Colorado Democratic Rep. Jason Crow reintroduced the End Dark Money Act on Monday, his first legislative action of the 118th Congress.
The bill aims to crack down on spending by “dark money” groups to influence US elections by repealing a restriction in the omnibus bill that prevents the Internal Revenue Service from using its funding to clarify the rules governing how much political activity 501(c)(4) nonprofit groups can engage in.
Nonprofit groups operating under section 501(c)(4) of the tax code do not have to disclose their donors, but are supposed to exist for social welfare purposes, meaning the policy is not to the primary goal of 501(c) groups.
Federal political committees such as super PACs reported receiving more than $606 million in contributions from 501(c) nonprofits during the 2022 cycle, a new OpenSecrets analysis of disclosures found the Federal Electoral Commission. An additional $34.6 million in federal outside spending was reported to the FEC.
But the vast majority of dark money is not reported to the FEC. So-called “theme ads” that mention a candidate without expressly advocating their election or defeat must be disclosed to the FEC only if they air on television or radio in the weeks leading up to the election, and online ads that avoid Advocar expressly for the election or defeat of a candidate does not require disclosure to the FEC at all. Although the FEC approved a rule in November that requires anyone running a political ad on the Internet to disclose who paid for it in a disclaimer within the ad, the commission has not approved additional rules requiring the disclosure of online ad spend to the FEC.
“Coloradans deserve to know who is trying to sway their vote. Instead, we have a system that allows mega-donors to hide their identities. This is a critical threat to our democracy, and yet it is going unchecked,” Crow said in a press release issued Monday.
Nearly every year since 2015, Congress has passed appropriations bills that included a similar provision barring the IRS from clarifying the rules on 501(c) nonprofit political activity.
Nonprofits operating under Section 501(c)(4) of the Internal Revenue Code may spend virtually unlimited amounts on political campaign activities without ever disclosing their donors as long as their primary purpose is to social welfare activities. But the IRS rules are unclear about how much policy is too much.
The accepted rule of thumb is that less than half of a 501(c)(4) nonprofit’s activities can be political for the group to maintain its tax-exempt status. But IRS enforcement has been chronically lax, and many groups have found ways around the rules.
According to a 2020 US Government Accountability Office report, a “global challenge” for IRS agents is the “absence of bright-line rules about what constitutes political campaign intervention” and the lack of “clear and concise guidance” on the extent to which 501(c)(4) nonprofits may engage in political campaign activities.
“Bad rules at the IRS have allowed bad actors to abuse the system for too long,” said Emily Peterson-Cassin, coordinator of the Bright Lines Project at Public Citizen, a progressive nonprofit that supports the End Dark Money Act. OpenSecrets has also participated in the Bright Lines project.
“For too long, mega-donors and big-money special interests, operating under the guise of ‘social welfare,’ have abused this glaring loophole for their own benefit. It’s a scheme designed to keep the people American in the dark about who is trying to buy influence in our elections,” said Tiffany Muller, president of End Citizens United and Let America Vote Action Fund, progressive political advocacy groups that support the bill.
Crow first introduced the End Dark Money Act of 2019, his first legislative action after Colorado’s 6th Congressional District first elected him to Congress. The House deleted the language the financing bill prohibiting the IRS from updating or clarifying its rules governing the political activity of these social welfare organizations, effectively achieving the goal of the End Dark Money Act for this fiscal year.
The Colorado congressman reintroduced the End Dark Money Act of 2021. The 2021 iteration of the End Dark Money Act sought to repeal a provision in the House appropriations bill that prohibits the IRS use funds to clarify the rules governing the political activity of social welfare organizations. , similar to the one included in the recently approved omnibus bill.
The new iteration of Crow’s bill would free up the IRS to clarify its rules on how much political activity 501(c) nonprofits can engage in, though the proposal comes shortly after the House passed a bill law that deprives the IRS of about $71 billion of its newly appropriated funding and as congressional Republicans push another bill to abolish the IRS entirely. Those measures would require approval by the Senate, which is controlled by Democrats.
