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BY 4.0 license Open Access Published by De Gruyter March 23, 2023

How Dark Is It? An Investigation of Dark Money Operations in U.S. Nonprofit Political Advocacy Organizations

  • Renée A. Irvin ORCID logo EMAIL logo
From the journal Nonprofit Policy Forum


Claims of dark money influence on U.S. political activity are heard from both left- and right-leaning media, both accusing the other side of undue influence from high net worth political donors on American politics. This article explores the issues of donor control, transparency, and publicness of economic policy advocacy organizations. The study focuses on social welfare nonprofit organizations active in economic policy advocacy, utilizing tax filings to compose an index of transparency based on observed characteristics such as; website verbiage, board size, staffing, fundraising spending, relations to other organizations, and other indicators. All of these variables measure legal behavior, yet as L.H. Mayer describes, some organizations appear to be stretching the boundaries of the rules so egregiously as to be in violation of legal rules, with “little fear of negative consequences” (2018, 194). Organizational tactics can reflect a disinterest in public engagement, or worse, a deliberate attempt to keep the organization’s operations opaque. It is impossible to observe, with current policy, the identity of the donors. Given an index as proposed in this article, however, observers can rank organizations on a scale indicating transparent or opaque characteristics.

1 The Value of Anonymity

Given the protections US law provides to protect anonymity, a donor can give to certain types of nonprofit organizations in unlimited amounts without a transaction being publicly noted. This article examines an ecosystem of left- and right-leaning advocacy organizations active in economic policy. In this policy arena, many nonprofit advocacy organizations appear conspicuously different than other social welfare nonprofits and may be serving simply as conduits for funding political activities. For example, among the 54 organizations selected for review in this article, the following anomalies are noted.

  1. A right-leaning political advocacy nonprofit, One Nation, spent $63.3 million in 2016 (a presidential election year), up from $7.1 million the prior year. In 2016, One Nation had only one board member, and gave $21.7 million to the Senate Leadership Fund, a political action committee which is located at the same address as One Nation.

  2. A left-leaning political advocacy nonprofit, Majority Forward, spent $35.8 million in 2016. The organization’s salaries comprised only 1.34% of their expenses in 2016, their website totaled 81 words, and they had only two board members that year.

  3. A right-leaning political advocacy nonprofit, Freedom Frontier, spent $5.9 million in 2016, up from $873,707 in 2015. Freedom Frontier received its $6.2 million of total 2016 revenue entirely from grants and contributions, yet incurred no fundraising expenses. The organization spent almost 75% of its total expenses on political activities, including a $4.4 million grant to a political action committee.

High net worth donors with a strong desire to influence policy while remaining anonymous face regulatory barriers to donating directly to political activities. The Federal Election Commission (2020) sets the following limits on individual giving: An individual may donate $2800 to a political candidate per election cycle, $5000 to a Political Action Committee per year, $10,000 to a local political party per year, and $35,500 to a national political party per year. Only donations under $50 may remain anonymous. Thus, donors desiring anonymity or seeking to donate larger amounts may choose to route their political donations through one or more nonprofit intermediaries such as 501(c)(4) social welfare organizations. In essence, the 501(c)(4)s could be functioning as money launderers (e.g. California Fair Political Practices Commission 2012).

This article provides a conceptual framework explaining why certain nonprofits and their donors might want to shield their activities from public review, even if their ultimate aim is public advocacy. Some organizational characteristics suggest a deliberate attempt to keep operations close at hand without involving many members of the public. After a brief exploration of the policy advocacy industry in the U.S., the study is then situated within an illustrative context: 501(c)(4) social welfare organizations and, within that ecosystem, economic policy advocacy organizations. The index is applicable only to the US context, as the data are solely US-based. The construction of the index could be a model for similar efforts by regulatory agencies or watchdog organizations elsewhere.

This study utilizes US Internal Revenue Service (IRS) Form 990 financial reports to explore observable characteristics of organizations that operate with very little public involvement. That is, they may be operating primarily not to advocate publicly, but simply to provide funding for political campaigns. Nine characteristics are gathered into a composite index of transparency. The index components are explained in the methodology section and their use is illustrated by examining 54 organizations active in economic policy advocacy. The index can be easily replicated and applied to other policy contexts.

