Dark Money, Nonprofits and American Democracy
- Nonprofits are tax-exempt organizations classified under section 501(c) of the Internal Revenue Code (IRC).
- The Internal Revenue Service (IRS) classifies nonprofits into more than 30 categories. For the IRS, what is important is the exemption of nonprofits from the corporate income tax.
- Dark money refers to political spending by nonprofits classified under sections 501(c)(4), 501(c)(5),and 501(c)(6) of the IRC, and other entities.
- Dark money groups — A dark money group refers to an organization which seeks to influence people to vote a certain way during elections, where donors are “not disclosed and the source of the money is unknown” (Center for Responsive Politics).
- Nonprofit advocacy and interest group participation are rights guaranteed by the First Amendment to the United States Constitution.
- Many nonprofits are interest groups. For example, the National Rifle Association (NRA) is a membership interest group.
- The Constitution gives Congress taxing authority.
- The IRS is the executive authority charged with implementing tax laws enacted by Congress|Remember: Congress makes laws and the Executive Branch implements laws.
Nonprofits and American Democracy
A crucial element in a democratic society is the notion that every citizen has the right to take part in the political process. That is, a system of governance in which the ideals and preferences of all people are considered in the actions taken by government.
What is Nonprofit Advocacy?
Nonprofit advocacy describes the efforts of the sector to educate government officials, solicit broad support, and advance policy goals. Individuals cannot influence policy alone. Therefore, amassing support and resources increases the likelihood an issue makes the agenda for consideration by legislators.
How Might Nonprofit Advocacy Strengthen Democracy?
People cannot influence public policy alone. Historically, nonprofits have strengthened democracy by generating the networks, public support, financial capacity, and government commitment required to influence public policy and keep our democracy in tact. For example:
- Nonprofit advocacy and grassroots movements led by ordinary citizens compelled President Lyndon B. Johnson to address poverty and civil rights in the 1960s.
- The Civil Rights Act of 1964 — nominally — banned employment discrimination on the basis of race, color, religion, sex, or national origin, among other things.
- Similarly, nonprofit advocacy and the Tea Party’s grassroots movement in 2010 energized conservative voters and helped Republicans win political offices across the country during the 2010 midterm elections.
Both examples provide valuable insights about how nonprofits strengthen democracy. By generating the networks, public support, financial capacity, and government commitment required to influence public policy, citizens took part in political processes. Finally, in both cases, the ideals and preferences of many people were ultimately considered in the actions taken by government.
How Might Nonprofit Advocacy Diminish Democracy?
There are some ways nonprofits and nonprofit advocacy diminish — or undermine — democracy.
Dark money and dark money groups are examples of how nonprofit advocacy might diminish democracy. Provided by PBS, a recently released documentary titled Dark Money, “Examines one of the greatest present threats to American democracy: the influence of untraceable corporate money on our elections and elected officials.” The video trailer is a good primer on dark money and its impact on democracy.
This article is part one of a three-part series. Part two explores more ways nonprofits might strengthen and diminish democracy. While this article provides an introductory overview, part two offers a deep-dive into the topic.
Nonprofit Advocacy Resources
- Political nonprofits — The IRS website provides definitions and resources for people who want to learn more about the various nonprofit classifications, to include information about political nonprofits and the criteria upon which nonprofits are classified.
- Treasury Department and the IRS Announce Significant Tax-Reforms — Click the link to view the Trump Administration’s new rule (published July 2018) on dark money groups and other political nonprofits.
- GuideStar — GuideStar is an excellent resource for people interested in learning more about nonprofit organizations. For example, GuideStar offers website users free access reports about nonprofits:
- IRS Form 990 — Tax-exempt organizations must file Tax Form 990. Anyone interested in viewing the tax returns of nonprofit organizations such as the NRA, Sierra Club, NAACP, and chambers of commerce can do so for free on the GuideStar website.
- Financial Information — If you want to know how much nonprofit executives make, an agency’s annual revenue, and the sources of the agency’s revenue, GuideStar is a useful resource.
About the Author| Olivia P. Walker is a public affairs and administration professional. Olivia’s contract as governance consultant for the International Society for Pharmaceutical Engineering expired September 30, 2018. Prior to this role, Olivia served as government affairs and public policy Analyst for WellCare Health Plans, a Fortune 500 health insurer. Olivia is a graduate of the University of South Florida School of Public Affairs. She graduated from the Master of public administration program in 2015 with a 3.92 GPA. Olivia was duly initiated into Pi Alpha Alpha, the Global Honor Society for Public Affairs and Administration by the USF Chapter in November 2016. She also holds a Graduate Certificate in Globalization Studies. The certificate is a specialized graduate-level credential reflecting knowledge of the most up-to-date research on globalization. Olivia is a member of the American Society for Public Administration.
Olivia taught nonprofits and public policy at the University of South Florida both as an adjunct faculty member and as a graduate teaching assistant.