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Research Paper on Dark Money Groups and Dark Money in Campaign Finance
University of Ottawa
ENG1100[ZB]: Workshop in Essay Writing
Dr. Paul Graves
April 15
th
, 2023
Introduction
1
Money has an overwhelming influence on politics and has long been a concern for many.
The rise of dark money and the anonymous donations who contribute to this pool of money has
taken problems with campaign finance to a new level. The rise of dark money groups in
contemporary American politics has allowed organizations with specific ideological goals to
subvert campaign finance laws and donate over set limits while also keeping their donors
anonymous. This lack of transparency has allowed the wealthy elite to push their political
agendas without any public scrutiny, this anonymity promotes polarizing viewpoints and
subverts the democratic process. This research will argue that dark money groups have
contributed to the growth of political polarization in the United States using anonymity,
subversion of traditional campaign finance laws, and the organization of political elites to wield
power through money, all resulting in the degradation of democratic values.
Dark Money Groups and the IRS
Dark money groups refer to organizations that engage in political spending without
disclosing their donors and don not follow regular political spending laws. These groups can
raise unlimited funds from individuals, corporations, and organizations with complete
anonymity. This is because of their status as 501(c) non-profits, which are allowed to keep
donors anonymous, different than the traditional political action committees that are required to
(Chand, 2017, p.459). The creation of political groups like dark money groups are driven by the
need to find loopholes to funnel money toward candidates, previous organizations like IRS 527
tax-exempt organizations, also referred to as PACs (Gerken, 2015, p.6). After the loopholes with
PACs were patched, lobbyists moved to Super-PACs, then after dark money groups. The
evolution of political organizations has been focused on the hydraulics of campaign funds and
how they can legally funnel the most money into a campaign (Gerken, 2015, p.11). Campaign
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finance regulations will never reduce the amount of money in the system, but will shift it to other
channels (Gerken, 2015, p.11).
The creation of dark money groups came through the Citizens
United versus FEC case in the Supreme Court in 2010. Dark money groups are classified as
501(c)(4) organizations which are classified by the Internal Revenue Code statute on 501(c)(4)
organizations as: “social welfare organizations, civic leagues, or any organization that is
organized exclusively for the promotion of social welfare” (Reilly et al., 2003, p. 2). The citizen
case doesn’t define what corporations are, but this rather projects a different image on what they
could be if they wanted to, which portrays them as “purposeful social groups entitled to political
agency” (Greenhouse, 2018, p.548). This is essentially treating corporations as legally and
constitutionally an individual. Their classification allows them to collect unlimited contributions
and have unlimited expenditures on campaigns. The Citizen United ruling allowed these groups
to spend their funds, which are unregulated by the FEC, on direct advocacy towards candidates
(Chand, 2017, p.456). Essentially, dark money groups were created out of the necessity to find a
new loophole to funnel campaign money through and are an amalgamation of previous political
organizations but utilizing a different set of loopholes with the FEC and IRS. This is worrying in
terms of election fairness because it allows for unfair campaign support to certain candidates that
these groups favor. Money is power in elections, and when you have a lot of it, your chances of
success are higher.
Anonymity of Dark Money Groups
The anonymity provided by dark money groups allows for the wealthy elite to donate
money towards their political agenda without any worry of public scrutiny, no matter how
controversial the views. This anonymity creates the perfect environment for the wealthy elite to
utilize their money from behind the shadows and wield immense political control. In addition,
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3
dark money groups use these donations to manipulate politics through anonymous political
advertisements. These advertisements are often negative and bash the other candidate. One of the
defining features of these advertisements is that they are run with no disclaimers or source, so
they look like they are coming straight from the campaign but are independent expenditures from
dark money groups. They spent $308 million and ran 40% of all non-campaign political ads in
the 2012 federal election cycle (Wood, 2018, p.16). This large number demonstrates the large
scope that these organizations hold over campaigns, and how powerful they are when allowed to
spend money on campaigns, especially when they are not required to disclose where the
advertisement comes from. Most advertisements run on Facebook during the 2016 election were
run without disclaimers, and over 75% of these advertisements were run by groups that were not
even registered with the Federal Election Committee (Wood, 2018, p.14). This is through a
loophole with the FEC where disclaimers are not required if they aren’t placed for money, but
ads require a disclaimer when run on TV or radio (Wood, 2018, p.17). This rule is extremely
outdated with the higher use of social media now, and this creates an environment where these
organizations can speak on behalf of campaigns and make false statements with no
repercussions. Fake news is a problem in elections, and the root of the problem is with the
regulations surrounding disclosure requirements when making independent expenditures on
advertisements as a social welfare group. Data from a study by Daniel Chand (2017) found that
using data from the 2010 to 2014 congressional elections, dark money expenditures are more
likely to be for negative advertisements. The study found that outside group expenditures were
more likely to spend on negative advertisements when they aren’t required to disclose donor
information (p.455). This statistic alone shows what anonymity will do to people. Without their
public reputation at stake, they are able to say anything they would like, without any
4
consequences. This enhances freedom of speech but encourages bashing other candidates and
making slanderous claims, because of the lack of accountability. Outrageous and extreme claims
from these advertisements will encourage the polarization of politics by getting the public to
believe extreme views, because what is said in these advertisements is not regulated and fact-
checked. This is a serious issue that needs to be addressed in future election cycles to prevent the
American people from receiving fake information from anonymous advertisements that may
sway their vote on false pretenses.
