Congressional Leaders Are Embracing Dark Money More Than Ever

This article was produced by Sludge, an independent, ad-free investigative news site covering money in politics. Click here to support Sludge.

In his first interview after the collapse of his cryptocurrency empire FTX, founder Sam Bankman-Fried made the surprising admission that he had donated as much to Republicans as he had to Democrats—just that, as he put it, “All my Republican donations were dark.”

Bankman-Fried hasn’t volunteered more details, but it’s likely that he made his donations to one of the “dark money” nonprofits that are affiliated with super PACs aligned with Republican Party leaders in the U.S. House and Senate. The now-indicted mogul said he may have secretly been the second or third-biggest Republican donor in the midterms.

Donors are increasingly steering their political giving along these secretive paths. The four super PACs aligned with congressional leaders received more in contributions than ever last election cycle from their largest dark money affiliates, according to a Sludge review of Federal Election Commission data.

The four super PACs that are endorsed by congressional leaders, though technically independent from them, have come to dominate spending on congressional elections in recent years, spending far more than national party committees like the National Republican Congressional Committee (NRCC) or Democratic Congressional Campaign Committee (DCCC) to help elect their party’s candidates. In the 2022 cycle, these super PACs became the four highest-spending outside groups on federal races, according to OpenSecrets.

They each received large contributions from an affiliated 501(c)4 nonprofit organization that does not publicly disclose its donors—for example, the top donor group to the Congressional Leadership Fund, the super PAC aligned with House Speaker Kevin McCarthy (R-Calif.), is the nonprofit American Action Network (AAN). The president of both the CLF and the AAN since just after the 2018 midterms has been Republican strategist Dan Conston. These nonprofits offer a legal channel for wealthy individuals, businesses, or other organizations to secretly funnel unlimited amounts of money to PACs benefiting House or Senate leaders—who can control which bills come to the floor, or appoint powerful committee chairs.

“Money funneled through corporate entities and other types of entities that are not subject to the same types of disclosure rules that federal committees have to comply with are often the preferred vehicles for those spending huge amounts of campaign money—but who don’t want people to know they’re the ones spending it,” said Erin Chlopak, senior director of campaign finance at the nonpartisan Campaign Legal Center.

Due to campaign finance laws governing outside spending groups, the super PACs are not formally linked to members of Congress—but campaign finance watchdogs point out how closely the super PACs are tied to party leaders like McCarthy. In January, as part of the negotiations for McCarthy to corral the votes from his caucus to be House speaker, the ostensibly independent CLF struck a deal with another major outside spending group, the Club for Growth, not to spend on primaries in safe GOP districts.

The four dark money affiliates—on the Republican side, the American Action Network and One Nation, and on the Democratic side, House Majority Forward and Majority Forward—made contributions worth a combined $209.2 million to the four major congressional leader-aligned super PACs in the 2022 cycle, according to a review of FEC data. That sum is a more than 19% increase on the amount the groups contributed in the 2020 cycle to the four super PACs.

The vast majority of the contributions were monetary, but these sums also include contributions described in FEC records as in-kind services of research, data, or development, as well as provisions of salary, office space, and health insurance.

Three of the four dark money groups increased their contributions to congressional leader-aligned super PACs in the midterm elections compared with the 2020 cycle—only One Nation’s total given to the Senate Leadership Fund declined.

Dark money groups, in addition to continuing to spend money on things like television ads to influence voters, have increasingly been routing their contributions to super PACs: along with shell companies, nonprofits that don’t disclose their donors donated $612 million to federal groups in the midterms, OpenSecrets found.

The resulting lack of public disclosure has caused some to refer to super PACs like CLF as “gray money” groups: while they are legally required to disclose their donors, the individuals or businesses that fund their top donors like AAN are allowed to remain secret.

“Knowing who is behind these vast sums of money poured into political campaigns is crucial for voters to be able to make informed choices about who they want to represent them, and we don’t have that information available,” said Chlopak. “Without it, voters can’t make informed decisions and sometimes are deceived, as we’ve been reading about recently in the case of George Santos.”

House Republican Dark Money Soars

In the midterms, contributions from AAN to CLF soared by more than two-thirds compared with 2020, to a total of $50.7 million. AAN also spent more than $30.7 million on TV and digital ads, according to OpenSecrets’ analysis based in part on figures from the media tracking firm AdImpact. Along with more in donations from Republican billionaires like hedge fund CEO Ken Griffin and fossil fuel companies like Chevron, the CLF succeeded in helping to flip control of the chamber, giving Republicans a House majority of 222 members to 212 Democrats, with one vacancy. The CLF’s website states it is endorsed by McCarthy.

The CLF also received $1 million on Oct. 27, 2022 from a group called Building America’s Future, listing an address in Alexandria, Virginia, that releases no information about itself. The group’s website links to the Coalition to Protect American Workers, a conservative anti-tax group founded in 2021 by Marc Short, former chief of staff to Vice President Mike Pence, to block the Biden administration’s agenda. Short previously worked with Freedom Partners, a group in the right-wing Koch network, and his wife worked for the Koch Foundation, according to a report in The Intercept.

The AAN’s contributions amounted to more than 19% of the $260.6 million that the CLF raised in the 2022 cycle.

House Democrats Join in Secret Money

After the 2018 elections, the 501(c)4 nonprofit House Majority Forward (HMF) was founded as an affiliate of the House Majority PAC (HMP), sharing personnel including president Robby Mook, a longtime Democratic strategist who was Hillary Clinton’s campaign manager in 2016, and former executive director Abby Curran Howell, who previously worked for the DCCC.

