Most people are under the impression that the IRS and the FEC strictly enforce the rules that restrict nonprofit organizations, who are not required to reveal their donors to the public, from dedicating more than half of their proceeds to politics, but sadly, they would be mistaken. It’s not because the rules are non-existent, it’s because they aren’t enforced or enforcible to begin with. This anonymous funding is known as dark money.
The biggest issue is that these agencies—the IRS and the Federal Election Commission and the like —aren’t very effective when it comes to overseeing dark money groups.
The IRS, for example, does not have any procedures set up to assess political activity nor do they have the funds to properly train their employees. These were contributing factors that led to the discovery back in 2014 that those whose job it was to audit 501(c) applications for tax-exemption didn’t quite grasp the regulations they were supposed to be enforcing.
Now, although dark money groups aren’t allowed to dedicate most of their proceeds to influencing elections, that just means they are only allowed to devote less than half, or 49%. And that does not mean that nonprofits don’t regularly spend most, or even all, of their funds on elections. It’s actually really easy for them to do so without even getting in trouble.
The trick is a bit complicated, so here’s how it works:
Basically what is happening is nonprofits are daisy-chaining their contributions to fulfill their tax-exemption eligibility requirements while offsetting their spending on politics. And the worst part about it is that they don’t even have to declare any of these transactions until the election is over.
If you’re still confused about dark money or you want to learn more, check out this website.
[Via: Open Secrets]