The Shadow Party and the State of Democracy
The lack of transparency and accountability present in dark money groups has paved the
way for the creation of shadow parties that undermine the integrity of the democratic process and
contribute to the degradation of democracy. Super-PACs and dark money groups are almost
always run by ex-politicians and campaign managers. One of the best examples of this is retired
White House Deputy Chief of Staff Karl Rove manages one of the largest dark money groups in
the United States, Crossroads GPS. This is a spin-off of his Super-PAC, American Crossroads.
These organizations have started to recruit party leadership and function like a party in itself but
with less regulation (Gerken, 2015, p.12). These “shadow parties” are just a political version of a
shell company, and they are laundering campaign money instead. These shadow parties choose
which candidates will receive large sums of campaign money, and essentially control who will
run a successful well-funded campaign. This creates the perfect environment for these
organizations to wield immense influence and power using their money (Gerken, 2015, p.11).
While these organizations are legally required to operate separately from political parties and
specific campaigns, they are indirectly connected (Gerken, 2015, p.11). The perfect example of
this is through GOP Candidate Mitt Romney who was supported by a SuperPAC. The employees
5
of both the SuperPAC and the Romney Campaign were working in the same office building,
separated by only a conference room (Gerken, 2015, pp. 12-13). The “shadow parties” are very
connected to the registered political parties, and their leadership is filled with political elites.
They have started to function as real parties, instructing the registered parties from the shadows
and having the membership of all the party elites (Gerken, 2015, p.12). Except these informal
parties have all the advantages legally. While dark money groups have the legal advantage of
being able to accept and spend unlimited sums of money, the money will continue to flow to
them, and with money comes power (Gerken, 2015, p.14). The rise of dark money groups has led
to the creation of this twisted form of democracy where decisions are made in the shadows, and
money equates to political power. If these shadow parties reign, the power inequity between the
common people and wealthy elites will continue to grow, ending in the erosion of democratic
values.
Conclusion
In conclusion, the creation of dark money groups in contemporary American politics has
contributed to the growth of political polarization in the United States through the lack of
disclosure and transparency that has legally allowed the elites to funnel millions of dollars into
their political agenda and to promote polarizing political views without any public scrutiny. The
creation of these groups came out of a necessity to find a way to funnel money towards
candidates and has resulted in the beginning of a dystopian type of democracy where the power
is in the hands of the top percentile, and the integrity of the democratic process is undermined. It
is imperative that the Supreme Court and FEC address the issue of dark money in politics to
ensure that the power stays in the hands of the people, that elections are fair, and to preserve the
democratic values that America holds close.
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Bibliography
7
Chand, D. E. (2017). "Dark money" and "dirty politics": Are anonymous ads more
negative?
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GERKEN, H. K. (2015). The Real Problem with “Citizens United”: Campaign Finance, Dark
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Proceedings of the American Philosophical Society
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http://www.jstor.org/stable/24640167
GREENHOUSE, C. J. (2018). Citizens United , citizens divided: Democracy and economy in a
corporate key. American Ethnologist, 45(4), 548.
https://doi.org/10.1111/amet.12708
Reilly, John F, et al. (2003). “IRC 501(c)(4) Organizations .”
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