2 Transparency versus Opaqueness

Opaqueness, or its more colloquial catch phrase “dark money,” can refer to a broad array of fraudulent or legal arrangements to avoid disclosing a source of funding in any sector; nonprofit, government, or for-profit. This study focuses specifically on funding political campaigns with money from undisclosed sources. Vogel and Geldmacher (2022) add that dark money refers to organizations utilizing nonprofit intermediaries to anonymize funding of political activity. Over a century ago, federal legislation established mechanisms to prevent the corrupting influence of single individuals on the electoral process. Now, with fundamental changes in wealth and income distribution (allowing individuals to find expensive but effective ways of circumventing those barriers) and expanded electronic media with which to instantly court voter sentiment, high net worth individuals are using nonprofit organizations to erase their visible connection to political funding. Billionaires George Soros and the Koch brothers (Charles and David) had received attention for their huge donations to political action committees prior to 2010 (e.g. Mayer 2010), but the US Supreme Court’s 2010 Citizens United decision loosened restrictions on corporate and union political spending, effectively ushering in an expanded era of opaque campaign finance.

Donors, unions, and corporations can now donate unlimited amounts to political action committees anonymously if they first donate to a social welfare nonprofit organization, which becomes the donor of record to the political action committee. Charitable and social welfare nonprofits are not required to publicly disclose their donors. The arrangement can be elaborate, with funding routed through one or more social welfare organizations conducting political advocacy, transferring funds to political action committees, and giving grants to smaller social welfare organizations throughout the country (Choma 2012; J. Mayer 2016; L. Mayer 2018).

3 A Combined Theory of Circumventing Public Sentiment

Nonprofit advocacy is commonly conceptualized within the social movement space; the broad public, aided by coalitions of nonprofit organizations, seeking to promote a collective good (Jenkins 1987). Greenspan (2014) describes “the core goal of advocacy NGOs is the pursuit of a collective goal in the public interest”, while Tesh (1984) and Berry (1977, p. 7) specifically stipulate public interest groups as seeking “a collective good, the achievement of which will not selectively and materially benefit the membership or activists of the organization.” Yet nonprofits also naturally function as special interest groups, advocating for change on behalf of a narrower subset of the population. Special interest group advocacy, which can manifest as advantage-seeking behavior of corporations, industry groups; or policy reform efforts of issue groups, can route advocacy funding through nonprofit intermediaries. Finally, the special interest “group” behavior can be on behalf of one donor or a single corporation. This article essentially dwells on the spectrum of financial and organizational support, from the broader public to the individual donor.

Summarizing research on advocacy from multiple field perspectives, Andrews and Edwards (2004) and Johnson and Prakash (2007) provide thoughtful analyses of the literature strands relevant to nonprofit advocacy. The social movement literature, emanating from analysis of class and collective action, emphasizes organizing, coalition-building, resistance to elite institutions, resource mobilization, and other features of mass movements. From the political science perspective, nonprofit advocacy is the outsider force, challenging the policy structures and institutions to make changes that benefit new or broader constituencies. Throughout both strands of advocacy literature, the nonprofit advocate is often characterized by researchers to be wearing the white hat, as the good and moral nonprofit actor fighting the system (Johnson and Prakash 2007).

Although nonprofits “have a long history of defending and advancing the rights and interests of their members, clients, and the public, particularly marginalized and excluded groups” (Buffardi et al. 2017, p. 1228), there is no guarantee that all nonprofits do so. Grønbjerg and Prakash (2017) point out that economic interests are well-represented in nonprofit advocacy, and assuming that all nonprofits are “good” actors, advocating on behalf of non-elites, would be shortsighted. Goss (2016) and Skocpol (2020), among others, argue that ultra-wealthy individuals, via private foundation grant-making and networks of high net worth donors, are active players in policy advocacy. Elite actors can and do collaborate to advocate on behalf of disadvantaged populations: For example, see Jung, Kaufmann, and Harrow’s (2014) study of a coalition of funders advocating for incarcerated women’s rights in the UK. Skocpol (2020), however, focuses on elites advocating specifically for elite preferences.

Thus, we turn to theory that encompasses a wider view of advocacy, where both liberal and conservative/libertarian moral viewpoints are represented, and where elites are issue entrepreneurs (Goss 2016), actively engaged in building social movements and counter-movements. In this broader context, we can consider the cases where an advocacy organization’s goals may be to advance the interests of the organization’s key donors. Two theory bases are of interest: First, Gen and Wright (2018, p. 302) summarize the tenets of elite theory, whereby “political power is held by a small segment of the upper social class with fairly uniform policy preferences that is aware and intentional about perpetuating its privileges.”

