“Dark money” is a term of art in campaign finance. It refers specifically to political spending by organizations that do not disclose the sources of their funding — primarily tax-exempt nonprofit corporations organized under section 501(c)(4) of the Internal Revenue Code. The term is descriptive, not a legal designation. The spending it describes is generally legal. What distinguishes it from other political spending is not its purpose or its content but the absence of any requirement to reveal who paid for it.
Understanding dark money requires understanding the tax and legal framework that makes it possible — a framework built from an interplay between the IRS’s interpretation of the tax code and the FEC’s limited jurisdiction over nonprofit spending.
The 501(c)(4) Mechanism
Section 501(c)(4) of the Internal Revenue Code grants tax-exempt status to organizations “operated exclusively to promote social welfare.” The legislative history of this provision suggests it was intended for genuine civic organizations — community improvement associations, volunteer fire departments, civic leagues. It was not designed with political campaigns in mind.
The problem is the word “exclusively.” In 1959, the IRS issued a regulation interpreting “exclusively” to mean “primarily” — a significantly weaker standard. Under that regulation, an organization qualifies for 501(c)(4) status as long as its “primary” purpose is social welfare, even if it engages in substantial political activity. The IRS and enforcement advocates have long struggled with what “primarily” means in practice. The agency has, at various times, suggested that an organization can devote up to approximately 49 percent of its expenditures to electoral activity without losing its exempt status — leaving the other 51 percent to be characterized as “social welfare.”
In practice, according to ProPublica’s reporting, the IRS has not revoked a single organization’s 501(c)(4) status for exceeding permissible political activity since at least 2015. In 2017, the agency rejected only three out of 1,487 applications for 501(c)(4) status. The standard, such as it is, is effectively unenforced.
This matters because 501(c)(4) organizations are not required to publicly disclose their donors. They file Form 990 with the IRS, which reveals their revenues and expenditures in aggregate but does not identify the specific individuals or entities that contributed. Unlike political committees registered with the FEC — which must disclose all contributors above $200 — a 501(c)(4) can receive multimillion-dollar donations and spend them on political advertising without any public record identifying the original source of the money.
What 501(c)(4)s Can Do Politically
The range of political activity available to 501(c)(4) organizations has expanded considerably since Citizens United. These organizations can:
Make “independent expenditures” — broadcast ads with explicit electoral advocacy language like “vote for” or “vote against” — and report those expenditures to the FEC. However, they are not required to disclose the donors who funded those expenditures unless the donors earmarked their contributions specifically for that purpose.
Run “electioneering communications” — broadcast ads that mention a federal candidate within 30 days of a primary or 60 days of a general election and are targeted at that candidate’s electorate — and must report the expenditures but, again, not the underlying donor list.
Contribute unlimited amounts to super PACs. Because super PACs must disclose their donors, a contribution from a 501(c)(4) to a super PAC will appear in FEC records — but only the 501(c)(4) itself will be identified, not the original donors to the nonprofit. This contribution chain is the mechanism by which dark money moves into nominally “disclosed” super PAC spending.
According to the Brennan Center for Justice, 501(c)(4) and shell company contributions to super PACs totaled $1.3 billion in the 2024 election cycle — more than in the prior two cycles combined.
The Donor-Advised Fund Layer
Beyond 501(c)(4)s, a second layer of opacity is available through donor-advised funds (DAFs). A donor-advised fund is a charitable giving account held by a sponsoring organization (like Fidelity Charitable, Vanguard Charitable, or a politically oriented entity like DonorsTrust). A donor makes a contribution to the DAF, receives an immediate charitable tax deduction, and then recommends grants from the account to other nonprofits over time. The legal contribution is from the DAF sponsor, not from the original donor.
DAF sponsors are required to disclose their grant recipients in aggregate, but not by individual account. This means there is no public record linking a specific donor’s advice to a specific grant. A wealthy individual could contribute tens of millions to a donor-advised fund, recommend grants to a 501(c)(4), and the 501(c)(4) would then contribute to a super PAC — with the original donor’s identity buried at the first step of the chain.
DonorsTrust, a donor-advised fund aligned with conservative and libertarian causes, has been described by critics as the “dark money ATM of the right” for its role in anonymizing large political contributions. A 2021 analysis by Issue One found that DonorsTrust provided significant funding to several of the top dark money groups active in federal elections. A 2020 grant of $48.7 million went from DonorsTrust to the 85 Fund, a nonprofit founded by conservative legal activist Leonard Leo.
On the left, liberal donor networks use similar structures. Research by Inequality.org found that DAFs give to politically engaged charities at a rate approximately 70 percent higher than other funding sources, and that DAF sponsors with higher concentrations of donor-advised funds in their portfolios tend to give more to politically engaged organizations.
