According to OpenSecrets the 2024 election cycle broke the record for outside spending in US elections, racking up an immense $4.5 billion price tag. Outside spending, also referred to as ‘soft’ money, refers to spending made by independent organisations and individuals who do not coordinate their spending with the political party or candidate that they are supporting.
A lot of the time this money goes unreported to the Federal Election Commission (FEC), the non-partisan federal body that has the responsibility to oversee election spending, and the identity of donors therefore remains unknown. In cases where the source of such soft money is not disclosed to the public it is called dark money. The lack of electoral transparency that dark money causes has had serious repercussions for the health of American democracy. Here is how dark money seeps its way into American politics.
A clause to American tax law, 501(c)(4), allows ‘social-welfare’ organisations to participate in political activities as long as this does not become the primary purpose of the organisation. However, the meaning of primary purpose is not specified. Social welfare organisations are able to accept unlimited donations and can use that money to directly back their preferred candidates – this is often done in the form of political advertisements. 501(c)(4) groups do not need to disclose their identity or the sources of their donors.
Super PACs are another channel for dark money. A Political Action Committee (PAC) is an organisation with the primary purpose of raising money to elect or defeat political candidates. PACs are required to identify all donors to the FEC on a regular basis, and are under tight restrictions regarding the amount of money they can donate and receive.
Super PACs came into existence following the landmark Supreme Court case Citizens United v. FEC. This controversial ruling allowed corporations and other outside groups to spend unlimited money on elections under the First Amendment, the Constitution’s ‘free speech’ clause. This means, unlike a PAC, a super PAC can solicit and accept unlimited contributions to fund its expenditures provided they do not coordinate with the candidates’ campaigns. Whilst super PACs are not allowed to be an official part of a campaign’s apparatus they are so closely aligned with a particular candidate that they may as well be.
Similar to a PAC, a super PAC must also register, record, and file disclosure reports with the FEC. However, there are multiple ways for a super PAC to hide the true source of their funding.
One method is via the exploitation of a shell corporation, which is a corporation without active business operations. Known as a ‘straw donor’ scheme, this method consists of a wealthy individual transferring funds to an intermediary entity, the shell corporation. The entity then makes a political contribution, meaning the fake business’ name appears on the donor list concealing the identity of the wealthy individual who was behind the actual donation.
Additionally, some super PACs form in the immediate run up to the election so that they don’t need to disclose their donors until after the vote has taken place.
The vast majority of this money comes from extremely wealthy, individual donors. In the 2024 election 75% of the funding from all presidential super PACs came from individual donors who had given $5 million or more. This is an increase from the 63% seen in 2020. A lot of this increase is a product of donors’ support for Trump. For example, 44% of all the money raised to support Trump came from ten mega-donors, with Elon Musk notably making that list thanks to his $118.6 million donation to pro-Republican outside groups.
But this isn’t just a Trump issue; immense election spending is a bipartisan affair. According to Forbes, $1.6 billion was raised by Harris’ campaign committee and outside PACs, more than Trump’s $1.1 billion. Bill Gates was amongst the Democratic donors, after he gave $50 million to the 501(c)(4) arm of Future Forward. Future Forward is a hybrid PAC and, whilst they are required to disclose their donors to the FEC, they conceal the source of the majority of their funds. As a result, Gate’s donation is not present on any public campaign finance filings.
Dark money impinges on a voter’s right to know who is behind the funding of an election that will have a direct impact upon their lives and tarnishes the voting public’s trust in elected officials to serve their interests. Unlimited spending, and the lack of transparency surrounding it, empowers the already powerful by advancing their influence over American politics.
The Citizens United v. FEC ruling to deregulate campaign spending was justified on the grounds of free speech. However, in 2017-2018, only 0.47% of the US population contributed more than $200 to federal candidates, PACs, parties, and outside groups. Hence, what it has done is welcome in a system whereby those with more money have ‘more speech’. It is also a system in which corporations are treated simply as collections of people and are, therefore, granted the same rights as individuals.
There has been some attempt at reform, as seen with sponsorship of the Democracy Is Strengthened by Casting Light on Spending in Elections (DISCLOSE) Act which sometimes circulates the American political agenda. Although, it seems unlikely that there will be much change to the way election spending is carried out in the US in the near future. This is because of the overwhelming power of opponents to reform, including groups such as the American Civil Liberties Union (ACLU), who are concerned the bill could impinge on free speech rights and the privacy of Americans.
