What is Dark Money in Local Politics?
Who you gonna trust?
To understand how dark money plays in a local election, you must be loosely familiar with two types of organizational structure: the Political Action Committee (PAC) and the non-profit type called 501(c)(4) or social welfare organization.
A PAC is created when two or more individuals or an organization join together for the purpose of supporting or opposing the nomination or election of one or more clearly identified candidates. Once their organizational paperwork is filed with the State Board of Elections, they may accept contributions in the form of cash or in-kind expenditures for goods such as campaign signs and/or services, including fundraising, expert consultation, advertising. A legally registered PAC is required, by the state law, to disclose all contributions and expenditures. PACs are not tax-exempt.
North Carolina imposes strict regulations on PACs including periodic financial reporting to ensure that voters have the ability to find out who is contributing and how much ($6400 cap).
The rules for a 501(c)(4) are established by the IRS which grants tax-exempt status. The 501(c)(4) “must not be organized for profit and must be operated exclusively to promote social welfare.” According to the IRS, “social welfare organizations may engage in some political activities, so long as that is not its primary activity. However, any expenditure it makes for political activities may be subject to tax under section 527(f).”
For purposes of this 2023 local election in Orange County, Chapel Hill Leadership (CHL-PAC) is the Political Action Committee tied to CHALT (Chapel Hill Alliance for a Livable Town). Their most current filing (9/26/2023) reported a beginning balance of $553.97, revenues of $8,170, and expenditures of $1,241.24 for a fund balance of $7,482.73.
The NEXT Chapel Hill Action Fund is registered as a 501(c)(4) and has filed no voluntary financial reports with either the state or the county. However, the NEXT organization reports via their website, “In this upcoming 2023 election cycle, we expect to spend about $4,000 to print and mail postcards of our endorsements.” That funding comes from 60 donors.
Shameful Nuisance, Inc., the parent organization behind Triangle BlogBlog, is another 501(c)(4) active in Orange County politics. They do not voluntarily disclose their fund balance or the number of contributors as NEXT does. Neither NEXT or Shameful Nuisance/Triangle Blogblog discloses the names of their donors or the amount of individual contributions.
That brings us to dark money, or spending where the names of those contributing money to an organization that is actively engaged in a political campaign. But it’s not just the anonymity of the donors, it’s also how much is being contributed by an individual donor or a PAC and how much is being spent and for what purpose.
According to the Brennan Center for Justice, “Dark money at the state and local levels frequently flows from special interests with a direct and immediate economic stake in the outcome of the contest in which they are spending, in contrast to what is often portrayed as the more broadly ideological outside spending at the federal level.”
Despite all the hoopla about a potential new PAC that failed to transpire last month, Chapel Hill and Carrboro elected officials and incumbent candidates (minus one) have failed to call out the dark money contributors in this recent election cycle. In fact, certain candidates have welcomed the support of one such group as a fundraising tool. Why would a candidate accept the support of a dark money group but claim that a transparent, regulated PAC is going to “end fair elections in town”?
The bottom line is that a PAC is highly regulated and a 501(c)(4) is set up to avoid sunshine when it comes to political activity. Who you gonna trust?
Disclaimer: I am not a member, financial contributor or advocate for CHALT, Next or Shameful Nuisance/TBB. I am also not an expert on campaign finance and can only attest to having done my best to understand this issue with the help of state and county elections officials.
Another "really scary thing," and "an invitation" to harassment, is the personal attacks that TBB/NEXT and their allies trade in. I have read and witnessed them myself -- very damaging and against the spirit of progressiveness. A form of political hostage-taking. Protecting donors, especially academics -- this begs the question of why they need protection -- free speech is open to all and those with nothing to hide don't usually need protecting.
Hi Terri. Two things. First, I encourage you to take another look at the CHALT-PAC report. The fund balance is correct but they raised $8,170 in the reporting period, with one $3,000 contributions, two $1,000 contributions, a $650 contribution, an $640 contribution, and several $500 contributions. Don’t know if links to specific NCSBE documents work, but I’ll try anyway: https://cf.ncsbe.gov/CFOrgLkup/ViewDocumentImage/?DID=298213
Second, here’s what we (Triangle Blog Blog) recently said in a post about our 501c4 status: “We’re a 501c4, like the AARP, the ACLU, and March for Our Lives. Planned Parenthood and the Sierra Club both have 501c4s. It’s really common.
“We formed as a 501c4 because we felt that structure was best aligned with the work we were already doing – we have clear progressive policy positions and wanted to be able to advocate for abundant housing and walkable neighborhoods and a government that listens to those who have historically been left out of local decision-making. (This is all on our about page.)
“We also wanted to protect our donors. In 2023, our board was doxxed on NextDoor by a leader in CHALT, the group backing Adam Searing — our addresses were posted, along with our names. You can read more about the incident here. It was an invitation to harass us and it was really scary.
“We maintain a strict firewall between our finances and our writers so that donations do not influence what we write about. But we know from our treasurer that many of our donors are graduate students and faculty at the earliest stages of their career. Doing this work in a college town where many people work at the same institution is hard, particularly when it may affect career trajectories. We keep our donors private to protect them and to ensure that they are not harassed.
“What we can tell you is this: the vast majority of our donors give in the $20-50 range. All but two of our donors live in Chapel Hill or Carrboro – the other two live in Durham and Raleigh (places we occasionally write about). A lot of people seem to really like what we are doing, which is amazing. We hope they continue to do so, but if they are trying to buy influence they will be sorely disappointed: we A) don’t know who they are, and B) write what we want.”