ProPublica

Journalism in the Public Interest

Cancel
Politics & Government

Top 13 Questions From Our Q&A on Dark Money in the 2012 Campaign

Yesterday our reporter Kim Barker answered readers' questions on how outside money is influencing the 2012 election, in a rousing chat on Reddit. We combed through all 930 comments, and picked out some of the best. (Some have been edited for length.)

I feel like a dolt for even asking this, but can you elaborate on what is considered to be dark money? — sarochka

There are no dolts here. "Dark money" is used to refer to groups that can keep their donors anonymous. So the social welfare nonprofits, or 501c4s, and the trade associations, or 501c6s, like the U.S. Chamber of Commerce, are dark money groups.

I don't know what any of those numbers mean… IleaveComments

OK. The IRS has different categories for nonprofits. A charity, for instance, is a 501c3 — not allowed to do much politicking, if any.

A social-welfare nonprofit is a 501c4 — primarily supposed to be serving a social welfare purpose, but allowed to do lobbying and some campaign intervention. A union is a 501c5, and a trade association like the Chamber of Commerce is a 501c6. Both categories are allowed to do a certain level of campaign intervention.

A 527 is the IRS definition of a political committee, which has to report its donors to the IRS. The IRS makes those donors public. The other nonprofits have to report their donors to the IRS. But the IRS doesn't make those donors public…

So: A super PAC with the Federal Election Commission is a 527 with the IRS. A 501c4 with the IRS is simply an outside spending group with the FEC.

Are you saying that (most) dark money groups are social welfare nonprofits? What kind of social welfare are they claiming to support? — kreionysus

"Dark money" is a way of describing groups that don't disclose their donors for political ads. As of now, most of the groups that do this are social-welfare nonprofits, although trade associations like the U.S. Chamber of Commerce are also dark money groups.

As to their social welfare purpose, let's have some fun with this one and go to the facts. Here is an application to be recognized as tax-exempt by one group that just landed on my desk. "Foundation for a Secure and Prosperous America (FSPA) is a newly formed organization that will undertake several activities designed to inform the public and leaders in private and public institutions about ways to assure that America remains secure and prosperous."

...It really is a vague category. "Social welfare" is actually seen by many as kind of a catch all, a place to put nonprofits that don't necessarily fit anywhere else. They're supposed to be groups that benefit the common good. What does that mean? You know it when you see it, I guess....

Fascinating, so in theory an organization could advocate one thing but donate in such a way that they're supporting contrary views? — technicaltonic

In theory, yes, but it could be confusing. The interesting thing is that a group of Democrats, for example, could start one of these called something like Conservatives for a Fair and Just Hope, say the group's a 501c4 and incorporate out of Delaware.

Then, it could start operating without even being recognized by the IRS, and buy ads praising Democrats — maybe just slightly, like, "Candidate X may be a Democrat, but he shares our values," and then give some examples of this. The ad would say, "Paid for by Conservatives for a Fair and Just Hope."

It would seem as if a conservative group had paid for it, when in reality, it was formed by liberals. This hasn't happened yet, as far as I know. But the thing is — it could.

Is this campaign really that different from previous ones? – kinggovernor

Good question. In every campaign, both sides try to do end runs around campaign finance restrictions, to run through loopholes, to try to raise big money without reporting their donors, at least until after the elections. After McCain Feingold, it was 527s in 2004, and then 527s and 501c4s in 2008, and now, post-Citizens United and Speech Now (fun reading for you court buffs), we're in a world where it seems like anything goes. Super PACs! 501c4s! There are different ways to spend money on politics, and also to hide donors.

So is it different than before? The level of money is much higher now. The ability of 501c4s to spend seems much greater…

Do you see any difference between the funding of the Democrats vs. the funding of the Republicans? Are they both playing on the same sheet of music? — Warlizard

Well, it seems that on the Democrat side this year, it's more money being raised and spent through traditional means — i.e., Obama's campaign — vs. outside spending groups like super PACs and social welfare nonprofits. That could change as the election gets closer, and unions are expected to play a major role on the left.

On the right, Romney's raising a lot, but so are super PACs. And social welfare nonprofits like Americans for Prosperity and Crossroads GPS could end up spending more on this election than super PACs – remains to be seen.

Which outside source should we be most concerned with? — 3vanhask

As a reporter, I'm most interested in the idea of these dark money groups, the social welfare nonprofits that can spend millions on electing people without disclosing their donors. Sure, super PACs are important, and the millions of dollars being given are certainly worth noting, but at least with super PACs, we know (in general) who's giving that money.

Anonymous money raises different questions – questions I think we should be talking about. Maybe everyone's fine with anonymous money coming into the system. But it seems as if we've gotten to this place almost accidentally, without most people realizing it and without even having a discussion about it.

As a financial auditor, I am always intrigued by stories of shady money trails and the tools used to follow the money. What kind of investigative tools/methods/sources do you use? — pg21_SubsecD_Pgrph12

Secret sources! No, seriously, if anyone's out there, I'd love to get an inside line on any of these groups, left or right.

As to what I did for our most recent story, I FOIA'd the IRS for applications of these groups (Form 1024s) and their annual tax returns for 2010 (Form 990s). I then compared these documents with what the groups told the FEC, and with their websites and their ads. I then pointed out trends, particularly how these groups underreported their FEC spending to the IRS, or told the IRS much different things than they actually did.

