Dark Money - What is it?

It is any unidentified money source used by any group that engages in political activity.

Of special interest are groups who use unidentified money to finance political ads (supporting or opposing candidates in elections) directed at the general public – you and me. Equally of concern are similar groups that do not spend money on ads and the like, but use their funds to give donations to other groups or candidates that spend money on political ads and the like.

Would you trust a person who refuses to reveal who they are? Why let those kinds of people run your government?

Dark Money Non-Profit Groups

There are lots of groups who receive and spend money in political activity and actually have to report to election officials (in Michigan, those reports are provided to the Secretary of State for state and local offices, and the Federal Election Commission for Congresspersons, US Senators and the President of the US).

But there are lots of other, often non-profit organizations that are engaged in political advocacy of issues, who, because they are “advocating,” are allowed to not disclose information on their donors or details on their expenditures. The amount of money spent by these groups in political activity has been growing exponentially over the last 10 years data. The following is a listing of the kinds of non-profit organizations that can hide under this very large umbrella:

• 501c4 - Social Welfare Organizations
  • Essentially any kind of political issue that is not covered by the classifications listed below
    • E.g.; Sierra Club; American Gas Association
• 501c5 – Labor and Agricultural Organizations
  • E.g.; A union; Farming Groups
• 501c6 – Business Leagues
  • E.g.; Any Chamber of Commerce group; from the smallest town to the massive US Chamber of Commerce
• 501c7 – Social Clubs
• 501c8 & 10 – Fraternal Societies
• 501c9 & 17 – Employee Benefit
• 501c19 & 23 – Veterans

The most politically active of these groups are the 501c4s, 501c5s, and 501c6s.

Donors Are Using Personal Limited Liability Corporations (LLCs) to Hide Identity

Another, newer tactic, that some of the larger donors have used is to create an LLC and funnel their political donations through that LLC. The names of these LLCs are typically very deceiving.

Corporate Donations or Expenditures Do Not Have to Be Reported to Anyone

Because the US Supreme Court, in its 2010 Citizens United decision, declared that corporations had the same free speech rights as persons, corporations can make unlimited donations. Because these monies are donations, and donors of all kinds have never been obligated to report their donations (the organizations that receive the money must report the donation), corporations are not required to report their political donations. And more and more, corporations give these donations to the non-profits listed above that do not have report their donors. And, just as importantly, corporations do not have to report their political expenditures.

As a result, this kind of political money is totally dark, from the check written by the donor to the ad you see on your television, newspaper, social media, or hear on your telephone. Some corporations create and fund bogus non-profits to totally hide their political endeavors from outsiders, insiders, stockholders, and their customers (see Subvert Elections section below)

It’s pretty easy to see why Dark Money is big and only getting bigger with each election cycle.

Indeed, in 2018, for the very first time, Dark Money was the largest class of political money in our Governor’s election data.

Your Vote: Judging Someone (especially a candidate for public office) By the Friends They Keep

So why the fuss about Dark Money?

As we all know, it is not always easy to judge a candidate. And knowing what the candidates will do once elected is probably the biggest consideration in our choosing which candidate we select in the voting booth. The sources of the money that finance the ads and the other election activities of a candidate give us a VERY BIG hint on what the candidate will likely do once elected.

Dark Money totally blocks our ability to reach beyond candidate statements and see who are the friends of the candidate – to see whose views and needs s/he likely reflects, and whom s/he will surely owe gratitude and preference.

Without this information, you are voting blind! And, you are being manipulated. The accuracy of your vote has been seriously compromised.

Dark Money is Used Frequently for Deceptive and Malicious Activities

All of us learn in our lives that individuals that are up to no good generally do not do it out in the open. They work deceptively, they hide, they try to deceive you. In politics, they make claims that sound possible but are not true. They make accusations about others or defame the reputation of others. Their use of social media in the 2016 election took this problem to whole new levels of absurdity – and damage.

It won’t surprise anyone to learn that the financiers of most of the opposition media ads are Dark Money groups. Data

Dark Money Groups Are Used To Subvert Elections

A classic example of this kind of subversion happened in Michigan during the 2018 primary. The Consumers Power Corporation wanted to remove the then-current Chairperson of the House Energy Committee – Gary Glenn, a Republican from the western Thumb Area. The House Energy Committee controls all legislation related to the energy industry, so Rep Glenn had a major say on issues impacting Consumers. Consumers provides gas and electric power to over half of Michigan. Consumers’ headquarters is located in Jackson, Michigan.

Later it was revealed that Consumers was a heavy funder of a group called Faithful Conservatives for Michigan (FCFM). FCFM spent at least $264,000 in opposition ads against Glenn or in support of his primary opponent. Glenn lost his re-election in the 2018 Republican primary. Download Story Summary

• The utility industry was trying to intimidate the Committee Chairperson by spending money to unseat him, by alienating him from his constituents
  • These kinds of efforts have absolutely no concern about the voters in these districts! The voters are just pawns of the special interests.
    • This is a Jackson, Michigan organization, significantly impacting the representative for the people of the western Thumb Area.
  • When the Dark Money’s opposition candidate wins, the special interests totally own that legislator
• More extreme examples of this phenomena are when Dark Money groups motivate, create, and totally sponsor opposition candidates in a primary. The Koch Brothers have actually done this in a number of cases.
• This member of the utility industry apparently prefers to intimidate the committee chairman, during his re-election, to get their way rather than engage in open debate on their issues or needs before the energy committee. This is one of the reasons why our legislators end up ignoring the needs of their constituents and bend to the demands of the special interests. By the way, in the non-political world, being forced to bend to the will of people who are threatening you is called a “shake-down.”

How Transparent Money Goes Dark a/k/a “Grey Money”

https://www.politico.com/story/2015/11/the-kochs-vs-the-gop-215672

As pointed out earlier, it is becoming more and more common that large donors are making donations to non-profit groups that do not have to reveal those donations. But political groups that must report (Super PACs, and unaligned PACs) have begun to donate/transfer their funds to other PACs and Super PACs. When this happens, there is no original source information passed on to the organization that received that donation. While the funding and the expenditures data of that 2nd group must be reported to election officials, it only indicates the name of the donor group, not individuals. That money loses its transparency – it goes “grey.”

In the criminal world, this is known as money-laundering!!

The Lengths People Will Go to Hide

Following the money behind campaign ads reveals just how far moneyed special interests will go to hide their identities. We just covered how “grey” money comes about. But we are finding that simply giving money to a dark non-profit is not enough cover for some folks. Dark money groups have begun to spawn cascading daisy-chains of funding to make it nearly impossible for investigators to determine the interests behind candidates or media messages. This is especially the case with ballot measures. Listen to a description of one example from California.

ONE VERY IMPORTANT POINT: One of the reasons why these daisy chains are so bad is that the very general information that they must file with the IRS is only provided annually (990 report). Such reports are filed in the following year, no earlier than May or later!

This assures that voters will never have a chance of knowing who is funding/supporting a candidate or media messages on a candidate or ballot issue when it comes time to make their decision in the voting booth.