 ruling, determining that since such expenditures were “independent” of a candidate they could not be restricted. However, it limited this ruling to a small class of nonprofits.50

Rise of ‘Issue’ Ads

By the late 1990s, the campaign finance architecture set up under the FECA was beginning to collapse as the parties took advantage of a loophole in the Buckley decision. The ruling had upheld limits on “express advocacy” in which political ads explicitly told voters to vote for or against a specific candidate. However, it determined that so-called issue ads, including those that portrayed candidates glowingly or harshly, could not be regulated by the FEC so long as they did not directly call for a candidate's election or defeat. This led to a tidal wave of sham issue ads, many harshly negative, funded by soft money donations to the political parties.51 Such ads were hardly “party-building” activities, but were allowed to continue.

Meanwhile, the system of public financing of presidential campaigns was also ailing. During the 1996 campaign, Senate Majority Leader Bob Dole, a Republican from Kansas, accepted public financing but ran out of money during the Republican primaries. Dole managed to win the nomination and his campaign recovered during the general election with a new tranche of public funding, but the episode informed future campaigns. During the 2000 presidential campaign, Republican contender George W. Bush decided he could raise more money from donors than from public financing and opted out of public funding for the primaries — which also freed him from the spending limits that came with public financing. Bush raised nearly twice as much as his eventual Democratic opponent, Vice President Al Gore, received from public financing for his primary, effectively demonstrating that public financing was no longer a viable strategy for major candidates in the primary. (Both Bush and Gore accepted public financing during that year's general election.)52

McCain-Feingold Act

By the late 1990s, pressure for reform in Congress was growing, particularly after revelations that President Bill Clinton had been rewarding major donors with special access that included White House kaffeeklatsches and even overnight stays in the Lincoln bedroom at the White House. In 2002 Congress passed the McCain-Feingold Act, named for its main sponsors, Arizona Republican Sen. John McCain and Wisconsin Democrat Sen. Russ Feingold. The law amended FECA to ban soft money donations to political parties from corporations and unions and mandated disclosure of spending on television ads that mention a candidate in the 60 days before a general election or 30 days before a primary. Candidates were also required to “stand by your ad,” by appearing in the commercial to say they approved the message.53

Sens. John McCain, R-Ariz., (left) and Russell Feingold, D-Wis., speak at a 2006 Senate committee hearing on lobbying reforms. A campaign finance law named after the two limited corporate and union soft money donations to political parties and mandated disclosure of spending on television ads. (Getty Images/Chip Somodevilla)

Campaign finance reformers viewed the law as a major victory. Yet, as with earlier reform attempts, lawyers for big-money donors soon found new loopholes to exploit and the courts chipped away at the reform's underpinnings.

During the 2004 campaign, large donors shifted from giving to the parties to donating to “independent expenditure” nonprofit groups called 527s, named for a section of the tax code under which they were organized. These groups were direct forerunners of today's super PACs.

Although it remained a legal gray area, some corporations and large donors argued that so long as these groups’ ads were “issue advocacy” rather than expressly telling people how to vote, they were not covered by McCain-Feingold. Under this logic, there were no limits on donations and donors’ identities need not be disclosed to the FEC. The groups were required to disclose donors’ identities to the IRS for tax purposes, but in practice this often did not occur until after the election.

Despite the legal niceties, most 527s were neither independent nor issue-oriented. They were overtly political groups controlled by party strategists. In 2004, the most infamous of these groups, the Swift Boat Veterans for Truth, aired a series of devastatingly effective ads grossly mischaracterizing the military record of Democratic presidential nominee Sen. John Kerry, a decorated Vietnam veteran. In the months after the election, the FEC sued the group, along with some Democratic 527s, arguing that their activities violated McCain-Feingold.54 Several of the groups were fined, although campaign finance reformers viewed this as too little, too late.

In the seven years after McCain-Feingold was enacted, the Supreme Court and federal appellate courts overturned parts of the law, piece by piece. In a series of decisions, the justices created new ways for political parties to use independent expenditures to fund ads, allowed an exception to the ban on the use of corporate money for ads mentioning candidates in the 60 days before a general election and loosened other restrictions on 527 groups.55

Another milestone was reached during the 2008 campaign, when Democratic candidate Barack Obama became the first major party presidential nominee since the 1974 FECA amendments were adopted to decline public funding for the general election. Obama opted instead for private donations — and no spending limits. McCain, his Republican opponent, stuck with public financing, and was vastly outspent.56

Citizens United

In 2008, a D.C.-based conservative nonprofit group called Citizens United decided to promote and air a documentary harshly critical of Democratic candidate Sen. Hillary Clinton on cable television on the eve of the presidential primaries. The FEC determined that the documentary was an “electioneering communication” under campaign finance law, since it clearly featured a candidate and would air within 30 days of a primary. Since both McCain-Feingold and FECA prohibited corporations such as Citizens United from paying for “electioneering communications,” the FEC blocked the documentary from airing. Citizens United went to federal district court to challenge the ruling, where it initially lost. The group then appealed that decision to the Supreme Court.

Then came the hammer blow. In its 5-4 ruling in Citizens United v. FEC, the court's conservative majority ruled for Citizens United and overturned key parts of campaign finance law by determining that corporations and unions could spend unlimited sums to help candidates — as long as they did not give the money directly to the candidates (thereby corrupting them) but to groups that were technically independent.57

In making that determination, the 2010 Supreme Court used the Buckley v. Valeo framework to conclude that corporations had the same First Amendment rights as people and that unlimited electioneering spending was protected speech. Just as critics of the Buckley decision summarized it as “money is speech,” critics of Citizens United lampooned it as “corporations are people.”58

The decision threw out more than a century of restrictions on corporate money in politics. However, in his majority opinion, Justice Anthony Kennedy wrote that there remained an important check on the unlimited corporate spending unleashed by the ruling: quick and transparent disclosure of who was funding political ads.

“With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters,” Kennedy wrote. “Shareholders can determine whether their corporation's political speech advances the corporation's interest in making profits, and citizens can see whether elected officials are ‘in the pocket,’ of so-called moneyed interests.”59

More than a dozen years later, this section of the Citizens United decision appears either naïve or bizarre. Kennedy foresaw transparency as an important check on unlimited corporate political spending, but his opinion created no such disclosure requirements. Instead, by lifting restrictions on corporate electioneering — including on tax-exempt nonprofit corporations that do not report their contributors — Kennedy's opinion effectively cleared the way for opaque dark money groups, even as he lauded the safeguards of transparency.

The Citizens United ruling that corporations could make unlimited “independent” political contributions was soon extended by an appellate court in March 2010, when in SpeechNow.org v. FEC, the court lifted limits on such contributions by individuals. Until then, 527 groups that took unlimited donations from corporations and individuals operated under a legal cloud that deterred donors who feared an FEC enforcement action. “This Supreme Court decision essentially gave a Good Housekeeping seal of approval” to unlimited donations, said Steven Law, president of the American Crossroads super PAC.60

Now that the fog had lifted, the way was clear for the creation of today's super PACs and dark money groups.

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Current Situation

Dark Money and 2024

As the 2024 presidential race begins to take shape, dark money groups will almost certainly play a major role. Many announced and potential candidates have already established dark money nonprofits. These groups can play several important roles in advance of a campaign: Besides raising money for ads, they can begin compiling lists of supporters that can be sold or rented to an official campaign once it is announced. They also provide jobs for people who will take key roles in potential campaigns, and they shape and promote policies and messaging.