Major Dark Money Networks: Left and Right
Both major parties have built substantial dark money infrastructure since Citizens United.
On the conservative side, the most prominent examples include:
One Nation, a 501(c)(4) aligned with Senate Republican leadership. The successor to Karl Rove’s Crossroads GPS, One Nation spent approximately $123 million in the 2024 election cycle, according to the Brennan Center. It operates in close alignment with the Senate Leadership Fund, a super PAC aligned with Mitch McConnell’s political operation.
American Action Network, the dark money group affiliated with House Republicans, which spent approximately $69 million in the 2024 cycle.
The 85 Fund and Marble Freedom Trust, part of Leonard Leo’s network of conservative nonprofits, which have channeled hundreds of millions of dollars toward judicial confirmation campaigns and electoral activity without disclosing their donors.
On the progressive side:
Future Forward USA Action, the primary dark money group supporting Joe Biden and then Kamala Harris, contributed more than $304 million to spending and to its closely aligned super PAC, Future Forward USA, in the 2024 cycle. According to the Brennan Center, $1 out of every $6 in undisclosed spending in the 2024 election cycle flowed through this single organization.
House Majority Forward, the dark money affiliate of House Democratic leadership, spent approximately $61 million in 2024.
Sixteen Thirty Fund, managed by the consulting firm Arabella Advisors, serves as a fiscal sponsor and pass-through for a network of progressive nonprofits and has channeled hundreds of millions in contributions whose original sources are not disclosed.
In 2024, the Brennan Center found that dark money groups boosting Democrats spent approximately $1.2 billion, while groups boosting Republicans accounted for approximately $664 million. The asymmetry reflected the size and ambition of the Harris presidential campaign’s outside spending infrastructure.
Why the FEC and IRS Have Both Struggled
The regulatory gap in dark money enforcement is not accidental — it reflects structural features of both the FEC and the IRS that make enforcement difficult.
The FEC has jurisdiction over political committees, not over 501(c)(4) organizations generally. A 501(c)(4) that makes an independent expenditure or an electioneering communication must file a report with the FEC, but the FEC does not determine whether the organization’s overall activities are appropriately characterized as “primarily social welfare.” That question belongs to the IRS. The FEC has six commissioners appointed in bipartisan pairs, requiring four votes to take any major action. Deadlocked 3-3 votes on enforcement matters — particularly those involving coordination or disclosure — have been common throughout the post-Citizens United period, as documented by the Campaign Legal Center.
The IRS has jurisdiction over tax-exempt status but is not a campaign finance regulator. It lacks the expertise and the mandate to evaluate whether specific political advertisements constitute electioneering, and it has historically been cautious about regulatory action that could be characterized as political targeting. After a 2013 controversy in which the agency was accused of applying greater scrutiny to conservative 501(c)(4) applications than to others, the IRS effectively backed away from aggressive enforcement. It announced in 2015 that it would not issue new rules clarifying permissible political activity by 501(c)(4)s until after the 2016 election. No such rules were ever finalized.
In late 2025, a federal district court found that the IRS’s standards for 501(c)(4) eligibility were unconstitutionally vague and ordered the parties to propose new standards, according to Campaign Legal Center. That litigation, Freedom Path v. IRS, may produce more clarity — or further legal challenges — about what nonprofit political activity is permissible.
The Disclosure Debate
The debate over dark money is often framed as a disagreement about whether undisclosed political spending is harmful. But the core legal and policy question is narrower: whether voters have a right to know who is funding political communication directed at them.
In Citizens United, eight of the nine justices upheld disclosure requirements, with Justice Kennedy’s majority opinion noting that disclosure “enables the electorate to make informed decisions and give proper weight to different speakers and messages.” The majority explicitly contemplated that corporations would spend on elections in a transparent manner. The subsequent development of dark money channels — in which corporate and individual money flows through nonprofit intermediaries that have no disclosure obligation — was not what the Citizens United majority described or assumed.
Legislation requiring disclosure of contributions to organizations that spend on elections — including the DISCLOSE Act, introduced in various forms since 2010 — would be constitutionally permissible under existing doctrine. The reason it has not passed is political: the legislation has failed repeatedly to overcome filibusters in the Senate.
The question of whether to require disclosure is distinct from the question of whether to limit spending. One can hold, as the Citizens United majority did, that political spending is protected speech that the government may not prohibit, while also holding that donors to organizations that spend on elections may be required to identify themselves publicly. The current system contains neither prohibition nor meaningful disclosure. Whether that combination reflects the best balance between free speech and democratic accountability is the central question in this area of law.
This article was researched and drafted with AI assistance under human review. See our full AI and editorial practices.