Second, Weisbrod’s (1991) model posits a range of heterogeneous preferences among voters in a democracy. Given this range of tastes for various solutions to social and environmental problems, the median voter “wins” the right amount of service provision funded with tax revenue. People strongly preferring a good for themselves or for society might donate to either provide the good directly (service provision) or advocate to move the preferences of the broader public closer to favor a more generous amount of service provision. Those favoring less government provision of the good will direct their donations to advocacy groups seeking to move the median voter away from government-funded service provision. Combining these two theories, elite actors may seek to influence policy decisionmakers and move the median voter away from the median voter position, if elite preferences fall towards either end of the public preference spectrum.

Given the descriptions of “stealth” tactics in advocacy by Mayer (2016); MacLean (2017); and Page et al. (2018), this study takes an additional theoretical step to explore possible conditions under which being invisible make sense for advocacy. After all, if the defining motivation to advocate is to move the median voter towards one’s preferred level of government provision or regulation of the good or service, why would advocates seek a low profile?

4 When Opaqueness Could Be Advantageous

With the resources a high net worth individual in the U.S. can bring to advocacy, there may be no need to keep a low profile, because one could simply employ successful “insider” tactics to reach and convince policymakers directly. This includes political spending, lobbying, and forging close ties with elected officials (Mosley 2011; Walker 1991). Yet insider tactics may yield only temporary victories if the lawmakers consistently make decisions that run contrary to voter preferences, and voters later voice their displeasure at the polls. “Outsider” advocacy tactics (public education, mobilization, etc.) are also valuable, and both Prentice and Brudney (2017) and Jenkins (2006) suggest that effective advocacy utilizes both insider and outsider approaches.

If convincing policy decision makers is not enough to create a lasting policy shift, then any proponent of a truly unpopular cause must make considerable effort to influence and mobilize broader support. Note that unpopular causes can originate both with advantaged and disadvantaged populations. Greenspan (2014, p. 100) following Minkoff (1997) explains, “advocated issues are frequently in contradiction to, or ahead of, popular opinion, and only over time may be integrated into the policy domain or the public discourse.” Because stealth tactics are not normally found in advocacy, even among unpopular (minority opinion) causes, we must examine what could motivate a subset of policy advocates to operate in a non-transparent manner.

One clue is provided by Gen and Wright (2018, p. 312), whose study highlighted a nonprofit policy director explaining; “it can be helpful to have a ‘big bad opponent’ that lacks a positive public image. It makes it easier to ‘generate a lot more public interest and support.’” Because many ultra-high net worth donors and corporations are viewed with suspicion by the public, any cause championed and funded by them – even if the issue is broadly popular – can be damaged by the public discovery of elite funding. Walker (2014) describes the incentives for industry groups and other special interest groups to manufacture “astroturf” organizations masquerading as enthusiastic, broad-based public support groups. He also notes that the public, valuing authenticity, will ultimately not support staged participation orchestrated and funded by outsiders.

Geographic authenticity is also highly valued. In high-stakes elections, a candidate or cause funded primarily from local donors is trusted more than one financed with large sums from out of state. Frontline (2012) illustrates the enthusiasm with which nonprofits, serving as financial intermediaries, poured money into a US Senate race in Montana. An advocacy group with an innocuous name (note the names of the organizations in Table 3) can at least temporarily fund campaign ads until it is eventually revealed that the organization is not an active member of the local community, nor is it funded by local donors. A third reason for anonymous funding of political activity suggests that the donor does not want to be linked with negative campaign messages publicly. Beckel (2018) explains that political spending routed through dark money organizations is strongly negative, asking voters to defeat candidates, according to Federal Election Commission filings by the organizations.

5 Context: Advocacy Organizations in the Ideas Industry

Policy advocacy, once thought to arise from cloistered intellectual salons where free thinkers develop innovative solutions to issues of the day, has taken a strategic turn toward distinctly polarized camps. Sentimental ideals of intellectual freedom notwithstanding, the policy thought leadership industry has transformed over time to one that is focused less on research and more on political advocacy (Abelson 2016; McGann 2016a; Medvetz 2012; Weaver 1989). Particularly in the U.S. and Europe, think tanks and advocacy organizations are front and center in national and regional policy deliberations (Åberg et al. 2019; Plehwe et al. 2018). Advocacy organizations and their allied think tanks provide evidence, talking points, and justification for fiercely partisan issues, and media quote them daily in policy discussions.