Biden has been a top beneficiary of dark money, despite his stated opposition to it. During the 2020 presidential election, Biden and other Democrats benefited from hundreds of millions in anonymous donations funneled through groups such as the Sixteen Thirty Fund and Future Forward USA Action. After the campaign, Biden's allies formed a dark money group called Building Back Together to promote his policies during his presidency. The group, staffed by some veterans of Biden's 2020 campaign, raised $41 million in 2021 to support the president's infrastructure bill and other initiatives, according to Politico. 61

President Biden discusses the Disclose Act in September, a proposed Senate bill that would ban large dark money contributions and require that high-dollar donors be publicly identified. (Getty Images/The Washington Post/Demetrius Freeman)

Trump also has garnered support from several dark money groups run by former campaign and White House staff members. These include America First Works and America First Legal. The latter, founded by former Trump White House senior advisor Stephen Miller, aired a number of headline-grabbing ads during the 2022 midterms. These included a harshly negative ad that said Biden and his allies were “pushing radical gender experiments on children” and one accusing Biden and his allies of supporting anti-White racism.62

Dark money nonprofits aligned with other potential 2024 Republican presidential candidates include those formed by allies of former Vice President Mike Pence, Arkansas Sen. Tom Cotton, Maryland Gov. Larry Hogan, former Secretary of State Mike Pompeo, South Carolina Sen. Tim Scott, former U.N. Ambassador Nikki Haley and Rubio. Several prominent Democrats besides Biden also have supportive dark money groups, including New Jersey Gov. Phil Murphy and Secretary of Transportation Pete Buttigieg.63

Foreign Influence, Online Ads

The ability of foreigners to influence U.S. elections by using anonymous political donations remains a serious issue. “Foreign nationals, foreign corporations, this is where there is a lot of concern,” says Jay Costa, director of Voters Right to Know, an organization that advocates for disclosure of campaign contributions.

While foreigners are barred by federal law from political spending and making political donations, the nature of 501(c)(4) nonprofit groups make enforcement of this rule difficult, since such groups do not disclose donors and sometimes mix political and nonpolitical work. “501(c)(4) groups can accept as much foreign money as they want,” says Wertheimer, of Democracy21. “There are no restrictions on China, Russia, Iran, any country giving money to a c(4) in this country.”

Policing foreign contributions to nonprofit corporations that engage in politics became even more difficult after 2018, when the Trump administration dropped an IRS requirement that 501(c)s confidentially disclose their major donors to the tax agency.64 To date, the Biden administration has not reversed that policy.

Tracing dark money spent on online political ads is even more difficult because — unlike political ads on radio, television and in print — Facebook, YouTube and other online sites that accept ads are not required to disclose who paid for them. This loophole exists because Congress has not amended the FECA or McCain-Feingold, both of which were written before the internet revolutionized advertising.

Yet, the threat of foreign money influencing a U.S. election is real. Russia's multipronged effort to aid the Trump campaign during the 2016 U.S. presidential election included political ads on Facebook, false “news” reports on social media sites and paying trolls to amplify Russian propaganda. Russian-paid Facebook political ads generated more than 37 million impressions between 2015 and early 2017, according to a Washington Post analysis of data released by the House Intelligence Committee. Russia and Iran used online campaigns to influence the 2020 elections, and, in 2022, Facebook's parent company Meta reported a Chinese effort to influence U.S. elections for the first time.65

During the most recent election cycle, an estimated $1.3 billion was spent on online political ads, a figure likely to be dwarfed in 2024. Facebook and Google, which dominate the online advertising market, have moved to limit foreign political ads and to label ads promoting “news” from propaganda outlets such as China Global Television Network and Russia Today. However, many political ads on social media platforms do not disclose their funders. Twitter announced on Jan. 3 that it planned to loosen its longtime ban on political advertising.66

Language requiring disclaimers and strengthening the prohibition on foreign money in political ads was included as part of the For the People Act, which the House passed in 2021. The bill, which included several changes to redistricting, ethics, campaign finance and voting rights laws, was blocked in the Senate by a Republican-led filibuster.

Lack of Enforcement

Given Congress’ inability to check dark money, campaign finance reformers are pushing federal agencies to do more within existing law. For instance, donors who wish to remain anonymous appear to be increasingly using limited liability corporations, or LLCs, as part of straw-donor schemes to mask their identities when giving to federal super PACs. Using an LLC simply as a shell company to hide political donations is illegal under federal law, yet reform advocates say the FEC has not effectively enforced this rule.

“You are seeing more LLCs pouring money in, many of which are shell companies,” says Massoglia, the dark money researcher at OpenSecrets.

Further, the IRS has the authority to investigate tax-exempt groups such as 501(c)(4s) social welfare groups that are prohibited from “primarily” engaging in politics. However, many groups aligned with both Democrats and Republicans appear to be disregarding this prohibition or using dubious methods to work around it.

Those methods can include laundering money through a network of dark money groups to make it appear that no single group is spending more than half of its revenue on politics. Or a dark money group can buy ads that are not required to be reported to the FEC due to loopholes in the law. These include online ads that do not “expressly advocate” for a candidate or television ads more than two months before a general election or 30 days before a primary. The IRS could make its own determination that such ad buys are political spending, but it has not.

The IRS has not been actively looking at many 501(c)(4) groups, critics say. Between 2010 and 2017, the agency examined only 14 social welfare groups to see if they were violating the law on political spending, according to the Government Accountability Office.67 Critics say the agency has also become skittish about such investigations after facing fierce political blowback from congressional Republicans in 2013 over its probes of dark money groups aligned with the Tea Party movement.

“The IRS has been completely absent from this area,” says Noti, of Campaign Legal Center.

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Outlook

Murky Future

Overall, it remains unclear whether opponents of secretive political donations will make headway over the next decade. At the federal level, any new legislation mandating disclosure of funding would require a majority vote in the House, 60 votes to break a filibuster in the Senate and the president's signature. Given united Republican opposition, prospects for such an outcome remain bleak in the near to medium term.

It is unclear whether the Supreme Court, which now has a more conservative majority than it did in 2010, would address disclosure differently in the future. Smith, the former FEC chairman and opponent of campaign finance regulation, argues that reformers have been on a losing streak since McCain-Feingold was enacted, a streak he says likely will continue if they push new requirements.

“If you look today, they're much worse off than when they began under McCain-Feingold,” he says. “It's kind of a lesson to learn. If you disturb an uneasy peace, it's not clear what the outcome will be.”

Noti disagrees. While it is possible the current Supreme Court “may carve out some exceptions here and there” on political funding transparency laws, “it would be difficult for the courts to do a 180 on disclosure,” he says.

At the state level, reformers see continuing opportunity to enact disclosure requirements, as they did recently in Arizona, especially in states that allow enactment of such laws through referendums. (See Short Feature.)

Some are pushing for cities and states to adopt an old idea — public financing of campaigns. Currently, 14 states and 19 municipalities operate some form of public campaign financing, according to the Brennan Center for Justice, a law and policy institute at New York University.68 One type of public financing, known as “match and multiply,” has gained currency of late. Under New York City's version of the program, the city matches and multiplies small donations at a ratio of 8 to 1 — so a $25 donation from an individual nets a candidate $225.69 New York state is set to begin implementing a similar program for the 2024 election cycle.

Another type of public funding, known as “democracy vouchers,” was first adopted in Seattle in its 2017 city elections. Using funds from property taxes, the city sends all residents four $25 vouchers each election cycle, which the residents can then assign to their preferred candidates for city office. The program has succeeded in diversifying the city's campaign donors, who had been largely white and wealthy, to include more minorities and young people.70

Despite the many obstacles to ending dark money in politics, some campaign finance reformers remain optimistic. They say major corruption scandals enabled by dark money — such as the FirstEnergy scandal in Ohio — will eventually make the issue a larger priority for voters.

