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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)