With apologies to the cast of Cabaret, dark money makes the political world go round. Confusing rules and a regulatory void in campaign finance have unleashed a tsunami of cash from anonymous donors that is expected to have unprecedented influence over the midterm elections in November. As a result of the U.S. Supreme Court’s Citizens United v. Federal Election Commission judgment in 2010, individuals—and big corporations—received a carte blanche to make unlimited anonymous financial donations to “nondisclosing” organizations, increasingly nonprofit groups whose primary mission is defined as “social welfare.” There are some guidelines: Such groups, categorized as 501(c)(4), can devote no more than half of their funds to political spending if they want to retain their nondisclosing tax-exempt status. The trouble is, who is holding them to account? Since the Internal Revenue Service got hammered for oversight activities that were at best overzealous, at worst partisan, many of these groups can essentially do whatever they want, unchallenged.
While the partisan battle rages over whether such anonymous and unlimited political spending should even be allowed, a more immediate concern is the unwillingness, or inability, of regulators to get involved and enforce the existing rules—for dark money and for campaign spending in general.
On November 4, candidates will do battle over all 435 seats in the House of Representatives, plus 36 of the Senate’s 100 seats. Dark money as a proportion of total money spent on U.S. election campaigns is reaching an all-time high, according to data obtained by Newsweek from the Sunlight Foundation, a Washington-based nonpartisan group that is an advocate for transparent government.