“It's really clear that we are living with the consequences of not regulating dark money,” says Catherine Turcer, executive director of the reform group Common Cause Ohio. Noti, citing polls, says public pressure will eventually decide the issue. “Among the general public, there is barely any partisan divide,” he said. “This is something people want. When that large a chunk of the populace wants something for an extended period of time, they usually get it.”

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Pro/Con

Would the Disclose Act help restore faith in the U.S. political system?

Pro Craig Holman, Lisa Gilbert Lobbyist; Executive Vice President, Public Citizen. Written for CQ Researcher, January 2023 The Pew Research Center has charted a new and troubling “democratic deficit” in America: a growing distrust of American voters to make informed political decisions, fueled by the wave of misinformation from outside groups and social media. About 60 percent of Americans now say they have little confidence in the wisdom of voters when it comes to making political decisions. As recently as a few years before the U.S. Supreme Court's disastrous 2010 Citizen's United decision unleashed “dark money” into elections, that balance of opinion was almost the reverse, with 57 percent confident in their fellow citizens. Full disclosure of who is paying for campaign ads by outside groups and political messages on social media would provide the tools necessary to judge the merit of political advertising and go a long way toward reversing this trend. The Citizens United decision was falsely based on the premise that such disclosure exists and highlighted the importance of transparency for democracy. “With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters,” Justice Kennedy wrote. However, the court was wrong. The sources of funds for electioneering nonprofit groups and sponsors of social media ads — including foreign interests — today remain largely secret. These avenues of dark money should be shut down. The Disclose Act would require nonprofits to make all electioneering expenditures from a segregated “political account” and disclose the sources of those funds. The Honest Ads Act would mandate that social media platforms identify the funders of political messages and establish an online library documenting the identities of those donors. And a presidential executive order could require that government contractors, many of the nation's largest corporations, reveal their campaign spending. Americans across party lines are clamoring for greater transparency and stronger democratic norms. In the 2022 elections, voters widely rejected election deniers and passed ballot measures designed to expand democracy. The Disclose Act, Honest Ads Act and a transparency executive order would tap into this popular demand and bring the financing of American elections back into the open. With major legislation unlikely in the upcoming divided Congress, the Biden administration must move on this executive action so all voters can see the spending of major government contractors and use that transparency to better judge the merits of campaign advertising.

Con David M. Primo Professor of Political Science and Business Administration, University of Rochester and Co-Author, Campaign Finance and American Democracy: What the Public Really Thinks and Why It Matters . Written for CQ Researcher, January 2023 For decades, reformers have been promoting campaign finance reform as a solution for restoring trust in government. Case in point: In September, President Biden offered a full-throated defense of the Disclose Act — which broadens the types of political spending subject to government-mandated disclosures — and warned us about the evils of “dark money” that “erodes public trust.” The trouble is, reformers do not have social science on their side. In our study on this topic, the most comprehensive to date, my co-author, economist Jeffrey Milyo, and I found that campaign finance laws do not have any meaningful effect on trust and confidence in government. How can this be? Given the distaste Americans have for money in politics — nearly 90 percent of Americans believe “there is too much money in American politics” — it stands to reason that further campaign finance restrictions would reduce Americans' suspicions about the political system. The reality is different. In our study, Milyo and I used decades of survey data to show that state-level limits on campaign contributions have no meaningful effect on trust and confidence in state government. We also show that the U.S. Supreme Court's 2010 Citizens United decision, which reformers proclaimed to be the death knell for democracy, and which spurred the first iteration of the Disclose Act, had no effect on perceptions of government. These results reflect an American public fed up with politics generally, with money being a convenient scapegoat but not the root cause of the problem. Most Americans believe, for instance, that politicians trying to make the other party look bad reflect “corrupt” behavior. Data like this tells us mistrust of politics is not fundamentally about money. But maybe the Disclose Act, with its broadened disclosure requirements for organizations unaffiliated with candidate campaigns, is different. More information is always a good thing, right? Not quite. Supporters of the proposal fail to consider the many costs associated with ratcheting up disclosure. The Disclose Act will inhibit political speech and stifle dissenting voices who fear reprisals for speaking their mind. What's more, additional disclosures will provide ammunition for reformers to continue beating the drum about the evils of money in politics — reinforcing, rather than ameliorating, negative attitudes toward government. Finally, given the evolution of American politics over the past few years, do you really think the Disclose Act will fix what ails us?

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Discussion Questions

Here are some issues to consider regarding dark money:

• Massive spending by anonymous donors has proliferated since the Supreme Court's 2010 decision in Citizens United v. FEC. Has dark money made it easier to bribe public officials?

• How has the flood of money from undisclosed donors changed the outcome of recent U.S. elections?

• Candidates from both political parties have received large amounts of dark money in recent federal elections. In your opinion, does Congress have the political will to enact legislation reining in such donations?

• Do you think state governments have the political will to control dark money?

• Opponents of proposals to reduce dark money in politics say such efforts will inhibit free speech and stifle dissenting voices. Is free speech more important than preventing corruption in politics?

• Some opponents of legislation to increase transparency in campaign spending say such laws would not restore the public's faith in the political system. Do you agree?

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Short Features

States Begin Regulating Dark Money

Campaign finance reformers have mostly lost ground since Congress adopted the landmark McCain-Feingold legislation two decades ago in an effort to regulate funding of federal political campaigns. But that has begun to change at the state level.

In November, for example, 72 percent of Arizona voters approved a ballot initiative requiring outside groups to disclose the source of any donations over $5,000 in state political races, including governor, attorney general and utility regulatory commissioners.1

“It's hard to get people to agree on most things,” says Jay Costa, the director of Voters' Right to Know, a national group that supported the measure. “But this is one that nearly everybody agrees on.”

Dark money had been influential in the state's elections. In 2014, for instance, Sandra Kennedy was seeking re-election to the board that regulates the state's electric utilities when her campaign cratered after a 501(c)(4) dark money group called Save Our Future Now ran a tsunami of negative TV ads about her. Although she had no proof, Kennedy suspected that the state's largest utility, Arizona Public Service, had bought the ads in response to her support for expanding solar power.2

Kennedy lost that bid to two candidates widely seen as supportive of the utility, and in 2017 the five-member commission voted to approve a rate increase on most customers, with both new members voting in favor.3 But in 2018, Kennedy won a seat back on the board. With a new majority, the commission subpoenaed documents about Arizona Public Service's political spending. Five years after the 2014 election, the agency finally learned that the utility had given $10.7 million to groups — including Save Our Future Now — that contributed to candidates in the 2014 election. The figure was 73 times more than Kennedy had raised for her entire campaign that year.4

“This is definitely not the way the system should work,” Kennedy told the public radio program “Marketplace.” “We should be regulating. The utility should not be coming down here telling us what to do and how to do it.”5

Voters arrive to cast their ballots on Nov. 8, 2022, in Phoenix. An Arizona ballot initiative requiring outside groups to disclose the source of any donations over $5,000 in state political races passed with 72 percent of the vote. (Getty Images/Kevin Dietsch)

In January 2020, Arizona Public Service's new chief executive officer, Jeff Guldner, vowed that the company would not spend election money on future races for the regulatory commission.6

Opponents of the Arizona referendum say it will do more harm than good, primarily by drowning small nonprofits in donor disclosure paperwork that discourage them from participating in politics. “If some small group is afraid they're going to get swept into some onerous regulatory regime, they just don't speak, and I don't think that's what we want,” says Jon Riches, of the Goldwater Institute, a conservative think tank in Phoenix.

