By: Kira Tretiak
Edited by: Andrew Bongiovanni
Graphic by: Arsh Naseer
According to former Wisconsin State Senator Jessica King, she lost her reelection campaign because of a single vote she cast—a vote against a bill that would speed up the permitting process for mining companies. Because of this vote, she made an enemy of pro-business interest groups who later rallied against her reelection. One group, the Wisconsin Club for Growth, spent $919,000 on ads in that one race—more than double the total King spent on her own campaign.1
With King out of the Senate, the bill passed its second time around.2 She attributed her reelection loss and the bill’s subsequent passage to the advertisements dispersed by the Wisconsin Club for Growth and other similar groups.3 Voters who saw these attack ads against King did not know that they were at least partially funded by the out-of-state company who would benefit most from the mining bill King voted against. A leaked court document reported that the mining company gave $700,000 to the Wisconsin Club for Growth—information not available at the time of the election.4 This lack of transparency stems from the organization not disclosing its donors. Funds spent by organizations like the Wisconsin Club for Growth have soared in recent years. The lack of full disclosure for political expenditures is widespread, preventing fair local, state, and federal elections.
“Dark Money,” Defined
“Dark money” refers to the funds spent by organizations to influence the outcomes of political processes, whether elections, referendums, or legislative agendas, while not disclosing the source of the funds.5 These funds are most notably spent by 501(c)(4) nonprofit organizations. 501(c)(4) nonprofit organizations are considered social welfare organizations who can engage in political activities.6 Unlike other types of nonprofit organizations, donations to 501(c)(4)s are not tax deductible.7
501(c)(4) organizations use their money to influence political outcomes by funneling money to political organizations and by directly funding political messaging.8 Some organizations are purely for “pass-through” purposes, meaning they pass money from donors to political groups, rather than engaging in political advocacy themselves. These groups often have characteristics like few board members and volunteers, sparse websites, and low net assets.9 Many “dark money” spenders do not fall squarely into this category and use money to fund advertisements supporting a certain candidate or policy directly.
The rise of “dark money” can be attributed to two 2010 court rulings. The Supreme Court case Citizens United v. FEC held that the First Amendment right to political spending extends to organizations and individuals.10 This landmark ruling overturned efforts to curtail campaign spending rules outlined in the Bipartisan Campaign Reform Act (BCRA) eight years prior. BCRA amended existing campaign finance legislation to diminish the influence of special interest groups, setting new limits on the “electioneering communications” of corporations.11 In SpeechNow.org v. FEC, the U.S. Court of Appeals for the District of Columbia ruled that the amount individuals give to organizations like 501(c)(4) nonprofits cannot be limited, reviving the loopholes to funding campaigns that BCRA closed.12
These two rulings have made it difficult to reign in political spending and, by extension, the influence of special interest groups. “Dark money” poses a particular threat to democracy because the opacity of this type of spending means groups can influence elections without accountability. For instance, a study of support for the Americans for Job Security Act found that some wealthy donors who publicly support liberal policies use “dark money” organizations to “funnel money into resoundingly conservative cause[s] without fear of discovery.”13
Further, 501(c)(4) nonprofits can fund political messaging without clarity about who supports their group.14 It is difficult to discern the goals of a “dark money” organization by name alone. For example, Americans for Tax Reform is a group whose purpose is opposing all tax increases.15 Even with research into the mission of these 501(c)(4) nonprofits, the lack of obligatory donor disclosure makes it difficult to know where their values align. Therefore, it is hard to challenge the credibility of political advertisements made by “dark money” groups on behalf of, or against, certain candidates or policies. This lack of accountability threatens representative elections because voters and candidates can be influenced by political messaging that makes it seem as though there is more support for a certain viewpoint than there truly is—a viewpoint often held by a few secret wealthy donors.
New York’s Public Finance Option
One method to address “dark money” spending is government funding for campaigns, also known as a public campaign financing program. These financing programs provide sourcing to fund campaigns so that candidates can challenge the political messaging paid for by “dark money” groups. These programs are often implemented at the state level where they are most impactful. Compared to federal elections, in state elections like New York assembly elections, less information and spending are required to sway outcomes.16 Furthermore, “state and local elected offices are capable of directly impacting special interests’ bottom lines” because they have fewer checks on regulatory decisions.17
Two types of public campaign financing programs are (1) a “clean elections” program and (2) a “matching funds” program.18 A clean elections program funds campaigns by giving qualifying candidates a lump sum subsidy, like Vermont’s full grant system which supports candidates running for governor and lieutenant governor.19 A matching funds program uses public funds to match small donations to campaigns, like New York’s program which matches contributions of up to $250 made to candidates running for statewide and state legislative positions.20
New York’s matching funds program is being utilized in its entirety for the first time in the 2024 election cycle.21 Depending on the amount donated, New York state will match small donations ($5-$250) using a ratio that decreases as the quantity donated increases. In the upcoming elections, over 300 candidates will receive public funds from this program. To carry out the program, $39.5 million has been allocated from the state budget.22
New York’s matching funds program addresses the issue of “dark money” spending by providing candidates the funding needed to challenge candidates supported by “dark money” interests. While the program does not address the ability of “dark money” organizations to disperse and fund political messaging, it helps level the playing field. Data from public campaign funding programs implemented in Arizona and Maine lend empirical support to the notion that government funds increase competitiveness for challengers in state elections.23 A matching funds program is especially useful for combating special interest groups because it empowers small donors to contribute their own money, given their donations will be amplified by government spending.24 The program is estimated to “increase the financial power of small donors sixfold, from 11 percent…to as much as 67 percent.”25 This significant shift in campaign fundraising would curtail the influence large campaign spenders may have by removing the reliance candidates have on major donors to fund their campaign efforts.
