Dark money is untraceable political cash that the public knows little about, including where the funds come from and where the funds are spent.
A 2010 Supreme Court case, known as Citizens United v. FEC, allowed specialized political groups to collect donations from almost anyone and spend unlimited amounts of money on campaigns and campaign issues.
In effect, the financial floodgates were opened, pumping billions of dollars into political races from small town school boards to national presidential elections.
Why does dark money matter?
Good government advocates argue that hiding political donations can obscure political corruption and deprive the public of information they need to make informed decisions at the ballot box.
For instance, a contractor can write a large check to a dark money group helping to elect a city council member, and the council member could then vote to approve a lucrative contract for that contractor. Without public reports, a taxpayer would not know if undue political influence led to a more expensive, less efficient contract.
What is a super PAC?
A super PAC is a type of political group created in the wake of the Citizens United decision.
Super PACs are notable because they can raise and spend unlimited amounts of money in elections, something a candidate cannot do. Someone running for office can only accept checks of a certain size – $2,600 per New Jersey election in 2022 – which limits the amount candidates have to air ads, knock on doors, and help them win their elections.
That’s where the unlimited resources of super PACs become important. However, they are not legally allowed to “coordinate” with candidates, or share information, resources or strategy with each other.
Super PACs differ from PACs, or political action committees. PACs are accounts that companies and unions set up and collect money from their members or employees. PACs have limits on how much they can collect and donate to politicians.
What is a 501c4 nonprofit?
Named for its IRS designation, a 501c4 is a “social welfare organization.” It can be involved in political activity, but politics cannot be its primary focus: It must spend at least half of its resources to promote social welfare. For example, civic leagues, homeowners associations and local fire departments could be 501c4s.
While super PACs file with the Federal Election Commission or state elections authority, 501c4s report to the IRS. Federally, super PACs are required to file regular reports that disclose their donors and spending; in New Jersey, super PACs are only required to report their spending.
501c4s do not need to report their donors. They file annual forms that can take more than a year to be public that disclose some information, such as how much they raised and spent, and who their biggest contractors are.
These nonprofits are exempt from federal income tax. Donations to 501c4 groups are not tax-deductible.
Ashley Balcerzak is a reporter covering affordable housing and its intersection of how we live in New Jersey. For unlimited access to her work, please subscribe or activate your digital account today.
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