By adopting the referendum, Arizona joined several other states trying to end dark money in state races. Between 2017 and 2019, California's Legislature passed a series of laws requiring disclosure of the largest contributors to independent expenditure groups that donate to both political races as well as organizations that support or oppose ballot measures.7

In 2018, North Dakota voters adopted a constitutional amendment that required public disclosure of the “ultimate and true source of funds” greater than $200 spent to influence elections and banned foreign money from state elections. In 2020, Alaska passed its own anti-dark money law.8

However, not all states have referendum processes for changing laws, and the regulation of independent expenditures varies widely across the country. Alabama, Indiana and Missouri, for example, do not require disclosure of independent expenditures, according to the National Conference of State Legislatures.9

In many states, such as Kansas, Iowa and Kentucky, an independent expenditure is defined only as one that “expressly advocates” for the success or defeat of a particular candidate or ballot measure. Thus, groups whose ads avoid language such as “vote for” or “defeat” need not disclose their spending — even if the ads clearly portray candidates or measures positively or negatively. In New Hampshire, nonprofit groups making independent expenditures are specifically exempt from having to disclose their donors.10

Costa, whose group worked to help pass the reform laws in Alaska, Arizona, California and North Dakota, is optimistic such efforts will continue. Up next, his group is promoting an anti-dark money referendum in Oregon in 2024.

“Broad majorities of people believe money in politics is a problem, especially dark money,” he says. “No one likes the idea of billionaires or companies spending money secretly to tell them how to vote.”

— Jason McLure

[1] “State of Arizona Official Canvass, 2022 General Election — Nov. 8, 2022,” Arizona Secretary of State, Dec. 5, 2022, https://azsos.gov/sites/default/files/2022Dec05_General_Election_Canvass_Web.pdf.

[2] David Brancaccio and Alex Schroeder, “In Arizona, A Story of Secret Campaign Spending and Rising Electric Bills,” Marketplace, Oct. 10, 2022, https://www.marketplace.org/2022/10/10/secret-campaign-spending-rising-electric-bills-arizona/.

[3] Ryan Randazzo, “APS Electricity Bills Going Up as Rate Increase is Approved,” Arizona Republic, Aug. 15, 2017, https://www.azcentral.com/story/money/business/energy/2017/08/15/aps-electricity-bills-going-up-rate-increase-approved/565388001/.

[4] Ryan Randazzo, “APS Acknowledges Spending Millions to Elect Corporation Commission Members, After Years of Questions,” Arizona Republic, March 29, 2019, https://www.azcentral.com/story/money/business/energy/2019/03/29/arizona-public-service-admits-spending-millions-2014-corporation-commission-races/3317121002/.

[5] Brancaccio and Schroeder, op. cit.

[6] Patrick O'Grady, “New APS CEO Vows No Election Spending on Corporation Commission Races,” Phoenix Business Journal, Jan. 15, 2020, https://www.bizjournals.com/phoenix/news/2020/01/15/new-aps-ceo-vows-no-election-spending-on.html.

[7] “Money and Influence Legislation,” California Common Cause, https://www.commoncause.org/california/our-work/reduce-moneys-influence/money-influence-legislation/.

[8] “Official 2018 General Election Results,” North Dakota Secretary of State, https://results.sos.nd.gov/ResultsSW.aspx?text=BQ&type=SW&map=CTY&eid=303; Becky Bohrer, “Lawsuit Challenges Alaska Campaign Disclosure Rules,” The Associated Press, April 7, 2022, https://apnews.com/article/2022-midterm-elections-lawsuits-campaign-finance-campaigns-elections-e6286e2eb3a4037a7512bd53df82b079.

[9] “Campaign Finance Regulation: State Comparisons,” National Conference of State Legislatures, Sept. 23, 2022, https://www.ncsl.org/research/elections-and-campaigns/campaign-finance-regulation-state-comparisons.aspx#Disclosure%20Requirements.

[10] “State Campaign Finance Disclosure Requirements,” National Conference of State Legislatures, July 5, 2022, https://www.ncsl.org/research/elections-and-campaigns/state-campaign-finance.aspx.

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Dark Money Leads to $1.3 Billion Corporate Bailout

If there is a single scandal that encapsulates the fears of opponents of secretive campaign donations known as dark money, it is probably the case of former Ohio House Speaker Larry Householder, whose trial on public corruption charges is scheduled to begin in late January.

Householder is accused of selling his support for legislation that provided a $1.3 billion bailout to state utilities in return for $61 million in payoffs, which were funneled through dark money groups funded by Akron-based electric utility FirstEnergy Corp. and a subsidiary.

Former Ohio state Rep. Larry Householder, a Republican, is accused of selling his support for legislation that provided a $1.3 billion bailout to state utilities in return for $61 million in payoffs that were funneled through dark money groups funded by the Akron-based FirstEnergy Corp. (Getty Images/The Denver Post/MediaNews Group/RJ Sangosti)

The saga began in 2016, when FirstEnergy faced a financial crisis due to a weak energy market, hundreds of millions of dollars in red ink and two aging nuclear plants that could not compete with cheaper natural gas and renewable energy alternatives. In response, FirstEnergy executives devised a rescue plan: convince Ohio's Legislature to fund a massive bailout.11

In January 2017 the executives flew Householder, a recently elected Republican member of the Ohio House, to Washington on a company jet to attend the inauguration of President Donald Trump. Within months, the utility was funneling hundreds of thousands of dollars into a network of dark money groups, including Generation Now, a 501(c)(4) organization one of Householder's aides had established in the corporate secrecy haven of Delaware.

During the run-up to the 2018 state legislative elections, Householder and his team used about $2 million of their dark money funds to support the campaigns of 21 candidates for Ohio's 100-member House of Representatives. Most won their races and supported Householder's successful bid to become House speaker in January 2019.12 According to court documents, FirstEnergy executives and lobbyists helped the speaker draft what would become known as House Bill 6 (HB6).

Critics called HB6 “the worst energy bill of the 21st century.” It included $900 million from Ohio ratepayers to bail out FirstEnergy's two nuclear plants and another $450 million to subsidize two coal plants. It slashed the state's energy efficiency program and effectively ended a requirement that Ohio utilities use renewable energy after 2026.13

The advantages of using a dark money group to support the bailout were obvious to those involved. “It's a secret; a [501](c)(4) is a secret,” Neil Clark, a lobbyist who was part of the scheme, said in a recorded conversation described in court documents. “Nobody knows the money goes into the speaker's account. It is controlled by his people, one of his people, and it's not recorded.”14

To counter opposition from consumer and environmental groups, supporters of HB6 launched a massive lobbying and public relations campaign in the spring of 2019, spending $16 million in dark money on ads and direct mail.15

“All of a sudden there were all of these promotional materials coming out from Generation Now,” says Catherine Turcer, executive director of the reform group Common Cause Ohio. “We were like: ‘What is Generation Now and why is this happening?’ There were Facebook ads, there were mailers, there were television ads.”

The effort worked. Ohio's Legislature passed the measure in 2019 with the support of representatives elected with help from Generation Now, and Republican Gov. Mike DeWine signed it into law in July of that year. Yet, Householder and FirstEnergy had to clear one more hurdle. In Ohio, citizens can repeal legislation via a referendum. To repeal HB6, opponents would need to gather 266,000 signatures in 90 days to put it on the ballot.

As opponents prepared to gather signatures, FirstEnergy wired $38 million to Generation Now to help block the effort, according to court filing by the Justice Department. The dark money was used to send out 235 spotters to track people gathering signatures, and some signature gatherers were offered a plane ticket home and cash payments of up to $2,500 to quit the work.16 Generation Now TV ads claimed erroneously that the petition drive was backed by the Chinese government, according to the federal complaint.