Legislation intended to close the loopholes that allow dark money to pour into American elections has repeatedly failed over the past decade. The DISCLOSE Act, reintroduced several times by Sen. Sheldon Whitehouse (D–RI) over the past 10 years, failed another Senate vote in September despite support and bipartisan support from President Joe Biden. Among other provisions, the bill would have required dark money groups that make contributions to federal political committees or spend on any communications that refer to a federal candidate to disclose contributions of more than $10,000 to the FEC.
Dark money groups aligned with political leadership poured hundreds of millions of dollars into the 2022 election
The 501(c) groups that contributed the most money during the 2022 election cycle are aligned with the Democratic and Republican leadership in the US Senate.
The main dark money group aligned with the US Senate Democratic leadership, Majority Forward, invested about $75.9 million in reported political contributions to the FEC during the last election cycle. As of Nov. 4, Majority Forward also bought $26.5 million in TV and online ads promoting Democratic candidates without explicitly calling for their election or defeat, according to data provided to OpenSecrets by the tracking firm of AdImpact ads.
Senate Majority PAC, the main super PAC aligned with Senate Democratic leadership, reported receiving more than $72 million from Majority Forward as of subsequent filings with the FEC. During the 2022 election cycle, the Senate Majority PAC also funneled money to groups that spent tens of millions of dollars to influence US Senate elections in key states, obfuscating ties between aligned national groups with party leadership and state-focused super PACs.
Georgia Honor, a super PAC funded entirely by Senate Majority PAC, spent $5.7 million boosting incumbent Sen. Raphael Warnock (D–Ga.) and $54.9 million opposing his GOP challenger, Herschel Walker, before Warnock’s bitterly contested re-election. The super PAC reported no spending in any other races.
Majority Forward also helped fund other Democratic groups and spawned pop-up PACs that pushed candidates in key Senate races. A pop-up group called 53 Peaks that sponsored ads attacking Republican primary candidates seeking to challenge Sen. Michael Bennet (D-Colo.) was fully funded by a $3 million contribution from the group of dark money, first Colorado Sun. reported
House Majority Forward, a 501(c)(4) aligned with Democratic House leadership, invested $8.5 million during the 2022 election cycle. Most of that went to the hybrid PAC aligned with the Democratic House leadership, the House Majority PAC, which spent more than $145.1 million in the 2022 midterm elections. AdImpact tracked another $13 million in spending in online advertising and television from November 4.
One Nation, a 501(c)(4) shadow money group aligned with Senate Republican leadership, invested more than $145 million in ad spending and political contributions during the 2022 cycle, but reported none of these expenses to the FEC. About $71 million went into online TV and advertising spending in the 2022 cycle, according to AdImpact tracking that OpenSecrets previously reported.
Dark money groups funneled another $74 million in political contributions to influence federal races as parties vied for control of the U.S. Senate. Most of that went to the Senate Leadership Fund, a super PAC aligned with Senate Minority Leader Mitch McConnell (R-Ky.) that shares staff and offices with the dark money group. The Senate Leadership Fund spent more money than any other outside group during the 2022 election cycle, pouring more than $245.7 million into US Senate races across the country. The second-biggest outside spender was the Congressional Leadership Fund, a hybrid PAC aligned with the House GOP leadership that poured more than $227.1 million into the 2022 midterms.
The Congressional Leadership Fund reported receiving tens of millions of dollars from the American Action Network, a 501(c)(4) group aligned with the Republican leadership of the U.S. House that poured $46.5 million dollars in federal elections during the 2022 election cycle. The dark money group did not report any expenditures directly to the FEC.
American Action Network spent another $30.7 million on TV and online ads to push or attack candidates as of Nov. 4, according to AdImpact data provided to OpenSecrets.
Another major contributor to dark money, the American Prosperity Alliance, funded the Conservative Americans PAC, a “pop-up” super PAC that spent more than $2.4 million in GOP primary races for seats in the US House in Missouri, Tennessee and Arizona from July 19-29, 2022. By registering with the FEC just before an election, the super PAC was only required to disclose dark money contributions after voters they had voted The dark money group is not required to reveal the real donors behind the millions invested to influence voters in these races.
“This bill attacks the root of the problem by preventing mega-donors from using nonprofits as vehicles for political contributions,” Crow said. “By increasing transparency and accountability in our elections, we are returning power to voters and restoring Americans’ faith in our democracy.”