How Dark Money Impacts Our Democracy

Dark money in politics refers to the funds spent by groups that don't have to disclose the identities of their donors. This form of campaign financing allows individuals, organizations, and various entities to financially support political candidates and initiatives without public knowledge of the contributors. 

Dark money is a controversial issue, because it decreases accountability and reduces opportunities for public scrutiny, undermining democratic norms. A lack of transparency in funding sources makes it more difficult to detect conflicts of interest or improper conduct. 

Dark money is often channeled through entities like 501(c)(4) organizations, Super PACs, and LLCs, which can contribute to political campaigns anonymously. This anonymity obscures the origins of political funding and spending, making it challenging to identify the donors funding political activities.

The History of Dark Money

The emergence of dark money in politics can be traced back to the evolution of campaign finance legislation. Legislative actions and court decisions tried to limit the quantity and sources of political financing throughout the 20th century. The main purpose of these efforts was to prevent undue political influence and eradicate bribes and corruption in politics. These contribution limits, however, experienced challenges with certain groups and individuals expertly maneuvering their way through legal technicalities, ambiguities, or exemptions.

Citizens United v. Federal Election Commission

The Supreme Court's decision in Citizens United v. FEC in 2010 was a pivotal point in the rise of undisclosed donations. This case overturned limits on independent political expenditures from union spending and corporate contributions, such as ads or messages supporting or opposing political candidates. Importantly, these expenditures were to be unrelated to any formal campaign or political party. 

The Court argued that such political financing expenditures constituted a type of free speech protected by the First Amendment, granting organizations and unions the same rights as individuals. Notably, the court determined that identifying the sources of such spending wasn't mandatory unless it was "unambiguously related" to a specific candidate.

Unleashing Unrestricted and Anonymous Spending

Following the Citizens United ruling, there was an increase in unlimited anonymous donations from organizations, unions, and wealthy individuals. Political action committees (PACs), super PACs, 501(c)(4) social welfare organizations, 501(c)(6) trade associations, and 527 groupings were all used to channel funds toward political ends. It is important to note that when it comes to politics, nonpartisan organizations can only get involved in certain activities like lobbying and advocacy without explicitly backing any candidate.

According to OpenSecrets, there was a significant surge in hidden-source campaign spending in federal elections following the Citizens United ruling. Since Citizens United v. FEC, hidden funding has accounted for more than 30% of total outside political financing reported to the FEC, underscoring the ruling's major impact on the financial landscape of U.S. elections.

Dark Money’s Impact on Transparency

Having hidden sources of money in politics poses a significant threat to the transparency and accountability required for a functioning democratic system. Openness, a pillar of a thriving democracy, allows the public to identify the makers of influential messages and acts, encouraging accountability for the consequences. It also serves as an inhibitor to corruption in politics, influence peddling, and power abuse by exposing potential conflicts of interest and hidden intentions among political actors.

Hidden funding also undermines accountability by hiding the genuine origins and interests driving financial inflows into politics. This obscurity impedes efforts to efficiently trace and verify the source and purpose of political spending. As a result, assessing the impact of such expenditures, whether on political nonprofits that engage in issue advocacy or on political outcomes, becomes an impossible task. 

Beyond its effect on openness, hidden donations undermine the public’s trust and confidence in the democratic system. As the public grows more suspicious and cynical about politicians and their supporters' motives, concerns about the integrity of the electoral process arise. The resulting lack of trust exacerbates the issues confronting an already fragile political system.

The Impact of Hidden Donations on Elections

There are a number of ways that dark money influences American elections. Here are a few of the most notable impacts:

Distorted Information Landscape

Undisclosed donations have a negative impact on the information landscape accessible to voters. Anonymous organizations can pay for political advertising, messaging, or media sources that either favor or oppose specific candidates or issues. The main problem in this case is the lack of clarity about the funding sources or biases driving these communications. Messages financed by hidden contributions are often deceptive, misleading, or even fraudulent, relying on emotional appeals instead of rational arguments founded on facts and evidence.

Candidate and Voter Participation

On one hand, the presence of dark money has the potential to discourage voter and candidate engagement by instilling feelings of apathy, despair, or pessimism. Intimidation, threats, or harassment may also contribute to the suppression of voter and candidate engagement. 

On the other hand, advertising created through the use of dark money might promote involvement by producing a sense of urgency, excitement, or loyalty to a certain politician or party.

Electoral Competition 

Hidden donations alter the electoral competitive field by creating differences in resources, opportunity, and exposure among candidates and parties. Some may benefit from financial and logistical assistance and improved media exposure, while others may be handicapped by a lack of these critical aspects for running effective and competitive campaigns. 

