In election’s final days, dark money and ‘gray money’ fund ‘dirty tricks’

The campaign literature that landed in Republican mailboxes in North Carolina this week was jarring. On one side was a sonogram image of a human fetus, with this message: “Her heart is beating. We all know it. Only the courageous few will protect her.” On the other side was a call to action: “You have the courage and the conviction to vote for Randall Terry.”

But the mailer did not come from supporters of Terry, a third-party presidential candidate and longtime leader in the anti-abortion movement.

Rather, the fine print showed it was the work of a nascent super political action committee with the anodyne name of Civic Truth Action that was funded by millions of dollars in difficult-to-trace money linked to Democrats trying to elect Vice President Kamala Harris as the next president.

The final days of a high-stakes election are often a time of political mischief. The message pushed by Civic Truth Action — purportedly to help Terry but aimed at siphoning votes from former President Donald Trump — may be among the most cynical. But it is far from unique. Across the country, supporters of Harris and Trump are taking advantage of a patchwork of lax laws that allow partisans to funnel millions of dollars through daisy chains of opaque entities into hard-hitting campaign tactics, all to try to sway the tiny slice of swing-state voters who could make the difference.

Campaign operatives and donors have long deployed creative accounting to mask the flow of money into politics. But in the decade and a half since the Supreme Court’s Citizens United decision paved the way for unlimited spending on political advertising, it has become particularly difficult to follow the big-money flow in the weeks before Election Day, despite the majority opinion’s assertions that “prompt disclosure” of political spending would enable voters “to make informed decisions.”

“Now it’s sort of undeniable that the court was wrong with those predictions,” said Ian Vandewalker, a lawyer at the Brennan Center for Justice, a progressive nonprofit that works to reduce the influence of big money in politics. Vandewalker published an analysis this week of the increase in difficult-to-trace funding to super PACs. “The ability to hide funding for those types of things is attractive for people who want to engage in dirty tricks,” he said in an interview.

If done effectively, operatives can hide the provenance of this money until after the election is called — or perhaps forever.

Here is how: Major donors give to so-called dark-money organizations, usually nonprofit groups that are not obligated to disclose their donors. Those groups then give the money to super PACs, which are technically required to disclose their donors. But the trail goes cold when those super PACs list dark-money organizations instead of individual donors.

This cash, sometimes called “gray money,” has become increasingly popular in both parties, particularly for late spending that operatives and donors want to mask.

Between Oct. 1 and Oct. 16, about $240 million in gray money was donated to super PACs from entities that do not disclose their donors, according to a review of Federal Election Commission filings by The New York Times.

Gray money is particularly useful when partisan operatives and donors want to meddle on the other side of the aisle, as when supporting third-party candidates to siphon votes.

That appears to have been the case with a new super PAC called Badger Values, which was started by a Republican consultant in late September. As of Oct. 16, it had raised $0. But two days later, the super PAC somehow had at least $225,000 in its coffers to spend on what has now become a seven-figure campaign in Wisconsin primarily supporting Jill Stein, the Green Party’s presidential candidate whose support presumably draws from Harris.

Badger Values, based in Texas, did not respond to a request for comment, and there is little public information available about it.

There are slightly more breadcrumbs around Civic Truth Action. The super PAC was registered with the FEC in July and lay dormant for months. Then, over the past two weeks, it spent nearly $2.5 million on direct mail and text messages supporting Terry, and more than $1.5 million on digital advertising promoting Chase Oliver, the Libertarian nominee for president.

Among those involved in the group are two veteran Democratic operatives, Jesse Ferguson and Drew Godinich.

The super PAC raised all of its money, $4.4 million, in early October from a dark-money group called Evidence for Impact that was incorporated this year and is represented by the firm of Democratic political lawyer Marc Elias, which also represents Harris’ campaign. A firm spokesperson declined to comment on Evidence for Impact. Godinich did not respond to a question about the original source of the group’s money.

Evidence for Impact had quietly donated millions of dollars to other Democratic nonprofit groups before the fall, according to a person familiar with its finances.

In mid-September, it began making its first publicly disclosed donations, which would total $16.8 million in the subsequent month, according to FEC records. That included $10.2 million donated to Future Forward, the main super PAC supporting Harris.

Evidence for Impact has also put $2 million into a super PAC formed in August called Voters of These 50 States of America, providing two-thirds of its funding to date. Voters in These 50 States did not return requests for comment.

That super PAC and Civic Truth Action have spent much of their resources trying to boost third-party candidates who could eat into Trump’s vote, such as Terry and Oliver. Additionally, Civic Truth Action’s sister group, a dark-money nonprofit called Civic Truth Coalition, gave $430,000 this summer to a super PAC called Retire Career Politicians, which has recently started running ads supporting Oliver.

“One side doesn’t take us seriously; the other takes us for granted,” the narrator says in one digital ad from Civic Truth Action. “You know what I say? Screw ‘em. I’m voting for Chase Oliver.”

The catch, of course, is that the ad is the product of a super PAC firmly aligned with one of those sides.

Other big-money operatives are taking advantage of related rules, such as the fact that any super PAC that was not active before Oct. 16 is not required to disclose its donors until after Election Day. It is a loophole that all but serves as a blaring invitation to savvy operatives to wait until the last minute to launch strategies most likely to create a backlash, without having to disclose financial information, including their donors, budgets or vendors.

Last week, for instance, Republicans dropped $19 million on ads that sought to minimize potential fallout from Trump’s position on abortion by tying him to former Supreme Court Justice Ruth Bader Ginsburg. The identities of the donors to the group behind those ads, RBG PAC, won’t be public until Dec. 5.

Or maybe ever.

That’s because of the deluge of gray money that nowadays floods into U.S. elections — and especially at the end of the season. When super PACs file paperwork with the FEC, it is not uncommon for almost all of the largest donors to be these nonprofit entities, skirting any real transparency. Those nonprofits — known by the section of the tax code, 501(c)4, under which they are registered — will be required to file a public tax disclosure with the IRS, but often not until more than a year after the election. That tax filing discloses the amount of money they raised but, crucially, not the people who gave it.

Such nonprofits cannot spend a majority of their money on these super PACs; most of their cash must be spent on their “social welfare” mission to keep their tax-exempt status. But if the nonprofit is big enough, even a minority of its budget can overwhelm the super PAC campaign finance landscape.

The biggest donation to Future Forward in the first half of October, for instance, was not from a person but from Future Forward USA Action, its own nonprofit entity, which has put $170 million into the super PAC, including $40 million in early October.

A major, little-scrutinized Democratic spender in the final weeks of the election has been a super PAC, started in August, called Your Community PAC. The super PAC has raised and spent about $10 million on billboards and other messaging to help Democrats like Harris, but a significant portion of its funding comes from 501(c)4 groups that are each affiliated with Arabella Advisors, which helps administer a philanthropic network for liberal donors. Those Arabella-linked entities do not disclose their givers’ identities. The super PAC declined to comment.

Republicans use the same methods. A major funder of downballot Republican campaigns this month has been a super PAC called America Fund, which in the first 15 days of October took in $13.6 million. All of that money was disbursed to other big-money Republican super PACs, including some that were just incorporated. Those super PACs disclosed America Fund, which did not return a request to comment, as the donor of the money.

But where did the money truly come from? Almost all of it originated with American Prosperity Alliance, America Fund’s own nonprofit arm, which likely won’t ever disclose its donors.

This article originally appeared in The New York Times.

© 2024 The New York Times Company