What is Dark Money?
Dark Money refers to political spending meant to influence the decision of a voter, where the donor is not disclosed and the source of the money is unknown. Depending upon the circumstances, Dark Money can refer to funds spent by a political nonprofit or a super PAC. Here’s how:
Political nonprofits are under no legal obligation to disclose their donors. When they choose not to, they are considered Dark Money groups.
Super PACs can also be considered Dark Money groups in certain situations. While these organizations are legally required to disclose their donors, they can accept unlimited contributions from political non-profits and “shell” corporations who may not have disclosed their donors, in these cases they are considered Dark Money groups.
Hard money: traditional political spending
With this kind of spending, donors must be disclosed, contribution limits apply and organizations are allowed to coordinate their efforts to help elect a candidate. This is not Dark Money. These groups include candidate committees, political parties, and traditional Political Action Committees (PAC).
Soft money: outside political spending
Outside spending — sometimes referred to as independent or non-coordinated — spending refers to political expenditures made by organizations and individuals other than the candidate campaigns themselves. All outside groups that aren’t political parties — except for a few traditional PACs that make independent expenditures — are allowed to accept unlimited sums of money from individuals, corporations, or unions. With these donations, groups can engage in a number of direct political activities, including buying advertising that advocates for or against a candidate, going door to door, or running phone banks. However, these organizations are not allowed to coordinate their spending with political candidates or parties. While some outside groups — like super PACs — are required to disclose their donors, others are not. These nondisclosing organizations are referred to as Dark Money groups.
Types of Dark Money Spending
501(c) Groups / Political Nonprofits
These are nonprofit, tax-exempt groups organized under section 501(c) of the Internal Revenue Code. These groups can engage in varying amounts of political activity. And because they are not technically political organizations, they are not required to disclose their donors to the public. These groups, like super PACs, cannot coordinate with political parties or candidates and therefore are allowed to raise unlimited sums of money from individuals, organizations and corporations.
Types of 501(c) Organizations
501(c)(3) groups: These organizations operate for religious, charitable, scientific or educational purposes. These groups are not supposed to engage in any political activities, though some voter registration activities are permitted. Donations to these organizations are tax-deductible.
501(c)(4) groups: These are commonly referred to as "social welfare" organizations. They may engage in political activities, as long as these activities do not become their primary purpose. The IRS has never defined what “primary” means, or how a percentage should be calculated, so the current de facto rule is 49.9 percent of overall expenditures, a limit that some groups have found easy to circumvent. Donations to these groups are not tax-deductible.
501(c)(5) groups: These are labor and agricultural groups and may engage in political activities, as long as they adhere to the same general limits as 501(c)(4) organizations. Donations to these groups are not tax-deductible.
501(c)(6) organizations: These are business leagues, chambers of commerce, real estate boards and boards of trade, which may engage in political activity, as long as they adhere to the same general limits as 501(c)(4) organizations. Donations to these groups are not tax-deductible.
Benefits of being a 501(c) organization/political nonprofit
Operate without incurring tax liability.
Mask the true nature of a highly political organization through non-disclosure.
Ability to disguise the true nature of a highly political organization through non-disclosure.
Take donations from individuals and corporations that may not want shareholders or customers to know they’re taking a stand on a controversial topic.
Disclose financial activity long after it has taken place.
https://www.opensecrets.org/dark-money/basics