'Dark Money' Groups Exceed Super PAC Spending, Secrecy

The top five outside spending groups on presidential election ads have reported less than 1% of their spending to the Federal Election Commission, according to a new report by national research and advocacy organizations Demos and US PIRG. Multiple types of outside spending groups are playing an even larger and more secretive role in the 2012 election cycle than previously thought or estimated.

The report titled Million-Dollar Megaphones: Super PACs and Unlimited Outside Spending in the 2012 Elections reveals that beyond Super PACs, other, less transparent, forms of outside spending are becoming increasingly dominant.

Nonprofit "social welfare" organizations, or "dark money" groups, exempt from taxes under Section 501(c)(4) of the Internal Revenue Code and trade or membership associations organized under Section 501(c)(6) are permitted to spend money to influence federal, state, and local elections like Super PACs, but are not required to disclose the identities of their donors or the amounts of their contributions, according to the report.

Super PACs no longer have a monopoly on outside political spending and are even outspent by these more advanced and secretive forms of political marketing.

"For all their problems, Super PACs have one significant virtue: transparency. They are required to report all of their spending on a real-time basis and all of their donors monthly or quarterly to the Federal Election Commission," the report states. On the contrary, 501(c)(4) "dark money" groups, which also utilize unlimited contributions from wealthy individuals and institutions for political marketing, are not required to disclose donor names or donation amounts due to a gap in FEC regulations.

"Dark money" groups actually outspent Super PACs in the 2010 cycle by a substantial margin and are set to have an even greater effect on this year's elections, according to the report, which pooled data from the FEC and secondary sources.

The report finds:

• When all types of outside spending on television ads related to the presidential race are taken into account, 50% the spending has been by "dark money" groups that do not disclose their donors.
• The top 5 "dark money" groups spent $53.0 million on TV ads related to the presidential race alone through July 1, but reported only $420,920 in spending on all races through June 30th to the FEC. This means that these groups are currently reporting less than 1% of their spending.
• The top 5 outside spending groups have accounted for 58.5% of all reported outside spending in the 2012 cycle.
• More than half (57.1%) of the $230 million raised by Super PACs from individuals came from just 47 people giving at least $1 million. Just over 1,000 donors (or 0.00035% of the population) giving $10,000 or more were responsible for 94% of this fundraising.
• Sheldon and Miriam Adelson have given a combined $36.3 million to Super PACs in the 2012 cycle. It would take more than 321,000 average American families donating an equivalent share of their wealth to match the Adelsons' giving.

The report finds that the combined spending of Super PACs, "dark money" groups, and other forms of outside political spending is far greater and more secretive than imagined.

According to report co-author Blair Bowie, Democracy Advocate at U.S. PIRG, "Our analysis in 'Million-Dollar Megaphones' shows clearly that unlimited, corporate, and secret money continues to undermine the principle of 'one person, one vote,' and yet our findings are only the tip of the iceberg."

"Today's outside spending groups act as megaphones for moguls and millionaires," said Adam Lioz, Counsel for Demos and report co-author. "The more money they pump in, the louder they're able to amplify their voices--until a few wealthy individuals and interests are dominating our public square, drowning out the middle and working classes."