Dark Money – Definition

Cite this article as:"Dark Money – Definition," in The Business Professor, updated July 30, 2019, last accessed October 25, 2020, https://thebusinessprofessor.com/lesson/dark-money-definition/.


Dark Money Definition

Dark money refers to money spent by non-profit organizations for political purposes such as influencing elections, influencing the decision of voters and others. The money is pooled from funds donated by a huge number of donors, which in turn, is spent on election purpose by these organizations.

These non-profit organizations receive unlimited funds but they do not disclose the amount received to donors. Donors are also not disclosed to the public neither do the funds. Individuals, corporations and unions can give donations to non-profit organizations.

A Little More on What is Dark Money

Political action committees (PACs), super PACs and not-for-profit organizations are referred to as dark money groups. They money they receive from donors are spent on campaigns and other processes that cannot be directly linked with any candidate vying for a political post. Super PACs are created solely for political purposes while dark money groups only spend part of their money for election purposes.

In the United States, the Internal Revenue Service regulates dark money groups. PACs and Super PACs, on the other hand, are regulated by the Federal Election Commission (FEC). Super PACs are obligated to disclose who their donors are to the regulatory body but dark money groups are not required to disclose their donors or the total amount realized from donations.

The Political Influence of Dark Money

Non-profit organizations that use dark money to fund election processes often have significant amount of influence on election processes. Although PACs and super PACs also use funds donated to them for election purposes, the impact of dark money groups is greater. Dark money groups contributed immensely to the 2010 and 2012 election. For instance, in the 2012 elections, it was recorded that Charles and David Koch who were business tycoons spent an estimated quarter of dark money on the elections.

Furthermore, from 2014 till this moment, there has been a tremendous amount of dark money spent to influence elections.

Laws Surrounding Dark Money Groups

Although, dark money groups are not obligated to disclose their donors and the amounts they receive to the public, there are certain laws guiding dark money groups. Also, the rise of dark money groups can be attributed to two major decisions of the Supreme Court in the United States. In 2008 for instance, the Supreme Court have a verdict stating that adverts that do not clearly support our oppose a political candidate may not be banned. This is a major milestone that led to dark money groups influencing elections through campaigns or advertisements that support or oppose no candidate.

In 2010, the Supreme Court also ruled that restricting political spending by a nonprofit corporation is unaccepted. Dark money groups influence election process greatly with the rulings of the supreme court.

Reference for “Dark Money”

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