New York’s matching funds program would also make elections more representative of the public, as opposed to major campaign spenders, by diversifying New Yorkers’ ballots. Public campaign financing makes campaigning more economically viable and accessible by providing resources to populations that have been marginalized in the political process, thereby promoting socioeconomic, gender, and racial diversity in elections.26 In states where public funding for campaigns has been implemented in the past, racial minorities and women were more likely to become candidates.27 Therefore, New York’s program could make state officials more representative of the state’s population.
Critics of programs like New York’s public financing option argue that government funds lead to candidates who are more extreme in their policy positions.28 It is true that public funding can cause increased polarization between candidates because they no longer must shift their policies towards the center to appease donors, meaning they can campaign on more fringe positions.29 Increased polarization can dampen the benefits of a public campaign financing program by isolating more voters, causing candidates who are less representative of the public to get elected. New York’s “matching funds” structure for public campaign funding, however, would minimize the extent that polarization is an issue. Unlike a clean elections program, a matching program requires candidates to appeal to voters to receive small-scale donations for the government to match. If candidates are too fringe, they will not be able to amass sufficient contributions for a successful campaign, thus minimizing the salience of this critique.
Critics also argue that New York’s program is costly and ripe for fraud. While true that the program can give hundreds of thousands to an individual candidate—an amount that could be used to help New Yorkers more directly—the overall cost of the program is relatively low. For each New Yorker, funding and implementation of the program costs only around $2 of taxpayer money.30 There is, however, a real risk that the funding goes towards fraudulent sources. The program established a Public Campaign Finance Board to monitor the program’s implementation.31 However, in the 2024 elections, some New York residents have reported that fake donations were being submitted to the government under their names so candidates could claim more public funds.32 One state assembly candidate, Dao Yin, collected over $160,000 in public funds from New York’s program–at least some of which was obtained through reports of fake donations. Given the increasing evidence of fraudulent spending, greater oversight must be funded and mandated, including hiring more staff to oversee the program.33
Conclusion
“Dark money” spending endangers fair elections by giving wealthy donors and companies a route to disperse political messaging without clarity about what interests are being represented. To address the damage done to representative elections by rulings in Citizens United v. FEC and SpeechNow.org v. FEC, New York has implemented a matching funds public financing campaign program. This program uses public funds to enhance equity in the campaigning process. The evidence suggests that the program will help level the playing field for candidates who can challenge “dark money” interests, decreasing their influence. Still, the program is not without its many critics and its true effectiveness in combating “dark money” remains to be seen. As it stands without federal regulation, it is essential that New York and other states find a lasting solution to address the threat posed by “dark money” spending to fair elections, and by extension, American democracy.
Works Cited
[1] Meyer, Theodoric. 2014. “In Wisconsin, Dark Money Got a Mining Company What It Wanted” ProPublica. October 14, 2022. https://www.propublica.org/article/in-wisconsin-dark-money-got-a-mining-company-what-it-wanted.
[2] Meyer. 2014. “In Wisconsin, Dark Money Got a Mining Company What It Wanted.”
[3] Meyer. 2014. “In Wisconsin.”
[4] Meyer. 2014. “In Wisconsin.”
[5] Campaign Legal Center. 2022. “What Is Dark Money?” Campaign Legal Center. May 9, 2022. https://campaignlegal.org/update/what-dark-money.
[6] Ballotpedia. n.d. “501(c)(4).” https://ballotpedia.org/501(c)(4)#:~:text=501(c)(4)%20refers,exempt%20from%20federal%20income%20tax.
[7] Ballotpedia. n.d. “501(c)(4).”
[8] Irvin, Renée A. 2023. “How Dark Is It? An Investigation of Dark Money Operations in U.S. Nonprofit Political Advocacy Organizations.” Nonprofit Policy Forum 14 (2): 101–29. https://doi.org/10.1515/npf-2022-0032.
