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A Billion Dollars in Dark Money Is Just the Tip of the Iceberg

The environment is ripe for effectively unlimited secret political spending.

Direct dark money spending by groups funded entirely by anonymous donors hit nearly $150 million reported to the Federal Election Commission for the 2018 election cycle alone.

Secret donor-funded “dark money” spending reported to the Federal Election Commission has officially exceeded $1 billion according to a new analysis by the Center for Responsive Politics, and that barely begins to scratch the surface of political spending by groups that don’t fully disclose their donors.

Along with another billion dollars spent by partially-disclosing groups that keep some donors hidden or are funded by dark money sources, spending by groups that don’t fully disclose donors has exceeded $2 billion since the 2006 election cycle.

Direct dark money spending by groups funded entirely by anonymous donors hit nearly $150 million reported to the FEC for the 2018 election cycle alone. That doesn’t include additional money funneled to other groups spending in elections or spent on political ads couched as issue advocacy and digital advertising that remains largely untouched by FEC disclosure requirements. Dark money has hardly waned. Instead, it has begun manifesting in new forms that are often harder to track and quantify.

More than half of all 2018 election spending by outside groups, excluding party committees, was by groups that do not fully disclose their donors.

Altogether, the 2018 election cycle attracted more than $539 million in spending by groups that don’t fully disclose their donors, setting a record for reported spending by these groups during non-presidential years and nearly edging out the all-time high of $619.4 million spent during the 2012 presidential election cycle. In 2006, groups that don’t fully disclose donors made up less than 2 percent of outside spending excluding party committees. Since then, that portion has jumped precipitously, making up more than half of all outside spending excluding party committees for three election cycles in the past decade — including 2018.

Partially disclosing groups are playing an increasingly important role in the political area, as evidenced by record spending by groups that keep some donors secret or are funded by dark money sources.

The percentage of outside spending made up by partially disclosing groups spiked to a record high in 2018 elections, totaling more than $391 million and accounting for more than a third of money spent by outside groups excluding party committees.

Even among groups that do report spending to the FEC, donor disclosure is checkered at best. Recent FEC guidance requires all groups that spend at least $250 explicitly advocating for or against a candidate to report every donor giving at least $200 for “political purposes” in the calendar year, but some of the biggest spenders in the 2018 election cycle found ways to skirt this requirement — leaving the financiers behind tens of millions of dollars spent to influence elections unaccounted for.

Some spenders claim to have adopted policies against accepting funding earmarked for political purposes despite spending tens of millions of dollars on politicking and a little else, a loophole that can continue to be exploited without a settled definition of “political purposes” in this context. Others reported dark money groups as their donors, simply adding an extra layer of insulation between a spender and its ultimate source of funding.

More than $176 million was funneled from dark money groups to super PACs and hybrid PACs during the 2018 election cycle alone. Many of those dark money groups are closely tied to the political committees they fund, sharing staff, office space and other resources. In the 2018 election cycle, 20 partially disclosing groups made up of a super PAC and affiliated dark money arm spent over $1 million each. In multiple cases, they spent tens of millions.

That number does not include spending by “pop-up” super PACs that are legally allowed to hide their donors until after election day by strategically submitting formation paperwork after FEC deadlines then quickly pouring millions of dollars into a race.

Moreover, dark money spending reported to the FEC does not take into account millions of dollars spent on issue ads that praise or attack candidates using carefully crafted language that does not explicitly advocate for or against their election. The vast majority of ads airing under the guise of issue advocacy fall outside of the FEC’s reporting requirements — meaning the actual amount of dark money spending in 2018 elections was likely much higher. This not only leaves political donors secret but also obscures the actual amount spent to influence elections.

The Digital Dark Money Boom

Digital advertising has also become an increasingly common vehicle for dark money groups to dodge disclose requirements, with digital media spending reported to the FEC rising with each election cycle. CRP’s conservative calculation of digital spending reported to the FEC by House candidates exceeded $33.3 million in the 2018 election cycle, more than twice the $16.2 million spent in the 2016 election cycle.

As more and more money pours into digital political ads, the scope of loopholes only continues to expand. The Internet largely remains a regulatory Wild West, leaving the most common platform for American voters to get information subject to significantly less stringent disclosure requirements than television or even political mailers.

Although the information about digital spending made available through FEC disclosures is limited, social media and digital advertising platform resources for tracking political ads shined additional light on spending in the final months of 2018 elections.

More than $350 million was spent on Facebook advertising labeled as political from when the social media platform began publishing the spending data in May 2018 through Election Day, according to data from the Facebook Ad Archive.

Google took in roughly $75 million in political ad spending during that same period, according to data from Google, but covers a smaller subset of ads limited to spending mentioning candidates or officeholders.

Twitter saw over $3 million in political spending by certified “political campaigning” accounts paid for by political committees and candidates registered with the FEC or ads using express advocacy language about a clearly identified candidate for federal office. Non-disclosing groups make up just $56,655 of spending by political and partially disclosing groups make up $13,747. However, Twitter’s spending does not account for a breadth of issue advocacy ads and ads by groups that have skirted detection despite political messaging.

Liberal vs. Conservative: Which Side Is the Darkest?

The 2018 election cycle also saw record levels of dark money spending supporting Democrats with liberal groups accounting for over half of all spending by groups with secret donors.

Liberal dark money groups spent over $81.7 million on 2018 elections, nearly twice the $43.3 million spent by their conservative counterparts.

Liberal groups may have warmed to dark money spending but conservative groups have continued spending through other less apparent channels. While liberal groups dominated direct dark money spending, conservative groups that only partially disclose their donors spent nearly four times as much as their liberal equivalents with $311.2 million by conservatives and $79 million by liberal groups.

In total, conservative groups that do not fully disclose their donors outspent liberal groups by hundreds of millions of dollars during the 2018 election cycle. Conservative groups that don’t fully disclose their donors spent more than $354.47 million while liberal groups spent just over $161.5 million.

Outside Spending Disclosure: Liberal vs. Conservative

The biggest dark money spender reporting to the FEC for the 2018 election cycle was Majority Forward, a liberal 501(c)(4) nonprofit that does not disclose its donors despite spending more than $45 million on 2018 elections.

While the top dark money spender was Majority Forward, the top spender overall was the conservative Congressional Leadership Fund, a partially-disclosing super PAC fueled by a closely-aligned dark money group. Over $26.5 million of the group’s coffers were filled with money from American Action Network (AAN), the 501(c)(4) nonprofit organization that shares much of the Congressional Leadership Fund staff and resources but is funded entirely by secret donors.

Despite the large investment in political contributions, AAN spent nothing directly supporting or opposing candidates during the 2018 election cycle, a marked shift from prior years.

In the 2016 election cycle, AAN spent more than $5.5 million and made just $771,295 in political contributions. Continuing that trend, AAN spent around $8.9 million in the 2014 election cycle and roughly $11.7 million in 2012 while giving just only a few hundred-thousand in political contributions each year.

The dark money landscape is more than just direct spending, hundreds of millions more is being funneled through other kinds of groups that don’t fully disclose their donors.

This adulteration of new technology with gaping holes in disclosure rules has bred an environment ripe for effectively unlimited secret political spending. Some of the biggest financiers pulling the strings of U.S. elections will remain hidden if the 2020 election cycle continues on the same path as 2018, potentially leaving voters in the dark about whether messaging may be paid for by a billionaire with stake in an election outcome or even foreign powers trying to interfere.

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