Pautz (2014) describes non-academic, non-government-commissioned think tanks in the U.K. as “advocacy think tanks”, repackaging existing policy agendas (rather than promoting new research) to persuade the public and politicians (Kelstrup 2017). In the U.S., however, a split organizational structure can be observed in policy advocacy: Think tanks are more often 501(c) (3) organizations, founded for research and educational purposes, not for direct political influence. Often affiliated with these think tanks are 501(c) (4) advocacy organizations, commonly referred to as “social welfare” organizations and hereafter noted as C4s. Many C4s function as think tanks as well, generating and disseminating research, mirroring the UK model of combined policy advocacy. 501(c) (3)s may lobby, but this lobbying cannot be a “substantial” portion of their operations during the year. C4 social welfare organizations are allowed to lobby and advocate in a politically partisan manner to influence policy agendas. Neither 501(c) (3) organizations nor C4s are required to list names of donors publicly (Reid 2006).

6 Section 501(c) (4) Social Welfare Organizations

C4s in the US include a broad range of beneficial organizations, from choirs to high school reunion committees (Galle 2020; Pekkanan, Smith, and Tsujinaka 2014; Post and Boris 2020). The C4 organizational category encompasses both advocacy organizations and associations, and as Koulish (2016, 27) notes, “conducts uncontroversial, legitimate tax-exempt activity and represents the shared interests of groups ranging from veterans in a county, to tenants in a housing complex … These activities are beneficial to society rather than to individual shareholders or executives, and the organizations that conduct these activities are generally very small in size and local in scope.” Post and Boris (2020) also illustrate the beneficial role that C4s play in promoting grassroots engagement in public policy. Koulish provides a summary of C4 numbers and trends over time, estimating that less than 10 percent of the 81,000C4s are involved in advocacy.

This article spotlights a distinct subset of C4s specifically because these organizations play accessory if not central roles in U.S. political campaign financing and issue advocacy. In contrast to 501(c) (3)s, C4s may advocate and lobby without limit and can fund political activities without limit as long as political activities do not constitute the C4’s primary activity (IRS 2022, Aprill 2018). The Internal Revenue Service (the authority granting tax exempt status to nonprofit organizations) has not defined the bright-line limit of the “primary activity.” The remainder of the C4’s activity can include lobbying and can be educational, which includes instructing voters about candidates and issues without expressly calling for support or opposition.

Pertinent to this research are C4 organizations’ relations to political organizations. The more intensely political counterparts to C4s are political action committees (PACs) and other 527 organizations. Named after IRS Code 527, 527 organizations are formed to fund political campaigns. One type of PAC, the independent expenditure committee or Super PAC, can receive unlimited donations from C4s as long as the Super PAC remains uncoordinated with a political campaign.

While coordination and maintaining an appearance of independence is not the focus of this article, the funding from a donor to a C4 for political activity and in addition from the C4 to the 527 organization (in particular, a Super PAC) is crucial. The IRS forbids 501(c) (3)s from establishing related 527s, but C4s may do so because donations to C4s are not tax-deductible (IRS, Ward, and Kindell 2000). Donors face Federal Election Commission limits on direct donations to campaigns and most PACs (donations to Super PACs are not limited). Furthermore, donations to 527s must be publicly disclosed. Thus, C4s provide a convenient organizational form in political advocacy: A donor seeking to remain anonymous can donate in unlimited amounts to the C4 (up to 49.9% of its budget, so it is not the organization’s “primary activity”), which in turn can lobby and serve as the donor of record for transfers to political organizations – thus shielding the donor from Federal Election Commission disclosure (see Bolder Advocacy 2018; Mayer 2018). Table 1 provides a summary of this context. While the focus in this article is on the role of C4s in political finance, limited liability corporations are also used in a similar intermediary financing role, and warrant further research (Brown 2022).

Table 1:

The role of 501(c) (4) organizations in donor financing of political activity.

