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This story is part of a series related to the 10-year anniversary of Citizens United v. FEC. OpenSecrets recently released a comprehensive report on the impacts of the controversial Supreme Court decision. Click here to read the full report.

Emboldened by inaction from the Internal Revenue Service and Federal Election Commission, “dark money” from anonymous donors set new records influencing elections in the decade after the Supreme Court’s landmark Citizens United ruling.

America’s democratic institutions continue to face new threats from money increasingly flowing into U.S. elections as well as efforts to erode what little transparency rules remain in place.

Dark money groups have reported nearly $1 billion in direct spending on U.S. elections to the FEC since Citizens United with just 10 groups bankrolled by secret donors spending more than $610 million of that. For every dollar in grey or dark money spending by groups that do not fully disclose their donors reported to the FEC during the decade before Citizens United, at least $10 were spent in the decade after.

That doesn’t even scratch the surface of advertising framed as issue advocacy that may feature candidates but airs ahead of a brief window before Election Day and avoids explicitly advocating for a specific election outcome.

Citizens United opened the door for incorporated entities to spend on political messaging advocating for or against candidates and removed time restrictions on spending mentioning candidates that stopped short of express advocacy.

Before 2010, federal campaign finance law prohibited nonprofits from taking money from corporations to spend on messaging mentioning candidates too close to an election or ads explicitly advocating for a candidate at any time. Only a small number of nonprofits without corporate funds could get an exemption and still legally spend on elections while others could not. But the Supreme Court’s decision opened the floodgates to millions more from anonymously funded nonprofits to flow into U.S. elections.

The impact of Citizens United could be seen almost immediately. Nonprofit groups funded by secret donors disclosed less than $1 million in spending to the FEC during the first half of the two-year election cycle prior to the Supreme Court’s Citizens United in January 2010. That spending increased by more than one-hundredfold in a matter of months, topping $138 million before Election Day.

At the same point in the 2006 election less than five years earlier, dark money spending for the cycle had yet to even reach six figures.

After Citizens United, it became commonplace for dark money groups to report more spending as elections neared. Spending on ads that avoid using words like “vote for” and “vote against” is only required to be reported during a short window of time in the weeks before Election Day. This means millions in spending on ads that may paint a candidate in a favorable or unfavorable light but avoid using those “magic words” may never be disclosed to the FEC.

Nonprofits operating under section 501(c)(4) of the tax code may spend unlimited money on political activities without following most disclosure rules imposed on political committees as long as their primary purpose is “social welfare.”

Since the Internal Revenue Service has not clearly defined what a primary purpose is or issued rules on how to calculate it, the generally accepted test is that less than half of a 501(c)(4) nonprofit’s activities may be political. But enforcement has been lax, and dark money groups have found a variety of ways to skirt the rules.

The number of 501(c) nonprofit groups reporting political activity to the IRS has proliferated since 2010, surging from 56 groups reporting political activity in 2009 to more than 100 each year since. That number only skims the surface of politically-active nonprofits since many groups report little or no spending to the IRS but disclose millions of dollars in spending to the FEC.

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The Treasury Inspector General for Tax Administration’s January 2020 audit report found that the IRS failed to identify 9,774 nonprofits that may have failed to provide sufficient notice of their existence operating as a “social welfare” groups under 501(c)(4) of the tax code. The report said the IRS found it difficult to get information on whether the groups existed in some cases, in part due to nonprofits forming and dissolving before the 60-day deadline to notify the IRS of their existence.

The inspector general’s report estimated more than $95 million in fees are potentially owed to the federal government by the delinquent nonprofits. But IRS officials say stronger enforcement would be a “resource-intensive process and resources would be better used in other priority areas.”

Another recent inspector general report found that the IRS failed to adequately document why thousands of complaints alleging impermissible political activity by nonprofit organizations did not result in any tax-exempt status revocation or independent oversight committee review between 2015 and 2016.

The reports come as the IRS considers a rule that would let nonprofits stop reporting their donors’ identities to the tax agency unless the government requests the information. Donor names and addresses are already required to be kept from the public, but the new rules would leave government entities with fewer tools to uncover potentially illegal foreign money steered through politically active nonprofits.

Many of the groups pushing for the changes are tied to conservative dark money networks. Over the span of the decade since Citizens United, conservative dark money groups spent more than three times the amount spent by groups on the left.

Conservative groups have been the most vocal opponents of donor disclosure or reporting requirements, but dark money has become an increasingly popular tool for political actors on the left. Liberal dark money groups outspent their conservative counterparts in 2018 for the first election cycle since Citizens United.

Some dark money groups’ early investments secured their spot among the top spenders years after they stopped reporting spending to the FEC. Crossroads GPS continues to hold the distinction of being the second-highest spender since Citizens United despite reporting no spending to the FEC since the 2014 election cycle. Americans for Job Security stopped reporting spending after Barack Obama’s 2012 election but still ranks among the top 10 dark money spenders. That group finally disclosed its donors last year a lengthy legal battle came to a close.

Two nonprofits that didn’t exist before the 2016 election have already clinched spots among the top 20 dark money groups. A single Democratic leadership-aligned nonprofit called Majority Forward poured a record-breaking $46 million into 2018 elections from the left. On the right, a nonprofit called 45 Committee poured more than $23 million into the 2016 presidential race to support President Donald Trump. These two groups have independently spent more money from secret donors in one election cycle than many top spenders did in the past decade.

The 2020 election stands to shake this up even more, with dark money groups across the political spectrum pledging to spend hundreds of millions before Election Day.

The Supreme Court’s Citizens United decision opened the doors for companies to spend unlimited money in their own names and contribute to nonprofits that can engage in political spending without disclosing their funders. While nonprofits aren’t required to disclose their donors, some corporations have taken it upon themselves to voluntarily disclose donations to nonprofits that would otherwise remain hidden.

Every one of the top 10 dark money spenders disclosing spending to the FEC since Citizens United have taken money from corporations, partnered with corporations, have affiliates with corporate financiers or some combination of the above during the last decade, according to OpenSecrets analysis of tax records and voluntary corporate disclosure data from the Center for Political Accountability.

The full extent of corporate money seeping into U.S. elections is unknown, since many corporations choose not to voluntarily disclose donations. Donations to nonprofits voluntarily disclosed by corporations are subject to less stringent oversight than if those nonprofits reported their donors to the FEC since campaign finance reports are required to be made under penalty of perjury.





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