[9] Irvin, Renée A. 2023. “How Dark Is It?” 101–29.
[10] “Citizens United v. Federal Election Commission.” 2010. Oyez. https://www.oyez.org/cases/2008/08-205.
[11] Congress.gov. “H.R.2356 – 107th Congress (2001-2002): Bipartisan Campaign Reform Act of 2002.” March 27, 2002. https://www.congress.gov/bill/107th-congress/house-bill/2356.
[12] Donnellan, Emily, and Cathy Silak. 2017. “Enhanced Campaign Finance Disclosure and Recusal Rules to Offset the Influence of Dark Money in State Supreme Court Elections.” SSRN Scholarly Paper. Rochester, NY. https://papers.ssrn.com/abstract=2919101.
[13] Oklobdzija, Stan. 2019. “Public Positions, Private Giving: Dark Money and Political Donors in the Digital Age.” Research & Politics 6 (1): 205316801983247. https://doi.org/10.1177/2053168019832475.
[14] OpenSecrets. n.d. “Dark Money Basics.” https://www.opensecrets.org/dark-money/basics.
[15] Americans for Tax Reform. n.d. “About Americans for Tax Reform.” https://dev.atr.org/about/.
[16] Lee, Chisun, Katherine Valde, Benjamin T Brickner, and Douglas Keith. 2016. “Secret Spending in the States.” Brennan Center for Justice. https://www.brennancenter.org/our-work/research-reports/secret-spending-states.
[17] Lee, Valde, Brickner, and Keith. 2016. “Secret Spending in the States.”
[18] NCSL. 2023. “Public Financing of Campaigns: Overview.” National Conference of State Legislatures. February 6, 2023. https://www.ncsl.org/elections-and-campaigns/public-financing-of-campaigns-overview.
[19] Brennan Center for Justice. 2024. “Guide to Public Financing Programs Nationwide.” June 10. 2024. https://www.brennancenter.org/our-work/research-reports/guide-public-financing-programs-nationwide.
[20] New York State Public Campaign Finance Board. 2022. “Public Campaign Finance Program Overview.” November 9, 2022. https://pcfb.ny.gov/program-overview.
[21] Whalen, Ryan. 2024. “329 N.Y. Political Candidates Are Certified for Matching Public Campaign Funds.” Spectrum News 1. April 9, 2024. https://spectrumlocalnews.com/nys/capital-region/politics/2024/04/09/329-candidates-are-certified-for-matching-public-campaign-funds.
[22] Geringer-Sameth, Ethan. 2023. “Budget Includes $39.5 Million for New State Public Campaign Finance System.” Gotham Gazette. May 4, 2023. https://www.gothamgazette.com/state/11987-state-budget-funding-public-campaign-finance-system.
[23] Malhotra, Neil. 2008. “The Impact of Public Financing on Electoral Competition: Evidence from Arizona and Maine.” State Politics & Policy Quarterly 8 (3): 263–81. https://doi.org/10.1177/153244000800800303.
[24] Vandewalker, Ian, Brendan Glavin, and Michael Malbin. 2023. “Analysis Shows Amplification of Small Donors Under New NY State Public Financing Program” Brennan Center for Justice. January 30, 2023. https://www.brennancenter.org/our-work/research-reports/analysis-shows-amplification-small-donors-under-new-ny-state-public.
[25] Vandewalker, Glavin, and Malbin. 2023. “Analysis Shows Amplification of Small Donors.”
[26] Murray, Mimi, Adam Skaggs, and Digby Marziani. 2011. “More than Combating Corruption: The Other Benefits of Public Financing.” Brennan Center for Justice. October 7, 2011. https://www.brennancenter.org/our-work/research-reports/more-combating-corruption-other-benefits-public-financing.
[27] Murray, Skaggs, and Marziani. 2011. “More than Combating Corruption.”
[28] Hall, Andrew B. 2014. “How The Public Funding of Elections Increases Candidate Polarization,” August 13, 2014. https://www.andrewbenjaminhall.com/Hall_publicfunding.pdf.
[29] Hall. 2014. “How The Public Funding of Elections Increases Candidate Polarization.”
[30] Brennan Center for Justice. n.d. “The Truth About the Cost of Public Campaign Funding” https://www.brennancenter.org/sites/default/files/analysis/Truth_Cost_Public_Financing_NY.pdf.
[31] New York State Public Campaign Finance Board. n.d. “About the Board.” https://pcfb.ny.gov/about-public-campaign-finance-board.
[32] Root, Jay, and Bianca Pallaro. 2024. “Fake Donations Helped a Candidate Get $162,000 From Taxpayers.” The New York Times. June 11, 2024. https://www.nytimes.com/2024/06/11/nyregion/campaign-finance-fake-donors.html.
[33] Root and Pallaro. 2024. “Fake Donations Helped a Candidate Get $162,000 From Taxpayers.”
