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Source of Dark Money Revealed to Be… Dark Money

A recent IRS filing revealed a chain of dark money in North Carolina for the 2014 midterm election.

November 20, 2015

Elec­tion watch­ers have noted that there is “only” a year left until Elec­tion Day—which means it has been just over a year since the last federal elec­tion. But the source of some of the biggest expendit­ures in the 2014 elec­tions is only just now being revealed.

Kind of.

Several of the highest-spend­ing groups in the 2014 elec­tions kept their donors secret. These “dark money” groups prevent voters from know­ing who put up millions to influ­ence their vote or curry favor with candid­ates. Or, in some cases, just one candid­ate.

For example, Caro­lina Rising, a “social welfare” nonprofit, devoted 97 percent of the $5 million it raised to ads support­ing the elec­tion of Sen. Thom Tillis (R-N.C.), who narrowly beat first-term incum­bent Kay Hagan. The race was one of the most import­ant of 2014 and a key part of the GOP’s success­ful strategy to take over the Senate. 

This week, thanks to IRS filings, we now know where Caro­lina Rising’s came from: Cross­roads GPS, a group that also keeps its donors secret.

Cross­roads GPS’ invest­ment in North Caro­lina was only a portion of what it spent on the 2014 midterms. Co-foun­ded by GOP oper­at­ive Karl Rove, Cross­roads GPS repor­ted to the FEC that it spent a total of $26 million in 2014. When its expendit­ures are combined with its sister super PAC, Amer­ican Cross­roads, which spent $22 million, the pair was the biggest outside spender in the midterms, other than the parties.

Yet the FEC disclos­ures do not capture all of Cross­roads’ spend­ing, in part because it sends funds to other groups that spend on polit­ics them­selves. In North Caro­lina, the two Cross­roads groups repor­ted spend­ing over $6 million directly. In addi­tion, IRS filings reveal that Cross­roads GPS gave Caro­lina Rising almost $5 million to spend in the state. Another $5 million went to the U.S. Cham­ber of Commerce, an outside money titan in its own right, which spent a similar amount on the North Caro­lina senate race.

In fact, Tillis was the biggest bene­fi­ciary of dark money in 2014, with $23 million in secret spend­ing behind him. If the public knew where that money came from, they could decide whether they approve of the rela­tion­ship between Tillis and the funders, whatever it is. But secrecy blocks account­ab­il­ity. Dark-money groups take advant­age of a form of tax status that was never inten­ded to be used by groups focused on polit­ical spend­ing. When disclos­ure is made, it does not come until months after the elec­tion, and even then does­n’t reveal the original sources of money.

There are some solu­tions on the table. The IRS is consid­er­ing a rule that would make the regu­la­tions govern­ing polit­ical spend­ing by nonprofits clearer and easier to enforce. A peti­tion call­ing for Pres­id­ent Obama to issue an exec­ut­ive order requir­ing federal contract­ors to reveal their polit­ical spend­ing gathered over 800,000 signa­tures. And the SEC is consid­er­ing a rule to make publicly traded compan­ies disclose expendit­ures on polit­ics. Although its passage is unlikely, the best solu­tion is the DISCLOSE Act, which would require any group that spends a signi­fic­ant amount on polit­ics to reveal the sources of its money.

Until changes like these are made, anyone who can afford it is allowed to spend millions in secret, and the elec­ted offi­cials who bene­fit can’t be held account­able.

(Photo: Think­stock)