Dark Money: What Laws Allow Unlimited Spending in Politics?

During the election cycle, a flood of political ads appears, funded under an official-sounding name with no clear backers. That funding can be “dark money,” political spending whose source is not disclosed to the public. While the money is often legal to spend, the source is hidden. Understanding dark money, the laws, court decisions, tax decisions, and disclosure rules that govern spending in political races matters to everyday citizens, voters, and anyone who needs to know who is influencing elections.

If you need more assistance understanding dark money and the laws that allow unlimited spending in politics, contact an experienced election law attorney.

The Main Legal Entities Used To Channel Dark Money

Depending on how they are structured under the Internal Revenue Code (IRC), certain organizations can spend on politics and keep donors private.

IRC 501(c)(4) Social Welfare Organizations

501(c)(4) social welfare organizations are intended to promote social welfare. They can engage in political activity as long as it is not their primary purpose. Social welfare organizations do not generally disclose donors who make campaign contributions.

IRC 501(c)(6) Trade Organizations

501(c)(6) organizations include business leagues, chambers of commerce, and industry groups. They operate similarly to social welfare organizations; they generally do not have to disclose their donors, and they can engage in political spending.

Super PACs (Independent Expenditure-Only Committees)

Unlike trade organizations and social welfare organizations, Super PACs must disclose their donors to the Federal Election Commission (FEC).

Because a Super PAC can accept large political contributions from a 501(c)(4) or a 501(c)(6), with donations from individual donors that do not need to be disclosed, this can create dark money. Money used in political campaigns often flows through multiple layers of entities to obscure its origin. The type of entity determines the disclosure requirements for political spending.

Rulings and Tax Provisions Shaping Spending in Politics

Several courts and tax provisions have opened the door to unlimited political spending.

FEC v. Wisconsin Right to Life (2007)

In FEC v. Wisconsin Right to Life (2007), the U.S. Supreme Court narrowed restrictions on “issue ads” that mention candidates close to an election. As a result, the case gave more organizations room to run ads without them counting as regulated campaign spending.

Citizens United v. FEC (2010)

Citizens United v. Federal Election Commission was a landmark decision that allowed corporations and unions to spend unlimited amounts on independent political communications.

In the Citizens United decision, the Supreme Court treated political spending as protected speech under the First Amendment. This decision expanded the role of outside groups, helping give rise to Super PACs.

Buckley v. Valeo (1976)

Buckley v. Valeo is the landmark case that involved the constitutionality of the Federal Election Campaign Act of 1971, as amended, and the Presidential Election Campaign Fund Act. The U.S. Supreme Court upheld the constitutionality of certain provisions of the election law.

IRS Tax Court Carve-Outs

Along with U.S. Supreme Court decisions that have shaped election and campaign finance law, tax law also allows anonymity.

Nonprofits under 501(c)(4) and (c)(6) are generally not required to reveal donors. Plus, shifts in IRS reporting requirements further reduce the donor information the government collects.

With the relaxed campaign rules and limited tax disclosure, dark money groups can give more than ever. This allows funds to flow from special interest groups, billionaires, and corporate donors. Understanding which rules apply to which entities is essential and often requires professional oversight.

Current Federal Rules on Donor Disclosure

Disclosure rules exist, but they include limits and exemptions. The Federal Election Campaign Act (FECA) requires political action committees and Super PACs to report contributions and expenditures. The law also sets contribution limits and requires regular reporting and pre-election reports.

501(c) nonprofits have fewer disclosure obligations than PACs. This means funds can be reported as coming from an organization without naming the true source, which can allow large amounts of outside spending in campaigns.

Lobbyists, government contractors, and corporate PACs are often discussed alongside dark money, but they face different campaign finance disclosure rules. This makes it important to distinguish between regulated political spending and spending routed through entities that do not reveal the source of funds.

Where To Check Disclosure Filings

Online resources, including the following, make it possible to check disclosure filings:

• FEC.gov. The official federal source for campaign finance, FEC.gov provides information on candidate committees, PACs, Super PACs, contributions, and expenditures.
• OpenSecrets.org. A nonpartisan research organization, OpenSecrets.org organizes and interprets political finance data. It provides information useful for tracking outside spending and connecting groups to broader networks.
• Campaign Legal Center. The Campaign Legal Center can be consulted for public-information or policy research.
• State-level resources. Many states maintain their own disclosure databases for state and local races. The National Conference of State Legislatures provides resources on campaign finance issues, including 50-state surveys on state laws and campaign finance reform.

Although various resources can provide campaign finance information, they cannot expose hidden sources.

Speak to an Election Law Attorney

An experienced election law attorney can help candidates, donors, PACs, and political organizations navigate contribution limits, disclosure obligations, and campaign finance regulations. For legal help, use the Super Lawyers election law attorney directory to find an experienced lawyer in your area.