“They shuttered our factories. Now they are coming for our energy jobs,” said one ad that aired in Cincinnati. “Don't sign the petition allowing China to control Ohio's power.17

The referendum effort failed, and HB6 became law. Yet Householder and FirstEnergy's victory was short-lived. FBI agents had been secretly tracking the scheme, and in July 2020 agents arrested Householder, Clark and three associates on racketeering charges. Two of the men pleaded guilty to corruption charges in October 2020, and Clark died by suicide in 2021. FirstEnergy Corp. agreed to a deferred prosecution agreement in which it admitted to bribery and defrauding the public and agreed to pay $230 million. In 2021, the Legislature repealed parts of HB6 and expelled Householder. He has pleaded not guilty to all charges.

Despite the prosecutions, the federal prosecutor who oversaw much of the investigation warns against assuming that law enforcement can prevent the illegal use of dark money. David DeVillers, the former U.S. attorney for the Southern District of Ohio, says federal agents caught a break in the case when an undercover agent investigating an unrelated matter “stumbled” across the FirstEnergy-Householder plan while it was still in its early phases. This allowed the FBI to conduct real-time surveillance of the plot and obtain incriminating conversations and text messages without the targets of the investigation knowing they were being investigated.

“Even in an extremely overt situation like this, we lucked into it because an undercover investigation was going on in a parallel case,” says DeVillers.

Trying to investigate such cases retroactively would likely require obtaining a subpoena to discover the source of the dark money group's funds, he says. “If you subpoena, they lawyer up, they destroy evidence, they get together and decide how they're going to explain this,” he says.

DeVillers says such a scheme could not have been orchestrated without the Supreme Court's 2010 decision in Citizens United v. FEC, which cleared the way for dark money groups.

“They couldn't have done it without a 501(c)(4),” he says. “They couldn't have done it with a super PAC, they couldn't have done it with a PAC.”

The former prosecutor says he has no idea how many other dark money groups are being used for corrupt purposes.

“That is the problem,” DeVillers says. “We need to ask ourselves … in whose interest is it to spend millions of dollars fighting or defending an issue or candidate. And why do they go these lengths to hide that they are doing so?”

— Jason McLure

[11] “U.S. v. FirstEnergy Corp. Deferred Prosecution Agreement,” U.S. District Court for the Southern District of Ohio Western Division, July 20, 2021, https://www.sec.gov/Archives/edgar/data/1031296/000103129621000071/ex101-8k7x22x21.htm.

[12] Nathanael Johnson, “How a $60 Million Bribery Scandal Helped Ohio Pass the ‘Worst Energy Policy in the Country,’” Grist, Jan. 26, 2022, https://grist.org/politics/how-a-60-million-bribery-scandal-helped-ohio-pass-the-worst-energy-policy-in-the-country/.

[13] Jeremy Pelzer, “There's a Lot of Important Stuff in Ohio House Bill 6 Besides the Nuclear Bailout,” Cleveland.com, Sept. 15, 2020, https://www.cleveland.com/open/2020/09/theres-a-lot-of-important-stuff-in-ohio-house-bill-6-besides-the-nuclear-bailout.html.

[14] Josh Sweigart and Laura Bischoff, “How Prosecutors Say the Ohio House Speaker Built a Political Machine on a ‘Corrupt Bargain,’” Dayton Daily News, July 24, 2020, https://www.daytondailynews.com/news/how-prosecutors-say-the-ohio-house-speaker-built-a-political-machine-on-a-corrupt-bargain/OBIZZFI5DZBQLNA3CG2JHRE6UU/.

[15] Johnson, op. cit.

[16] Sweigart and Bischoff, op. cit.

[17] Blaine Wetzel, “Affidavit in Support of a Criminal Complaint: U.S. v. Larry Householder, Jeffrey Longstreth, Neil Clark, Matthew Borges, Juan Cespedes, and Generation Now,” Federal Bureau of Investigation, July 17, 2020, p. 67. Uploaded from Cleveland.com: https://s3.documentcloud.org/documents/6999130/Ohio-House-complaint.pdf.

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Bibliography

Books

Hasen, Richard L., Plutocrats United: Campaign Money, the Supreme Court and the Distortion of American Elections, Yale University Press, 2016. A law professor at the University of California, Los Angeles, and an election law specialist argues for the Supreme Court's Citizens United decision to be overturned to prevent a small group of wealthy people from dominating U.S. politics.

Latkowski, Tom, Democracy Vouchers: How Bringing Money into Politics Can Drive Money Out of Politics, Democracy Policy Network Books, 2021. A campaign finance activist highlights how a new form of public funding for local campaigns can make politicians more responsive to ordinary people and boost the influence of women and minorities in politics.

Mayer, Jane, Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right, Doubleday, 2016. An investigative reporter for The New Yorker examines how wealthy idealogues, such as Charles and David Koch, used the Supreme Court's Citizens United ruling to shape the modern Republican Party.

Mutch, Robert, Campaign Finance: What Everyone Needs to Know, Oxford University Press, 2016. A campaign finance historian provides an accessible and comprehensive explanation of a system riddled with byzantine complexities.

Primo, David M., and Jeffrey D. Milyo, Campaign Finance and American Democracy: What the Public Really Thinks and Why It Matters, University of Chicago Press, 2020. A professor of political science and business administration at the University of Rochester (Primo) and the chairman of the economics department at the University of Missouri (Milyo) argue that the U.S. public does not understand the true role of money in politics and show that state campaign finance reform efforts have had little effect on public faith in government.

Vogel, Kenneth P., Big Money: $2.5 Billion Dollars, One Suspicious Vehicle, and a Pimp — On the Trail of the Ultra-Rich Hijacking American Politics, PublicAffairs, 2014. A journalist and campaign finance guru highlights the extent to which Citizens United has enabled billionaires to wield unprecedented influence over political campaigns.

Articles

Fuchs, Hailey, “Two Anonymous $425 Million Donations Give Dark Money Conservative Group a Massive Haul,” Politico, Nov. 14, 2022, https://tinyurl.com/5n7d8rdc. Two massive anonymous, tax-deductible gifts to a nonprofit charity are likely to boost conservative political groups in 2024, as they filter from the charity to more overtly political organizations.

Green, Emma, “The Massive Progressive Dark Money Group You've Never Heard Of,” The Atlantic, Nov. 2, 2021, https://tinyurl.com/44ve75tj. The author profiles Arabella Advisors, the “mothership” of the dark money machine that Democrats have built to counter the Koch brothers' right-leaning network.

Johnson, Nathanael, “How a $60 Million Bribery Scandal Helped Ohio Pass the ‘Worst Energy Policy in the Country,’” Grist, Jan. 26, 2022, https://tinyurl.com/2s483kxn. Drawing on court documents, interviews and local newspaper articles, a reporter explains how an Ohio utility received a $1 billion bailout after funneling $60 million to a politician's dark money group.

Mayer, Jane, “Inside the Koch-Backed Effort to Block the Largest Election-Reform Bill in Half a Century,” The New Yorker, March 29, 2021, https://tinyurl.com/5yjyazhf. Leaders of conservative groups express fears that proposed reforms to end dark money are popular with both Democratic and Republican voters.

Miller, Maya, “How the IRS Gave Up Fighting Political Dark Money Groups,” ProPublica, April 18, 2019, https://tinyurl.com/2x2zau4v. More dark money is flowing into U.S. politics, in part because the IRS is not enforcing its own rules governing political spending by nonprofits.

Vogel, Kenneth P., and Shane Goldmacher, “Democrats Decried Dark Money. Then They Won With It in 2020,” The New York Times, Jan. 29, 2022, https://tinyurl.com/4tbscwh3. Spurred by opposition to President Donald Trump, Democrats set aside their opposition to dark money and raised more of it than Republicans during the 2020 campaign.