...For some of these groups — let's take The Annual Fund, for example — it was very tough to come up with a starting point. Two other nonprofits had "disclosed" their donors for specific ads, but most of their money for those ads was coming from something called The Annual Fund. (Just try Googling The Annual Fund. Try it!)

So then, I was left with a starting point of an address, listed on FEC records. Which happened to be a UPS store, if memory serves. (That or a Mailboxes Etc.) So then, I was left with a post-office box and the name of The Annual Fund. So then, I went to incorporation records. Was it incorporated in that state? (No.) Then, I went to Delaware incorporation records. (When in doubt, always try Delaware.)

This time, a registered corporation named The Annual Fund came up. Was it MY The Annual Fund? I didn't know. So then I requested the incorporation papers through the Delaware Secretary of State. Bingo--it was. And the phone number of the group led to Neil Corkery, also involved with another social-welfare nonprofit, the National Organization for Marriage, who eventually answered my call and at least sent part of The Annual Fund's tax return to me.

I'm hoping the other part is in the documents the IRS just mailed me. Christmas!

How can we stop/limit the amount of money influencing future elections? Can we stop it, at this point? — ServerGeek

I think that by talking about this issue and by pounding officials on this issue, perhaps it's possible to make a change. But as of now, unlikely. The Supreme Court has opened the door to unlimited fundraising and spending by outside groups, and that's the world we now live in, like it or not.

So that raises the question: Should we know who's giving that money? That's an issue I think people can push on. The Supreme Court, even in Citizens United, was adamant that disclosure was paramount, and that disclosure would help voters make decisions. Well, we have a system now with unlimited money, but with very little disclosure.

As Congressmen and Senators will never vote against their own rational self-interest regarding campaign finance reform, what ways are available for us to turn off the spigot of these sources of undocumented campaign monies? — wes11

I think this is a really interesting point. Experts see two ways of the spigot being turned off: Either Congress taking action, or the IRS cracking down. It seems in the short term, the IRS is the most likely option, although the agency is reluctant to get involved with politics, for understandable reasons.

How do you look for corruption regarding campaign finance? How is corruption proved? — dfuse

Proving corruption in campaign finance is very difficult, and almost impossible unless you get leaked documents or a revealing court case or a Watergate break-in. Most of the time, all you can do as a reporter is shine a light on potential things that are interesting: Say, Donor A gave $X million to Candidate B, who wins election. Then, say, Donor A is awarded an $X million contract, six months down the road. Is it corruption? Tough to say. But it's certainly worth pointing out the dots, and letting readers connect them as they can. (EDITOR'S NOTE: This question unraveled into an interesting discussion on corruption in politics. And an array of amusing Watergate puns.)

What books do you recommend reading to learn about campaign finance? — dfuse

Wow, I heart you, you want to read a book about campaign finance! Honestly, the field has been changing so much, there's not necessarily a book that can bring you completely up to speed. Or, if there is, I haven't been reading it because I've been too busy working. I'd suggest you take a look at this reading guide we put together. Also, anything Jane Mayer at The New Yorker does on this topic is usually edifying and interesting. I'm hoping she's doing a book. (EDITOR'S NOTE: Redditor Focker CRNA pointed out that Republic Lost, by Lawrence Lessig, “is also a good book about money in politics in general.” Kim agreed, and said it's the next one on her nightstand.)

If you had your own 501(c)(4) group, what would you name it? — mwangster

Well, I've thought a lot about this. I've determined that one needs to maximize the use of the following words: America. Future. Citizens. Secure. Alliance. So therefore, I'd call it: The Alliance for the Future Citizens of a Secure America.

What do you think? Will you consider a non-deductible donation?

blog comments powered by Disqus

Projects You Can Help With

.

Transcript: Should Public Schools be Free to Pin Down Students?

Weigh In

105 comments

.

Discussion: How To Protect Your Privacy Online

Read Transcript

38 comments

.

Discussion: School Resegregation 60 Years After Brown v. Board

Read Transcript

60 comments

.

Discussion: Why Are Big Companies Rarely Ever Punished?

Read The Highlights

1044 Comments

More on This Investigation

In Wisconsin, Dark Money Got a Mining Company What It Wanted

An accidentally released court filing reveals how one company secretly gave money to a nonprofit that helped get favorable mining legislation passed.

Cuomo Has Raised Millions Through Loophole He Pledged to Close

The governor has called for closing a gap in the state’s campaign finance laws, but he’s taken far more through the loophole than his predecessors, much of it from real estate developers.

IRS Delays New Rules for Dark Money Groups

The agency has pushed back indefinitely a hearing on new regulations for social welfare nonprofits that spend money on politics.

Senate to Take Up Longshot Amendment to Regulate Campaign Finance

The Senate could soon consider a constitutional amendment that would give Congress and states the ability to limit money in politics, possibly reversing the effect of recent Supreme Court rulings. But the amendment doesn’t appear to have the votes to pass.

Dark Money Group Sues IRS Over Targeting, Disclosure

Freedom Path was launched by backers of Utah Sen. Orrin Hatch and ran ads supporting Hatch and other Republicans in 2012. It said it suffered damages because the IRS flagged its application for extra scrutiny and disclosed its pending application to ProPublica.