  1. 501(c) (3) charitable organizations are prohibited from lobbying, due to the income tax deduction donors receive

  1. 501(c) (4) social welfare organization donors do not receive tax deductions for donations, so the organization is allowed to lobby and conduct political activity

  1. 501(c) (4) organizations may spend up to half of their budget on political activities in addition to lobbying and other advocacy and education activities

  1. Donations to 501(c) (3)s and 501(c) (4)s are not publicly disclosed

  1. Direct donations to candidates, campaigns, and political parties are subject to limits per individual by the federal election commission and are publicly disclosed

  1. Donations to independent expenditure committees (Super PACs; a type of 527 organization) are publicly disclosed

  1. 501(c) (3)s cannot fund 527 organizations

  1. 501(c) (4)s cannot directly fund candidates, but can fund Super PACs in unlimited amounts, up to half of their budget

  1. Super PACs are not coordinated with political campaigns and may receive unlimited contributions from individuals, labor organizations, corporations, and 501(c) (4)s

Sample route for political donors seeking to donate anonymously in amounts exceeding federal election commission limits: Donate to a 501(c) (4), which then grants funds to a Super PAC in the 501(c) (4)’s name

7 Social Welfare Organizations Active in U.S. Economic Policy

This study provides an in-depth look at C4 organizations active in U.S. economic policy debates. Focusing just on the topic of tax policy alone, one study found over 190 think tanks and advocacy organizations actively engaged in tax policy research and promotion in the U.S (Irvin and Sokolowski 2020). As in the UK (Pautz 2014), the U.S. economic policy arena is a highly partisan battlefield, with a majority of organizations producing research and disseminating information to bolster and legitimize sharply divergent political agendas. Furthermore, economic policy research and advocacy organizations in the U.S. are funded almost exclusively by private donors, in comparison to other policy organizations in countries where organizational revenue often includes government support (Kelstrup 2017; Miragliotta 2018).

Although this study focuses on the population of C4 social welfare advocacy organizations that are active in economic policy, the evidence illuminates practices that may be prevalent in other issue areas that have attracted high net worth donor funding; e.g. education policy, Social Security reform, energy and environmental regulation (including climate change-related legislation), judicial reform, and voting restrictions. Notably, some organizations advocate for preserving donor anonymity (e.g. People United for Privacy, Philanthropy Roundtable, Institute for Free Speech, ALEC Action).

The U.S. economic policy arena is a key policy environment to study due to the passage of federal tax reform legislation in December 2017 (Tax Cuts and Jobs Act). This legislation reduced income tax rates for high income individuals, sharply reduced estate tax rates, and dramatically lowered corporate income tax rates. In the year prior to the passage of the Tax Cuts and Jobs Act, however, polls indicated broad majority support for the exact opposite tax reform; increasing taxes on the wealthy (Gallup 2017; Pew Research Center 2017; Reuters/Ipsos 2017). As Plehwe et al. (2018) demonstrate, the impact of think tanks and advocacy organizations specifically on economic policy has also been considerable across Europe, as highly networked, right-leaning organizations have promoted austerity policy. Examining the ecosystem of U.S. economic policy advocacy organizations operating in 2016 allows a unique glimpse of a “win” for conservative or libertarian tax policy positions.

8 Economic Policy Advocacy Organizations Sample

Because C4s are often affiliated with 501(c) (3) think tanks, data collection began with lists of think tanks focusing on economic policy in the U.S. The lists included McGann’s Global Go to Think Tank Index Report (2016b); Think Tank Network Initiative (2016); University of Chicago Harris School of Public Policy’s Think Tanks Guide; and partisan policy network such as the State Policy Network, Atlas Network, State Priorities Partnership, and Economic Analysis and Research Network. Many advocacy C4s are not associated with think tanks, so additional organizations were identified from Post and Boris (2020) and grantee lists of donor-advised funds such as Donors Trust, Donors Capital, Democracy Alliance, New Venture Fund, and Tides. Considerable grant making occurs between C4s, with certain C4s acting as incubators, fiscal sponsors, and grantmakers to other C4s. Examples of these pass-through C4s include the Wellspring Committee, Hopewell Fund, Tides Advocacy, 1630 Fund, State Engagement Fund, and Open Society Policy Center. Foundations active in grant-making to economic policy also revealed several remaining C4s as grantees.

C4s from the initial list of U.S. organizations were then reviewed for economic policy coverage on their website. To be included in the study, the C4 website (or related 501(c) (3) or 527, if the C4 lacked a website) had to include at least four examples of economic policy verbiage in 2017: Testimony on pending legislation, podcasts, blog entries, research reports, convenings and conferences, and press releases. Two centrist organizations; Fix the Debt Coalition and Bipartisan Policy Center Action, are largely focused on federal debt reduction and do not otherwise espouse typically left- or right-leaning tax policy positions.

