New Laws Preventing “Dark Money” Disclosures Sweep the Nation

by Vins
Published: Last Updated on

Across the United States, politicians are pushing legislation that follows in the footsteps of a model bill put forth by the American Legislative Exchange Council (ALEC), seeking to make it illegal to compel non-profit organizations to disclose donation sources. In a June 2021 article for Sludge, Donald Shaw explains how ALEC “brings together corporate activists, lobbyists, and state lawmakers to partner up on the crafting of rightwing legislation and other initiatives.” The organization is commonly referred to as a “corporate bill mill” and was behind other controversial laws, such as Stand Your Ground.

By allowing money to be passed anonymously to 501(c) organizations, funding can be directed from wealthy agenda groups to organizations that, by these new laws, have no legal duty to disclose the source of their donations. From there, the money is free to flow directly into politics with no record of the transaction.

“‘These bills are about making dark money darker,’” said Aaron McKean, legal counsel for Campaign Legal Center told Shaw, and they are being proposed widely on the state and federal level. Since 2021, provisions creating the loophole allowing for political money to be transferred silently are included on bills either accepted or pending in Arkansas, Iowa, Tennessee, North Carolina, South Dakota, and Florida. A House Bill and Senate Bill were both indefinitely postponed, and a “must pass” Omnibus Bill is working its way through congress, containing three riders achieving the same ‘darkening’ effect with a multi-prong attack on efforts to keep political funding above-ground information, as reported by Sludge in March 2022.

According to a May 2021 article from Open Secrets, additional support has been given to ALEC bills by Senate Minority Leader Mitch McConnell, who actively backs Sen. Mike Braun’s (R-IN) “Don’t Weaponize the IRS Act,” arguing that providing additional information to the IRS allows them to target specific groups and wealthy individuals.

Tracing back to the Supreme Court’s Citizens United Ruling in 2010, efforts including the current ALEC Bills have been made to shield political donations from public scrutiny. These efforts, however, are not without contest from Democratic politicians and organizations who often cite bipartisan support for stronger enforcement of campaign finance laws and transparency in elections.

On April 27, 2021, 38 Democratic senators sent a letter to the Treasury Secretary and IRS Commissioner encouraging them to roll back an anti-disclosure rule put in place by the Trump Administration, followed by a second letter on May 26 seeking the same action. Democrats now seek to enact the For the People Act, which would compel the disclosure of any individuals who surpass $10,000 in donations in a given reporting period.

The Washington Post reported on the early actions of Democrats to repeal Trump era rules, but made no mention of the numerous laws threatening to overthrow their efforts. The New York Post ran an article on New York governor Kathy Hochul’s “dark money shenanigans,” finding a problem in the free flow of dark money into her campaign coffers without pinning down any definitive cause or solution to the problem. Outside of local reports appearing in regional papers such as the Tampa Bay Times, there has been no acknowledgment in the establishment press of the steady stream of bills passing through the state legislature that seek to keep politically powerful money moving in the shadows.

Alyce McFadden, “GOP Bill Would Codify IRS Rule Hiding ‘Dark Money’ Donors,” Open Secrets, May 27, 2021.

David Moore, “Florida Republican Introduces ALEC Bill to Protect Dark Money in Politics,” Sludge, February 25, 2022.

Donald Shaw, “Laws Preventing Dark Money Disclosure are Sweeping the Nation,” Sludge, June 15, 2021.

Donald Shaw, “Noem Bill Would Make Dark Money Disclosure Illegal,” Sludge, February 19, 2021.

Donald Shaw, “Omnibus Bill Contains Dark Money Riders,” Sludge, March 10, 2022.

Student Researcher: Zach McNanna (North Central College)

Faculty Evaluator: Steve Macek (North Central College)