The Supreme Court’s 2010 Citizens United decision opened the way for unlimited corporate spending on politics and has led to the proliferation of nonprofit political groups that do not have to disclose the identities of their donors. But corporations may be getting another benefit from anonymous donations to these groups: a break on their taxes. It all starts with the so-called social welfare groups that have become bigger players in the political world in the wake of Citizens United, which knocked down restrictions on campaign activity by such groups. Tax experts say it’s possible that businesses are using an aggressive interpretation of the law to wring a tax advantage out of their donations to these groups. It’s almost impossible to know whether that’s happening, partly because the groups — also known by their IRS designation as 501(c)(4)s — aren’t required to disclose their donors. (That’s why the contributions have been dubbed “dark money.”)
This state of affairs is not entirely new; social welfare groups have long been involved in politics. In 2000, for example, the NAACP National Voter Fund, which is a social welfare group, ran hard-hitting ads just days before the election criticizing George W. Bush for his opposition to hate-crime legislation. What’s new is the scale of such groups’ election involvement, which has expanded dramatically in the wake of Citizens Unitedand helped feed the increasing flood of money in elections.
The most prominent of a new crop of these groups is the Karl Rove-affiliated Crossroads GPS, which raised $43 million for the 2010 midterm elections and is expected to become an even bigger force this year. It has pledged to raise and spend $300 million with its sister super PAC, American Crossroads. Democrats also are expanding their use of these groups, led by the pro-Obama Priorities USA, which raised $2 million last year.