In last year’s midterms, HMF ticked its donations to HMP up to $10.2 million, a rise of more than 25% compared with the 2020 cycle. The group’s executive director is Mike Smith, who was formerly a senior adviser for Nancy Pelosi and the DCCC. House Minority Leader Hakeem Jeffries (D-N.Y.) blessed the elevation of Smith to president of the group earlier this year, saying in a quote published on the HMP website that Smith “will help ensure a smooth transition.”

The HMP brought in nearly $181.8 million in the 2022 cycle to support House Democratic candidates, meaning that HMF’s share amounted to nearly 6% of those contributions.

Senate Republicans Got the Most From Dark Money Affiliate

The massive 501(c)4 nonprofit One Nation contributed $75 million to the Senate Leadership Fund (SLF) aligned with Minority Leader Mitch McConnell (R-Ky.) in the midterms, a dip of about 12% compared with the previous cycle. Contributions from One Nation made up SLF’s top source of funding in the 2022 cycle, providing SLF with more than three times as much as its next top donor, private equity CEO Stephen A. Schwarzman.

The SLF received other donations from groups whose funding is opaque, such as $3 million from the U.S. Chamber of Commerce, the business lobbying behemoth that does not publicly disclose its member companies or its donors. The SLF also received $1.5 million from Conservative Americans PAC, a new super PAC funded by two dark money groups, the American Economic Freedom Alliance and American Prosperity Alliance.

The SLF’s president is Steven Law, who has been listed as the president and CEO of One Nation in past tax filings. Law bills himself as president and CEO of both groups in media appearances, as well as the CEO of the super PAC American Crossroads, which spent $5.7 million last cycle, virtually all of it opposing Democrats.

Of the nearly $289.6 million the SLF raised last cycle, the share from One Nation—which marks the names and addresses of its contributors as “restricted” in tax forms—makes up close to 26%.

Senate Democrats Got Almost As Much as GOP Rivals

Last cycle, the 501(c)4 nonprofit Majority Forward contributed $73.3 million to the Senate Majority PAC (SMP), an increase of 40% over the 2020 cycle. The group’s president last year was JB Poersch, who is also president of SMP and worked from 2004-2010 at the Democratic Senatorial Campaign Committee (DSCC), according to his LinkedIn profile.

The SMP, which is aligned with Senate Majority Leader Chuck Schumer (D-N.Y.) and which he has helped fundraise for, raised nearly $337.5 million last cycle, and Majority Forward’s share amounted to almost 22% of that total, as Democrats held on to a slight Senate majority. As with their Republican rivals, the dark money affiliate was far and away the SMP’s top source of contributions last cycle, donating more than four and a half times as much as retired businessman Fred Eychaner of Chicago.

The ability for tens of millions of dollars to flow secretly to groups that benefit Senate and House leaders sets up questions about whether the money influences what they prioritize legislatively. In the previous Congress, bipartisan lawmakers behind antitrust bills targeting a handful of Big Tech companies said they had the votes secured to overcome a Senate filibuster and pass both chambers—only to have Majority Leader Chuck Schumer go back on his word and not bring the bills up.

Wary of tech executive largesse flowing to Senate Democrats’ dark money group, last summer the digital rights group Fight for the Future led a call on Schumer to “disclose publicly any contributions Big Tech companies, their executives, or affiliated advocacy organizations have donated this Congress to Majority Forward,” but Schumer made no public statements on the abandoned antitrust legislation as the Congress ended. Because Majority Forward’s donors are not publicly revealed, it’s difficult for the public to judge if Schumer’s actions were corrupted by donations from big technology companies.

Movement for Transparency at the State Level

Since the 2010 Supreme Court decision in Citizens United v. FEC opened the door to unlimited election spending by outside groups, nonprofits that don’t disclose their donors have themselves spent more than $1 billion on federal races, according to research by OpenSecrets.

The DISCLOSE Act, a bill to require greater transparency in the original sources of funding for groups spending on elections, among other provisions, was reintroduced recently in what its sponsor Sen. Sheldon Whitehouse (D-R.I.) called an effort “to end the corrupting influence of dark-money spending.”

“Legislation like the DISCLOSE Act is exceptionally important because it would require transparency about the true sources of funding,” said Chlopak.

With Republicans in control of the U.S. House and stronger disclosure laws facing an uphill battle, campaign finance reform advocates in states are taking the initiative to make the cash behind influence efforts in state and local contests more transparent.

“At the state level, perhaps the most exciting development has been passage of Arizona’s Proposition 211 by a sweeping majority,” Chlopak told Sludge. The measure, also known as the “Voters’ Right to Know Act,” would require groups spending more than $50,000 in statewide campaigns, or $25,000 on other campaigns, to disclose the original funding source of all donations of $5,000 and above. It passed in November with more than 72% of voters in favor.

Other state measures being tracked by Campaign Legal Center include an elections bill in Illinois, where House Democratic Rep. Maurice A. West recently introduced H.B. 3804, which would similarly require disclosure of funding sources behind large donations to groups spending on elections. And in Oregon, a ballot initiative Petition 9, titled “Honest Elections: Fight Political Corruption and Require Disclosure and Transparency,” has been submitted to face state voters in 2024.

“It’s encouraging to see states taking action themselves given the gridlock we see at the federal level,” Chlopak said.