Reports and Studies

Lee, Chisun, Douglas Keith and Ava Mehta, “Elected Officials, Secret Cash,” Brennan Center for Justice, New York University, March 15, 2018, https://tinyurl.com/2p83d2vf. New safeguards are needed to prevent dark money nonprofits affiliated with politicians from posing a corruption risk even after election day, according to campaign finance specialists at the liberal-leaning law and policy institute.

Shattuck, John, and Mathias Risse, “Money in Politics: Reimagining Rights & Responsibilities in the U.S.,” Carr Center for Human Rights Policy, Harvard University, Nov. 18, 2020, https://tinyurl.com/ksb6y34j. This easy-to-understand report provides a comprehensive history of modern campaign finance law and calls for lawmakers to restrict corporate donations and cap campaign donations.

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The Next Step

Federal Legislation

“Remarks by President Biden on the DISCLOSE Act,” The White House, Sept. 20, 2022, https://tinyurl.com/4zkze5ff. President Biden explained his support for the Disclose Act, which aimed to rein in dark money in politics, before the bill died in the Senate.

“S.4822 — DISCLOSE Act of 2022,” U.S. Congress, Sept. 13, 2022, https://tinyurl.com/4be7a6ae. The Disclose Act would have, among other things, introduced additional transparency requirements for political spending by corporations, labor organizations, super PACs and other entities. Democrats still hope to eventually pass similar legislation.

Newell, Keith, “With Deadlocked Vote on Dark Money, DISCLOSE Act Fails to Clear Senate,” OpenSecrets, Sept. 22, 2022, https://tinyurl.com/3rkybsz5. Senate Minority Leader Mitch McConnell said the Disclose Act was an “insult to the First Amendment,” as Republicans blocked passage of the bill in the Senate.

Impact on Elections

“Haley, Pence and other potential '24 candidates buff up their dark money groups,” Politico, Dec. 12, 2022, https://tinyurl.com/3t8sea7u. Conservative dark money groups associated with potential 2024 presidential candidates are already accepting millions of dollars in donations.

Montanaro, Domenico, “Outside groups have spent nearly $1 billion so far to boost GOP Senate candidates,” NPR, Oct. 27, 2022, https://tinyurl.com/yp6c2pt2. Most money spent on campaign TV ads in 2022 came from dark money groups.

Stone, Peter, “Conservative donors pour ‘dark money’ into case that could upend US voting law,” The Guardian, Dec. 16, 2022, https://tinyurl.com/yc7b7nwa. Conservative donors poured tens of millions of dollars of anonymous money into groups supporting efforts to take decisions about voting rights and gerrymandering away from state courts and give authority over such powers solely to state legislatures.

Political Corruption

Caplan, Andrew, “Florida Power & Light tied to dark money used to help Sen. Keith Perry win 2018 race,” The Gainesville Sun, Aug. 14, 2022, https://tinyurl.com/mrcwk4zs. Florida Power & Light, a utility provider, spent $200,000 in dark money to elect a Republican state senator, in a model the company could easily replicate in other races to gain sway in the Legislature.

Gilbert, Liza, “How Sam Bankman-Fried's dark-money political donations fueled his massive fraud,” Salon, Dec. 21, 2022, https://tinyurl.com/ye9vt3ab. The Citizens United Supreme Court decision allowed the disgraced FTX CEO to funnel dark money to his preferred political candidates in hopes they would sponsor legislation that would allow his cryptocurrency scheme to continue unabated.

Rushe, Dominic, “FTX billionaire Sam Bankman-Fried funneled dark money to Republicans,” The Guardian, Nov. 30, 2022, https://tinyurl.com/mr332kc7. Sam Bankman-Fried said he always used dark money to donate to Republicans to avoid political scrutiny from reporters and activists, while some of his donations to Democrats were public.

State Action

Gomez, Gloria Rebecca, “Conservative groups sue to block voter-approved ‘dark money’ law,” AZ Mirror, Dec. 21, 2022, https://tinyurl.com/2eaad8fk. Two conservative groups are asking a judge to declare unconstitutional Arizona's new Voters Right to Know Act, which voters approved overwhelmingly in a November referendum. The law requires greater transparency in state political spending.

Mayer, Jane, “A Rare Win in the Fight Against Dark Money,” The New Yorker, Nov. 16, 2022, https://tinyurl.com/46j2nfxe. Arizona voters from both parties overwhelmingly demanded that big, anonymous political donors reveal their identities.

Moomaw, Graham, “Virginia subcommittee on campaign finance reform still failing to complete only job,” Virginia Mercury, Dec. 21, 2022, https://tinyurl.com/mrxewpwn. A panel in the Virginia Legislature dedicated to campaign finance reform did not meet at all during 2022.

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Contacts

Brennan Center for Justice
120 Broadway, Suite 1750, New York, NY 10271
646-292-8310
brennancenter.org
Left-leaning law and policy institute affiliated with New York University Law School that promotes democracy reforms.

Campaign Legal Center
1101 14th St., N.W., Suite 400, Washington, DC 20005
202-736-2200
campaignlegal.org
Democracy reform organization that focuses on campaign finance, redistricting, ethics and voting.

CATO Institute
1000 Massachusetts Ave., N.W., Washington, DC 20001-5403
202-842-0200
cato.org
Think tank that advocates libertarian policy reforms; opposes many disclosure rules for political donations.

Common Cause
805 15th St., N.W., Suite 800, Washington, DC 20005
commoncause.org
Organization with a long track record of promoting campaign finance reforms, voting rights and ethics in government.

Institute for Free Speech
1150 Connecticut Ave., N.W., Suite 801, Washington, DC 20036
202-301-3300
ifs.org
Conservative nonprofit that advocates for First Amendment protections of political speech; opposes campaign donation limits and mandatory disclosure of donors.

Issue One
1401 K St., N.W., Suite 350, Washington, DC 20005
202-299-0265
issueone.org
Cross-partisan organization focused on money in politics, ethics and electoral issues.

OpenSecrets
1300 L St., N.W., Suite 200, Washington, DC 20005
202-857-0044
opensecrets.org
A nonprofit that tracks the influence of money in politics and maintains an extensive database of information from Federal Election Commission reports.

Public Citizen
1600 20th St., N.W., Washington, DC 20009
202-588-1000
citizen.org
Left-leaning nonprofit with more than 500,000 members that advocates for democracy reform and consumer and environmental protection.

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Footnotes

[1] Jerry Zremski, “Secret $1 million Boost From GOP Establishment Aided Langworthy, Records Show,” Buffalo News, Oct. 10, 2022, https://buffalonews.com/news/local/govt-and-politics/secret-1-million-boost-from-gop-establishment-aided-langworthy-records-show/article_3d316aa8-457c-11ed-a484-b308fe8dec7f.html.

[2] Carl Paladino, Twitter post, Aug. 22, 2022, https://mobile.twitter.com/CarlPaladinoNY/status/1561807277803421697.

[3] New York State Board of Elections, https://nyenr.elections.ny.gov.

[4] Citizens United v. Federal Election Commission, 558 U.S. 310 (2010), https://www.law.cornell.edu/supct/html/08-205.ZO.html.

[5] Anthony Salvanto, “Americans Continue to Feel U.S. Democracy Is Under Threat,” CBS News, Sept. 1, 2022, https://www.cbsnews.com/news/cbs-news-poll-americans-democracy-is-under-threat-opinion-poll-2022-09-01/; Lydia Saad, “Americans’ Take on the U.S. Is Improved, but Still Mixed,” Gallup, Jan. 27, 2020, https://news.gallup.com/poll/284033/americans-improved-mixed.aspx; and “Poll Finds Overwhelming Support for Public Disclosure of Political Contributions to Organizations,” ALG Research and GS Strategy Group, Campaign Legal Center, Nov. 13, 2019, https://campaignlegal.org/sites/default/files/2019-11/CLC%20DISCLOSURE%20MEMO.pdf.

