Arizona Judge Reinstates GOP Law Shielding 'Dark Money' - 2020-10-07
Campaign finance laws throughout the country generally require political donors to be disclosed, but it's usually not difficult for individuals and corporations that would prefer to keep their identities secret to dodge those rules. By setting up a 501(c)(4) "social welfare" nonprofit organization, money from undisclosed sources can be funneled to independent expenditures backing candidates because nonprofits are not required to disclose their donors.
This happens at a vast scale and it has allowed roughly $1 billion in dark money to be spent on elections in the past decade, partly because the Internal Revenue Service has not been stopping political actors from misusing nonprofit charity status. Social welfare nonprofits are not allowed under IRS guidelines to have politics be their "primary activity," but the IRS has not been actively enforcing this rule. Not a single nonprofit had their status revoked due to violating the political activity prohibition from 2015 to April 2019, according to a ProPublica investigation, despite a surge of political spending by nonprofits during that period.
States don't have to accept the IRS' inaction on nonprofits in order to police dark money in their elections. In Arizona, the Citizens Clean Elections Commission, which enforces the state's campaign finance laws, finalized rules in December 2017 allowing itself to demand records from social welfare groups spending on politics in the state to check whether they are properly designated as non-disclosing groups. If the commission determined groups were abusing their nonprofit status by being primarily focused on politics, it could force them to publicly disclose their donors.