‘Dark Money’: Tax-Free Charitable Gifts Increasingly Flow to Partisan Political Groups

By Steve Rabey
dark money tax free donations charitable giving
Americans get tax deductions for charitable giving — not donations to political groups. Yet, a growing number of donors on the left and the right have used “dark money” to exploit a simple work-around. (Aidan Barton / Unsplash / Creative Commons)

While Uncle Sam grants Americans tax deductions for charitable giving, the government prohibits deductions for donations to political groups.

But a growing number of donors on the left and the right have used “dark money” to exploit a simple work-around:

  • Donate money to qualified nonprofits.
  • Receive a tax deduction.
  • Watch as the nonprofits forward some or all of the donated money to political groups that aren’t qualified for deductions.

Such gifts swelled during 2020, an election year, according to two recent detailed reports. In December, OpenSecrets, a group that tracks tax returns to expose hidden political donations, reported, “Liberal ‘dark money’ groups’ revenue soared ahead of 2020 elections.” In January, the Chronicle of Philanthropy followed with its report: “$1 Billion in Gifts Attracts New Attention to the Rules on Charities and Political Giving.”

In 2020, politically progressive and liberal groups reaped a windfall from donors opposed to Donald Trump. The New Venture Fund — a regular recipient of gifts from tech billionaires like Jeff Bezos, Mark Zuckerberg and Melinda French Gates — and foundations including Ford and MacArthur received tax-deductible gifts of nearly $1 billion.

New Venture Fund then passed on significant sums to progressive political advocacy groups that can’t accept charitable gifts, including:

Give a gift of $30 or more to The Roys Report this month, and you will receive a copy of “The Way of the Dragon or the Way of the Lamb” by Jamin Goggin and Kyle Strobel. To donate, click here.

  • $86 million to the Sixteen Thirty Fund, which does legitimate educational work about the Supreme Court but was also involved in partisan advocacy over Trump’s three court appointees.

  • $44 million to America Votes, which rallies progressive voters to the polls.

As OpenSecrets reported:

Over the course of the election cycle, Sixteen Thirty Fund routed around $60 million into political committees boosting Democrats in federal races and more than $200 million to other 501(c)(4) nonprofit organizations that either spent directly on elections or gave to super PACs during the 2020 election cycle.

Significant charitable funding also flowed to a variety of state groups that got involved in local elections but never revealed their funding sources: “Sixteen Thirty Fund also continued to support a network of pop-up dark money groups that aired issue ads attacking Senate Republicans in swing states throughout 2019 and 2020.”

Funding flowed to numerous state advocacy groups, including Piedmont Rising in North Carolina, Advancing AZ, Maine Momentum, Rocky Mountain Values in Colorado and Iowa Forward.

While conservatives fume about tax donations going to liberal groups, they don’t seem as concerned about donations that flow to conservative groups from dark money mega-donors — such as Charles Koch, whose Charles Koch Foundation and Americans for Prosperity funnels more than $100 million a year to conservative political advocacy groups and causes.

And as MinistryWatch reported in October, the National Christian Foundation — the largest Christian charity in the world with more than $5 billion in assets — received $2.5 billion in donations in 2020 and distributed $1.3 billion in grants to thousands of organizations. NCF grants went to conservative Christian advocacy groups that claim Democrats seek to create “one-party control” of the country, question efficacy of COVID vaccines, reject 2020 election results and argue that Islam is not a religion but a military/economic/judicial system incompatible with the U.S. Constitution.

Critics say current practices foster an environment in which bad or illegal activities happen with greater regularity. People receive tax breaks for donations that ultimately go to partisan advocacy organizations, some of which falsely claim to be nonpartisan. These donations are kept dark, meaning concerned citizens find it impossible to determine who is funding political advertising and mailers that advance some positions and candidates while opposing others.

Adding to the confusion are laws that make it difficult to distinguish between legitimate charitable educational programs and programs that are clearly political advocacy. Some nonprofits do a mix of both kinds of work.