All C4s engaged in US or state-level economic policy advocacy, founded in 2015 or prior, and with 2016 total revenue above $100,000 were included in the dataset. The dataset encompasses the population of active organizations in this policy arena in 2016. While right-leaning economic policy advocacy organizations were highly engaged in tax policy issues in 2016, left-leaning advocacy organizations were often focused on minimum wage legislation, with tax policy being just one of several causes including environmental issues, LGBTQ rights, voting rights, racial justice, workers’ rights, and other concerns.

Selection of the organizations, therefore, resulted in a stratified sample of organizations actively engaged in economic policy advocacy in 2016. The final dataset, shown in Table 3, consists of 25 right-leaning C4s, two centrist, and 27 left-leaning organizations. For the purposes of this study, the classification of left, right, and center depended on the organization’s website verbiage vis-à-vis the Tax Cuts and Jobs Act of 2017 (pro vs. con), their stated mission, the partisan slant of their grantees, or membership in the partisan networks listed above.

9 Constructing the Index

Selecting attributes to include in the construction of a transparency index suggests the importance of replicability of the index by others. The indicator data must be publicly available. The indicator data must be salient to the issues of public engagement, donor control, and coordination with other organization. Index component adjustments (in this case, to scale each from 0 to 1) must be straightforward. Each of the nine index components are linked to contact with the public, connections with expressly political organizations, or the operational autonomy of the organization.

An illustration of an index used in a similar context is Transparify’s (2022) zero-to five-star transparency ratings of think tanks. Five stars describes a think tank that lists all donors on its website, identifies all funding sources and links that funding to specific projects. Their zero star rating describes opaque or highly deceptive think tanks displaying no information about their donors. By this definition, all 54 organizations in this study would have a zero star rating, due to non-disclosure of donors.

The data for the index in this research is obtained from IRS Form 990 financial returns and is publicly available. Explanatory power of the index must be measured in this context by observed behavior that is not already captured by the index. Because we want to include all observed behavior that is indicative of dark money operations in the index, we utilize data from an external watchdog organization to test the index validity. Finally, the adjustment of the components to fit the parameters of the index framework, requires some data truncation and other manipulation. These are explained in the discussions of index components below. After all index components are scaled to range from 0 to 1, the components are summed for each organization to obtain the organization’s index value.

A somewhat opaque organization can provide a handy conduit for political donations from multiple donors, among its other activities. A very opaque organization may exist as a vehicle for a single donor to carry out their expressed intentions. Thus, index construction assumes that a controlling donor will desire certain organizational characteristics in an effort to maintain control and secrecy. Index components and their IRS Form 990 source, enumerated below, address the publicness of the organization as expressed by personnel, ties to related organizations, and financial indicators of independence.

9.1 Number of Board Members (Form 990 Part I Line 4)

Having a small number of independent (uncompensated) board members may signal two incentives: First, a founding donor may prefer to keep the board as responsive as possible to the donor’s preferences. Second, the organization may prefer a small board to keep a low public profile. Ostrower (2007) reports that larger boards fulfill important fundraising and public education roles in charitable organizations, which suggests, at least for the 501(c) (3) context, a small board is a likelier option for an organization less concerned with garnering donations from the wider public. Sumption and Wyland (2021) summarizing practitioner and academic literature, report that optimal board size is about 8–9 members on the low end and 11–14 members on the high end. Many C4s in this dataset have very small boards. Some C4s are closely related to 501(c) (3) organizations, sharing staff and offices. For these organizations, the value for the board size is the greater of the 501(c) (3) board and the C4 board (many organizations have overlapping boards). For example, Heritage Action for America, a C4, has 4 board members. Its sister 501(c) (3), the Heritage Foundation, has 18 members, so the board size was recorded as 18. Because each index component must range from 0 to 1, the board size index component was recorded as 1 − (board size truncated at 25)/25.

As the number of board members in a given dataset varies, replicating this study with other data in other years or contexts would change the index as modeled above (the 25 representing the largest board size in the data). Thus, for comparability, it is sensible to pick one maximum board size for the index and remain with that value for consistent use of the index across studies, truncating extreme outliers. A board size of over 25 suggests an aggressive effort to utilize more board members as donors or bring in more perspectives to the board. For the dataset in this study, three mid-sized organizations had extremely large boards (26, 34 and 37 members), which were truncated at 25.

