Will Secret Donors Dominate the Upcoming Election Season?

Monday, January 26, 2015
(graphic: republicreport.org)

A tactic that a few campaigns in the 2014 midterm election used to hide all information about their donors is likely to become widespread by the 2016 presidential election, keeping voters in the dark about who the candidates will be beholden to once they take office.


Candidates’ backers set up nonprofit organizations ostensibly as “social welfare organizations” that don’t have politics as their primary purpose. Instead, they run “issue ads,” that coincidentally mention either the candidate they’re backing or their opponent. Sen. Mitch McConnell used this technique to great effect in his recent defeat of Alison Lundergan Grimes.


“This is the same kind of money that was at the heart of the Watergate scandals,” longtime campaign finance activist Fred Wertheimer told Shane Goldmacher at National Journal. “When you combine unlimited contributions with secrecy, you are dealing with the most dangerous kind of corrupting money….It’s not secret from the donors; it’s not going to be secret from the candidates; it is only going to be secret from the American people,” Wertheimer said.


Gov. Bobby Jindal (R-Louisiana), former Republican Senator Rick Santorum, former Texas Governor Rick Perry and other potential GOP candidates have versions of the 501(c)(4) groups, named for the portion of the tax code that governs them. None of the groups will have to file any paperwork with the Internal Revenue Service (IRS) until after the 2016 general election, which means there might be more such groups out there attached to other candidates’ campaigns.


The IRS is working on rules that would increase disclosures from the 501(c)(4) organizations, but there’s little hope they’ll be in force in time for the 2016 campaign. And Congress could still muddy the waters by restricting the IRS’ ability to enforce new rules.


“The whole controversy of dark money—I really don’t think that's going to be solved through the IRS regulatory process,” Nancy Ortmeyer Kuhn, a former senior attorney for the exempt organizations division in the IRS chief counsel’s office, told ProPublica.

-Steve Straehley


To Learn More:

Buying a Nominee (by Shane Goldmacher, National Journal)

RNC Date Change Gives Dark Money More Room to Operate (by Jacob Fenton and Peter Olsen-Phillips, Sunlight Foundation)

New IRS Rules on Dark Money Likely Won’t Be Ready Before 2016 Election (by Theodoric Meyer, ProPublica)

Latest Candidate Must-Have: Your Very Own Dark Money Group (by Robert Maguire, Center for Responsive Politics)

Dark Money Political Groups Hit $100 Million Mark in Election Spending (by Steve Straehley, AllGov)


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