By engaging in issue advocacy about key issues sponsored by a certain politician, political nonprofits can generate exposure for that particular politician. This game-playing undermines the core idea of equitable and impartial elections.

Legal and Ethical Concerns

There are considerable legal and ethical concerns surrounding the use of dark money in politics:

• Effect on Equality: One of the most pressing ethical and legal concerns is how hidden contributions undermine the principle of equality. This occurs when certain special interest groups or individuals hold excessive power and influence based on their connections or financial standing rather than their merit or accomplishments. This disparity calls into question the democratic principle of fair representation of all people.

• Effect on Fairness: Hidden donations to campaigns jeopardize the electoral integrity of the campaign finance system by exploiting or creating regulation loopholes in enforcement. This manipulation gives some groups an unfair advantage, allowing them to receive benefits without facing the appropriate risks or responsibilities. Such practices undermine the idea of fairness, which is the foundation of a just and equitable democratic process.

• Effect on Justice: Dark money creates further ethical concerns about justice by shifting attention away from the public interest. Instead of addressing the people's needs, these financial and political contributions might advance the donors' or beneficiaries' private goals. This deviation jeopardizes the fundamental essence of justice by putting individuals or special interest groups ahead of the general population.

Case Studies: Dark Money in Action

Consider the following two case studies involving the disclosure and utilization of dark money:

#1: Americans for Prosperity (2012)

During the 2012 U.S. presidential election, Americans for Prosperity, a 501(c)(4) organization linked with the conservative Koch brothers, spent more than $115 million on political advertising and messages attacking President Barack Obama and his policies, particularly on health care and energy. 

The group did not reveal its contributors or expenses, and claimed that its efforts were geared towards voter education rather than being political. The group, however, had coordinated its strategy with other conservative groups and secret donors, and had used shell corporations and front groups to conceal its election funding sources and destinations.

#2: Priorities USA Action (2016)

Priorities USA Action, a liberal entity affiliated with the Democratic Party, was one of the primary PACs backing Hillary Clinton's campaign in 2016. During the election period, the group spent more than $161 million on political advertisements. The majority of these advertisements were directed against Donald Trump or supporting Hillary Clinton. 

The group did, however, get money from hidden funding sources, including $1 million from Fair Share Action, a social welfare organization that does not reveal its donors.

Reforming Campaign Finance

In response to the issues created by dark money, various campaign finance reform strategies have been proposed. Here are five of the most prevalent proposed campaign finance reforms:

• Strengthening legislation requiring financial disclosure of the origins and destinations of political spending. Policymakers could close regulation loopholes and regulate the amount and type of money that can be spent on political activities by certain institutions or political actors.

• Establishing or enhancing systems to monitor, verify, and enforce compliance with election funding laws and regulations. Filing of electronic reports showing lobbying expenditures by nonpartisan organizations to ensure transparency could also be considered. 

• Creating alternatives to traditional means of political financing, such as democracy vouchers, matching funds, or crowdfunding. 

• Engaging in media and voter education about dark money’s role in politics, its origins and consequences, as well as how to detect, expose, and combat it.

• Mobilizing grassroots movements to call for campaign finance reform, transparency laws, and dark money disclosure policies to combat the power of hidden contributions. This kind of political activism can be accomplished by establishing clear channels for citizen participation in the policy-making process. 

The Role of Citizens in Addressing Dark Money

Voters ultimately have the obligation and power to address the issue of hidden political contributions. They have the right and responsibility to shape democracy so that it serves their interests and ideals instead of the interests of secret donors. 

Individuals can play an important role in combating undisclosed donations by:

• Staying informed and aware. Seek out and verify information about political contributions. 

• Being vigilant and critical. Examine the validity of the messages and advertisements you see or hear. Be watchful of political groups’ actions and organizations’ lobbying activities, and report any questionable behavior or conduct.

• Staying engaged in politics. Remain engaged in the electoral process and public discourse, and express your opinions about hidden contributions openly. 

• Supporting campaign finance reform. Support efforts aimed at campaign finance reform, transparency laws, and addressing the issue of dark money in politics. Voters can also back candidates who are committed to political accountability and anti-corruption reforms.

Be Part of the Future of Democracy

Voters have the power to shape democracy, ensuring that it serves the interests and values of the people rather than the interests and values of wealthy donors. Individuals can support campaign finance reform efforts by staying informed, critical, and accountable in the use and administration of dark money in politics.

Want an easy way to get involved? Join GoodParty.org's growing community of reform-minded individuals — either as a volunteer or as a member of our Discord server. You can also click here to sign up for a free info session to talk with our team about how you can get started making an impact.