[6] “Contribution Limits,” Federal Elections Commission, https://www.fec.gov/help-candidates-and-committees/candidate-taking-receipts/contribution-limits/.

[7] “Types of Advocacy Groups,” OpenSecrets, https://www.opensecrets.org/527s/types.php.

[8] Maya Miller, “How the IRS Gave Up Fighting Political Dark Money Groups,” ProPublica, April 18, 2019, https://www.propublica.org/article/irs-political-dark-money-groups-501c4-tax-regulation.

[9] “Top Organizations Disclosing Donations to American Liberty Action PAC, 2022,” OpenSecrets, https://www.opensecrets.org/outside-spending/detail/2022?cmte=C00821652&tab=donors.

[10] “Top Organizations Disclosing Donations to Eighteen Fifty-four Fund, 2022,” OpenSecrets, https://www.opensecrets.org/outside-spending/detail/2022?cmte=C00809483&tab=donors.

[11] Kenneth P. Vogel and Ben Protess, “Lev Parnas, Key Player in Ukraine Affair, Completes Break With Trump and Giuliani,” The New York Times, Jan. 15, 2020, https://www.nytimes.com/2020/01/15/us/politics/lev-parnas-ukraine-trump-giuliani.html.

[12] U.S. v. Lev Parnas et al., superceding indictment, S.D.N.Y., https://www.justice.gov/usao-sdny/press-release/file/1317711/download.

[13] Emma Loop, “New Impeachment Evidence Shows How Political Operatives Tried to Get a Respected U.S. Ambassador Fired,” BuzzFeed News, Jan. 18, 2020, https://www.buzzfeednews.com/article/emmaloop/impeachment-ukraine-yovanovitch-lev-parnas-rudy-giuliani; Ilya Marritz, “How Parnas and Fruman's Dodgy Donation Was Uncovered by Two People Using Google Translate,” ProPublica, Feb. 5, 2020, https://www.propublica.org/article/trump-inc-2020-how-parnas-and-frumans-dodgy-donation-was-uncovered-by-two-people-using-google-translate.

[14] Luc Cohen, “Ex-Giuliani Associate Fruman Sentenced to One Year in Prison in Campaign Finance Case,” Reuters, Jan. 21, 2022, https://www.reuters.com/world/us/ex-giuliani-associate-fruman-be-sentenced-campaign-finance-case-2022-01-21/.

[15] Andy Chow, “Judge Sets Trial Calendar for the Case Against Republican Former Ohio Speaker Larry Householder,” Statehouse News Bureau, March 11, 2022, https://www.statenews.org/government-politics/2022-03-11/judge-sets-trial-calendar-for-the-case-against-larry-householder; Mary Ellen Klas, “Watchdog Group Asks Feds to Investigate Funding Behind Florida's Ghost Candidate Scandal,” Miami Herald, Oct. 27, 2022, https://www.msn.com/en-us/news/politics/watchdog-group-asks-feds-to-investigate-funding-behind-florida-s-ghost-candidate-scandal/ar-AA13szvf.

[16] David M. Primo and Jeffrey D. Milyo, Campaign Finance and American Democracy: What the Public Really Thinks and Why It Matters (2020).

[17] Karl Evers-Hillstrom, “Most Expensive Ever: 2020 Election Cost $14.4 Billion,” OpenSecrets, Feb. 11, 2021, https://www.opensecrets.org/news/2021/02/2020-cycle-cost-14p4-billion-doubling-16/.

[18] Kenneth P. Vogel and Shane Goldmacher, “Democrats Decried Dark Money. Then They Won With It in 2020,” The New York Times, Aug. 21, 2022, https://www.nytimes.com/2022/01/29/us/politics/democrats-dark-money-donors.html.

[19] “Kentucky Senate 2020 Race,” OpenSecrets, https://www.opensecrets.org/races/summary?cycle=2020&id=KYS1.

[20] “Kentucky U.S. Senate Election Results,” The New York Times, updated Nov. 29, 2022, https://www.nytimes.com/interactive/2022/11/08/us/elections/results-kentucky-us-senate.html.

[21] “Election Results,” Kentucky State Board of Elections, https://elect.ky.gov/results/Pages/default.aspx.

[22] Maggie Koerth, “How Money Affects Elections,” FiveThirtyEight, Sept. 10, 2018, https://fivethirtyeight.com/features/money-and-elections-a-complicated-love-story/.

[23] Daniel Chand, “‘Dark Money’ and ‘Dirty Politics’: Are Anonymous Ads More Negative?” Business and Politics, April 2017, pp. 1-28, https://www.researchgate.net/publication/316219748_Dark_Money_and_Dirty_Politics_Are_anonymous_ads_more_negative.

[24] Michael Beckel, “In 2018 Midterms, Liberal Dark Money Groups Outspent Conservative Counterparts for First Time Since Citizens United,” IssueOne, Jan. 23, 2019, https://issueone.org/articles/in-2018-midterms-liberal-dark-money-groups-outspent-conservative-counterparts-for-first-time-since-citizens-united/.

[25] Vogel and Goldmacher, op. cit.

[26] Andrew Perez, Andy Kroll and Justin Elliott, “How a Secretive Billionaire Handed His Fortune to the Architect of the Right-Wing Takeover of the Courts,” The Lever and ProPublica (joint publication), Aug. 22, 2022, https://www.propublica.org/article/dark-money-leonard-leo-barre-seid; Haile Fuchs, “Two Anonymous $425 Million Donations Give Dark Money Conservative Group a Massive Haul,” Politico, Nov. 16, 2022, https://www.politico.com/news/2022/11/16/two-anonymous-425-million-donations-gives-dark-money-conservative-group-a-massive-haul-00067493.

[27] Anna Massoglia, “‘Dark Money’ Groups Aligned With Party Leadership Steer Hundreds of Millions of Dollars into 2022 Federal Elections,” OpenSecrets, Nov. 4, 2022, https://www.opensecrets.org/news/2022/11/dark-money-groups-aligned-with-party-leadership-steer-hundreds-of-millions-of-dollars-2022-federal-elections/.

[28] “Senate Leadership Fund Recipients,” OpenSecrets, https://www.opensecrets.org/outside-spending/detail/2022?cmte=C00571703&tab=targeted_candidates.

[29] “Senate Majority PAC Outside Spending,” OpenSecrets, https://www.opensecrets.org/outside-spending/detail?cmte=C00484642.

[30] Robert Maguire, “Two (At Most) Secret Donors Funded 93% of Pro-Rubio Nonprofit,” OpenSecrets, May 3, 2017, https://www.opensecrets.org/news/2017/05/two-donors-funded-rubio-nonprofit/.

[31] “SuperPACS Dominate Airwaves,” Wesleyan Media Project, Dec. 15, 2015, http://mediaproject.wesleyan.edu/super-pacs-dominate-airwaves/.

[32] “Remarks by President Biden on the DISCLOSE Act,” The White House, Sept. 20, 2022, https://www.whitehouse.gov/briefing-room/speeches-remarks/2022/09/20/remarks-by-president-biden-on-the-disclose-act/.

[33] “Democrats Threaten Americans' Privacy and Political Speech,” news release, Office of Sen. Mitch McConnell, July 19, 2022, https://www.republicanleader.senate.gov/newsroom/remarks/democrats-threaten-americans-privacy-and-political-speech.

[34] Scott Parkinson, “‘No’ on Disclose Act,” Club for Growth, Sept. 21, 2022, https://www.clubforgrowth.org/no-on-disclose-act/.