9.2 Number of Volunteers (Form 990 Part I Line 6)

A lack of volunteers could signal a disinterest in public engagement or a preference for privacy, or alternatively, merely a lack of success in engaging popular support for an obscure cause. However, measuring volunteer involvement is difficult if e-volunteers are counted. For example, Nelson (2019) reports political canvassing activities by members of the public, guided by apps provided by an organization. Any person downloading the app and forwarding a message of encouragement to vote to a friend could be counted as a volunteer. Zero volunteers, on the other hand, could serve as an indicator of a lack of public engagement. For this reason, this dataset records “0” for a reported value of zero or if left blank and one for utilizing volunteers. This variable was recorded as one minus the value in order to reflect the order of transparency in the other index components.

9.3 Website Words

This is the only variable not obtained from Form 990 data. Some organizations had no websites, indicating a lack of interest in advocating directly to the public. Others had minimalist websites, and some had very robust websites with over a million words (including videos, blog posts, media releases, and so on). A website word counter ( was used to provide a word count of each organization. Seven websites, though publicly visible, were inaccessible to the word counter, so these were hand-counted by copying and pasting material into a Word document. For organizations with no website, if there was a related 501(c) (3) or 527 with a website, the word count of the related organization was used as a proxy. C4 organizations were sometimes smaller subsidiaries of larger 501(c) (3)s, and sometimes the dominant organization with the 501(c) (3) functioning as a subsidiary “foundation” or “education fund.” For these linked organizations, the larger website of the two was recorded. As it was difficult to hand-count material well into the hundreds of thousands of words, and 100,000 words implies a robust amount of material to inform an inquiring public, this variable was truncated at 100,000. The value for index inclusion becomes

1 website words truncated at 100,000 100,000

9.4 Related to a 527 Organization (Form 990 Schedule R)

This indicator of organizational connection was recorded as 0 if none and one for one or more related 527 organizations. If a C4 controls or is controlled by another organization (for example, the board of organization A appoints the board of organization B), the related organization is listed in Schedule R (IRS 2021). The presence of a related 527 or PAC is not necessarily indicative of an intention to conceal activity from the public: The affiliated political organization may simply fulfill a function that the C4 is unable to do itself in a given election year. However, the control inherent in the affiliation could enable a donor or group of donors to more easily monitor the intent and outcome of their political funding.

9.5 Related to a 501(c) (3) Organization (Form 990 Schedule R)

If the C4 has a related policy institute or “education fund” conducting issue-related activities that are not expressly partisan, this implies some effort on the part of the linked organizations to develop new ideas and educate the public. A hypothetical donor with full control of an organization may not be expected to want to develop new ideas beyond their personal perspective, nor to waste resources on activity that is only indirectly linked to political influence. This variable is scored 0 if the C4 is related to one or more 501(c) (3)s, and one if it is not.

9.6 Grants Given to Political Organizations or Lobbying Expenses, Scaled by Total Expenses (Form 990 Schedule C Part I-A Line one plus Part IX Statement of Functional Expenses line 11d)

Expenditures on lobbying and on grants to 527s comprise a portion of total expenses in any given year, so this variable was computed as total political expenditures divided by total expenses for the year. Note that regardless of whether the organization was related to a 527, it could be giving grants to unrelated 527s, so this index component can measure different behavior than the prior component.

This variable excludes additional (sometimes huge) expenditures on issue advocacy carried out via other C4s. Many organizations in the data give substantial grants to other C4s (including other C4s in the dataset), but the C4 grants data does not detail whether those grants were for political purposes or not.

As with the other index components, expenditure on political activity and lobbying does not in by itself suggest stealth. The local library campaign, for example, may gather donations from its ardent supporters and spend up to half of its revenue on lawn signs, mailers, and political ads expressly urging voters to vote for the library ballot measure. It is only in combination with other index components that aggressive political spending can appear to be deliberately opaque in order to conceal donors’ identities.