Current legislation also allows groups to transfer funds from charitable to political groups, as OpenSecrets reported:

While the 501(c)(3) nodes of the network are prohibited from directly engaging in partisan political activity, they can still steer significant sums to 501(c)(4) nonprofits which can become top spenders in their own right, or pass millions to super PACs spending on candidates.

Conservatives fume about tax-free donations going to liberal groups, and liberals complain about funds flowing to conservative groups. But experts disagree over whether people across the political spectrum will join together to bring lasting legislative change that lessens the problem.

Rosemary Fei, a lawyer in the sector who serves as chair of the American Bar Association’s tax-exempt section, told Chronicle of Philanthropy that in today’s hyperpartisan times, groups focus on getting all the money they can to further their political agendas and win — rather than seeking to strengthen the system to protect against such abuse.

This piece originally appeared at MinistryWatch.

Steve RabeySteve Rabey is a veteran author and journalist who has published more than 50 books and 2,000 articles about religion, spirituality, and culture. He was an instructor at Fuller and Denver seminaries and the U.S. Air Force Academy.

SHARE THIS:
  •   
  •  
  •  
  •  
  •  
  •  
  •  

GET EMAIL UPDATES!

Keep in touch with Julie and get updates in your inbox!

Don’t worry we won’t spam you.

More to explore
discussion

5 thoughts on “‘Dark Money’: Tax-Free Charitable Gifts Increasingly Flow to Partisan Political Groups”

  1. Good article that sees people following the letter of our laws while ignoring the spirit of them. It is unbecoming of Christians to willingly engage in this tomfoolery. We should be careful that we do not become like the world who loves to act in darkness rather than in the light.

  2. Hi Steve, thanks for the article. This is an issue that we all should be concerned with. I do want to clarify/correct your description of the National Christian Foundation. It is NOT a “charity”. It is a nonprofit organization that sets up donor advised funds…basically a vehicle that allows a taxpayer to take an immediate deduction in the year money is contributed to the donor advised fund before the monies are eventually distributed to a charity (which does have to be an IRS approved 501c3). The funds can grow tax free prior to being given to a charity. Essentially a vehicle allowing flexibility on giving to charities but not a charity itself. There are many organizations that help people set these funds up…faith-based or not. I have sat down with my local NCF team and explored it. I decided to go with a lower cost solution (I didn’t feel like I needed to pay more in administration fees to vet out if a charity aligned with my values). The point being that giving to a donor advised fund still requires the funds to go to an appropriate charity that is not political. Now what the charity does with the funds is another question…thanks!

    1. Matt, when the funds are given from NCF or other donor advised funds to a charity, is the name of the donor provided as well or is the money so-called “dark money”?

  3. Let’s get it clear, ‘progressive’ doesn’t mean progress to anything but a Marxist world. The Marxists discovered that revolution didn’t happen as predicted, so the game turned into ‘progress’ to the workers nirvana, which turns into the fascism of the powerful. One of the main planks of this, if the Communist Manifesto is anything to go by, is the derogation of the family along with the church.

    But, who could object to ‘progress’? We have to be clear, the ‘progressives’ aren’t progressive in Christian terms, they are REgressives, when they are not just plain Aggressive, of course.

The Roys Report seeks to foster thoughtful and respectful dialogue. Toward that end, the site requires that people use their full name when commenting. Also, any comments with profanity, name-calling, and/or a nasty tone will be deleted.

Comments are limited to 300 words.

Leave a Reply

The Roys Report seeks to foster thoughtful and respectful dialogue. Toward that end, the site requires that people register before they begin commenting. This means no anonymous comments will be allowed. Also, any comments with profanity, name-calling, and/or a nasty tone will be deleted.
 
MOST RECENT Articles
MOST popular articles
en_USEnglish

Donate

Hi. We see this is the third article this month you’ve found worth reading. Great! Would you consider making a tax-deductible donation to help our journalists continue to report the truth and restore the church?

Your tax-deductible gift helps our journalists report the truth and hold Christian leaders and organizations accountable. Give a gift of $25 or more to The Roys Report this month, and you will receive a copy of “Unafraid” by Carey Scott.