[35] Ibid.

[36] “Whitehouse Blasts Republican Blockade of the DISCLOSE Act,” news release, Office of Sen. Sheldon Whitehouse, Sept. 22, 2022, https://www.whitehouse.senate.gov/news/release/whitehouse-blasts-republican-blockade-of-the-disclose-act-.

[37] “Citizens United v. Federal Election Commission,” op. cit.

[38] “The Federal Election Campaign Laws: A Short History,” Federal Election Commission, undated, https://transition.fec.gov/info/appfour.htm.

[39] “The Federal Civil Service and the Death of President James A. Garfield,” National Park Service/James. A Garfield National Historic Site, undated, https://www.nps.gov/articles/000/the-federal-civil-service-and-the-death-of-president-james-a-garfield.htm.

[40] Tom Price, “Campaign Finance,” CQ Researcher, May 6, 2016.

[41] Sidney Milkis, “Theodore Roosevelt: Campaigns and Elections,” University of Virginia Miller Center, undated, https://millercenter.org/president/roosevelt/campaigns-and-elections.

[42] Ciara Torres-Spelliscy et al., “Testimony of the DISCLOSE Act for the House Admin. Committee,” Brennan Center for Justice, May 11, 2010, https://www.brennancenter.org/our-work/research-reports/testimony-disclose-act-house-admin-committee#_ftn60.

[43] “Money-in-Politics Timeline,” OpenSecrets, https://www.opensecrets.org/resources/learn/timeline.

[44] Robert Mutch, Campaign Finance: What Everyone Needs to Know (2016) pp. 62–63.

[45] Price, op. cit.

[46] Richard Hasen, Plutocrats United: Campaign Money, the Supreme Court and the Distortion of American Elections (2016), pp. 20, 146.

[47] “Watergate Scandal,” Britannica, Dec. 2, 2022, https://www.britannica.com/event/Watergate-Scandal.

[48] Thomas Billitteri, “Campaign Finance Reform,” CQ Researcher, June 13, 2008.

[49] Hasen, op. cit., pp. 20–25.

[50] “FEC v. Massachusetts Citizens for Life — Summary,” Federal Election Commission, https://www.fec.gov/legal-resources/court-cases/fec-v-massachusetts-citizens-for-life/.

[51] Mutch, op. cit., pp. 105–107.

[52] Ibid., pp. 44–45.

[53] Price, op. cit.

[54] Kenneth P. Vogel, Big Money: 2.5 Billion Dollars, One Suspicious Vehicle, and a Pimp — on the Trail of the Ultra-Rich Hijacking American Politics (2014), pp. 29–31.

[55] John Shattuck and Mathias Risse, “Money in Politics: Reimagining Rights & Responsibilities in the United States,” Harvard Kennedy School, Nov. 18, 2020, p. 8, https://carrcenter.hks.harvard.edu/files/cchr/files/201118_money-in-politics.pdf?m=1605799361.

[56] John Whitesides and Caren Bohan, “Obama rejects public financing against McCain,” Reuters, June 19, 2008, https://www.reuters.com/article/us-usa-politics/obama-rejects-public-financing-against-mccain-idUSN1828132020080619.

[57] Citizens United v. FEC, op. cit.

[58] Jane Mayer, Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (2016), pp. 227–229

[59] Citizens United v. FEC, op. cit., p. 55.

[60] Mayer, op. cit., p. 239.

[61] Hailey Fuchs, Alex Thompson and Eli Stokols, “Who Won the Biden Dark Money Lottery,” Politico, Nov. 17, 2022, https://www.politico.com/newsletters/west-wing-playbook/2022/11/17/who-won-the-biden-dark-money-lottery-00069303.

[62] Ashley Ahn, “Right-wing Groups Spend Millions of Dollars on Ads Targeting Transgender Kids,” NPR, Nov. 3, 2022, https://www.npr.org/2022/11/03/1133741967/right-wing-groups-spend-millions-dollars-ads-anti-transgender-kids; Meredith McGraw, “Stephen Miller Group's Radio Ads Accuse Biden of ‘Racism’ Toward White Americans,” Politico, Oct. 30, 2022, https://www.politico.com/news/2022/10/30/stephen-miller-ads-biden-racism-white-americans-00064148.

[63] Scott Bland, “2024 Hopefuls Are Already in a Dark-Money Arms Race,” Politico, April 11, 2022, https://www.politico.com/news/2022/04/11/2024-presidential-campaign-dark-money-00024241.

[64] Patricia Cohen, Kenneth Vogel and Jim Tankersley, “I.R.S. Will No Longer Force Kochs and Other Groups to Disclose Donors,” The New York Times, July 17, 2018, https://www.nytimes.com/2018/07/17/us/politics/irs-will-no-longer-force-kochs-and-other-groups-to-disclose-donors.html.

[65] Philip Elliot, “The Mueller Report Is Embarrassing for Trump, but It Doesn't Call Into Question His 2016 Win,” Time, April 18, 2019, https://time.com/5573537/mueller-report-russia-election-interference/; Philip Bump, “What Data on More Than 3,500 Russian Facebook Ads Reveals About the Interference Effort,” The Washington Post, May 10, 2018, https://www.washingtonpost.com/news/politics/wp/2018/05/10/what-data-on-more-than-3500-russian-facebook-ads-reveals-about-the-interference-effort/; Ben Nimmo, “Removing Coordinated Inauthentic Behavior From China and Russia,” Facebook, Sept. 27, 2022, https://about.fb.com/news/2022/09/removing-coordinated-inauthentic-behavior-from-china-and-russia/.

[66] Mark Scott, “Fight Over Online Political Ads Heats Up Ahead of U.S. Midterms,” Politico, Aug. 3, 2022, https://www.politico.eu/article/online-political-ads-us-midterms/; Arjun M. Tambe and Toni Friedman, “Chinese State Media Facebook Ads Are Linked to Changes in News Coverage of China Worldwide,” Misinformation Review, Jan. 14, 2022, https://misinforeview.hks.harvard.edu/article/chinese-state-media-facebook-ads-are-linked-to-changes-in-news-coverage-of-china-worldwide/; and Elizabeth Dwoskin, “Twitter reverses longstanding ban on political advertising,” The Washington Post, updated Jan. 3, 2023, https://www.washingtonpost.com/technology/2023/01/03/twitter-political-ads-ban-reversal/.

[67] “Campaign Finance: Federal Framework, Agencies Roles and Responsibilities, and Perspective,” Government Accountability Office, Feb. 3, 2020, p. 41, https://www.gao.gov/assets/gao-20-66r.pdf.

[68] Hazel Millard and Mariana Perez, “How Public Financing Empowers Small Donors Nationwide,” Brennan Center for Justice, April 12, 2022, https://www.brennancenter.org/our-work/analysis-opinion/how-public-campaign-financing-empowers-small-donors-nationwide.

[69] “Matching Funds Program,” New York City Campaign Finance Board, https://www.nyccfb.info/program.

[70] Gene Balk, “Data Shows How Well Seattle's Democracy Voucher Program Is Working,” The Seattle Times, Sept. 2, 2022, https://www.seattletimes.com/seattle-news/data/data-shows-how-well-seattles-democracy-voucher-program-is-working/; Tom Latkowski, Democracy Vouchers: How Bringing Money into Politics Can Drive Money Out of Politics (2021).

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About the Author

Jason McLure is a Boston-based journalist. Previously, he taught journalism at the University of Missouri, hosted the NPR Podcast “Global Journalist,” covered politics for Reuters and worked as an Africa correspondent for Bloomberg News. His work has previously appeared in The Economist, The New York Times and the Center for Public Integrity.

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