9.7 Total Salaries (Form 990 Part I Line 15), Scaled by Total Expenses (Form 990 Part 1 Line 18)

An organization whose primary function is to serve as a pass-through funding device has little need for paid staff, regardless of the total organizational budget size. Thus, this variable is noted as

1 total salaries total expenses

Consultants’ fees can be classified as salary as well, through paying for the services of an employee employed elsewhere. The Form 990 lists the top five contractors, including consultants, if the funding exceeds $100,000. The proportion of employee labor versus other purchases (data from polling or other research and media buys), however, is usually not delineated. It is noted by Public Citizen, an advocacy group (Lincoln 2021), that many consulting firms serve clients whose operations are required by law to operate independently. That is, consulting firms, described as focusing on “media advocacy” or similarly unspecified activity in the Form 990, in some cases serve both the political candidate or campaign and the C4 organization, which suggests that the C4s are not operating independently.

The independent contractor section of the 990 includes expenditures on groups that function both as media buyers and strategy consultants, so it is not possible to determine how much of the independent contractor data refers specifically to staffing. This index component, therefore, limits its scope to salaried C4 employees, who cannot by law work directly with a political campaign.

9.8 Unrestricted Net Assets (Form 990 Part X Line 27), Scaled by Total Expenses (Form 990 Part I Line 18)

Organizational savings, especially in the form of assets that are unrestricted by a donor, provides the leadership of the organization decision-making discretion and an assurance of resilience during a future financial downturn (see Calabrese 2013; Fisman and Hubbard 2003; Irvin and Furneaux 2021). A donor with firm control over an organization is likely to be quite uninterested in the long-term survival of the organization, and instead focused on getting the donated funds spent in the current period. Like the board member index component above, this figure would change from year to year, based on the maximum value in the dataset. Therefore, a sensible maximum value must be selected now, and future figures that exceed this value could be truncated. Three years of savings is a generous target: If earnings on the savings average 5% annually, the three years of total expenses’ worth of unrestricted net assets could return investment earnings equal to 15% of total revenue (assuming an end-of-year surplus near zero). None of the organizations in this dataset exceeded a value of three for unrestricted net assets/total expenses.

The index component becomes 1 unrestricted net assets 3 × total expenses

Some organizations may have negative unrestricted net assets, meaning that the organization has so many liabilities and restrictions on assets that they have negative unrestricted net assets. To avoid values greater than one for this index component, negative values for unrestricted net assets were recorded as zero.

9.9 Fundraising Expenses (Form 990 Part I Line 16b) Compared to Total Grants and Contributions Received (Form 990 Part I Line 9)

An organization receiving the bulk of its revenue from one or a few key controlling donors is expected to have very low or no fundraising costs in comparison to funds raised. This fundraising ratio is converted to its index component value by subtracting from one:

1 fundraising expenses grants and contributions

For the two unfortunate organizations in the dataset whose fundraising expenses exceeded their grants and contributions, the index component was truncated at zero. Failing to truncate this at zero would produce an index component that reduces the impact of the remaining components of the index.

Not included in the index were several organizational characteristics worthy of discussion. First, the percentage of total revenue received from grants and contributions could, if a very high number, indicate that an organization is receiving only a small number of large gifts from donors, instead of revenue from a wide variety of fundraising activities. A diversified revenue stream requires a broader range of managerial effort (paid staff, etc.) than a simple donation-supported pass-through organization. The organizations in the data show extraordinarily high reliance on donated revenue, averaging 92% of total revenue. However, we lack information on whether that 92% comes from a small list of large donors or a large list of small donors. The local “vote for the library” campaign would be expected to be fairly reliant on small donations, for example, with no implication of exclusive donor control or stealth.

Second, the presence of organizational members would be indicative of a public-facing organization and could be considered a useful index component. Only two organizations in the dataset had membership revenue, however (Maine People’s Alliance and Utah Taxpayers Association). For example, the local Rotary Club would be expected to have members, but not the local “vote for the library” campaign. As membership is not typical of organizations in economic policy advocacy, this variable is not included in the dataset but could be incorporated in an index constructed for another area of C4 activity.

Third, a simple measure of political intensity is to measure the increase in total expenses in a non-presidential election year compared to a presidential year (every four years). Of course, political activity can be very intense in other years for Senate and Congress elections and for pending legislation, but the money, effort, and attention given to the national election is at a peak during presidential election years (e.g. FEC 2022 spending data). The data here revealed sharp increases in expenditures between 2015 and 2016. Given the inherently political nature of the topic, it would be expected that any organization, public-facing or not, would concentrate its spending on key periods in the political cycle. Thus, this measure was not included in the study.

As noted above all index components are scaled to fall between 0 and 1, so the index is the sum of all nine components, with a possible maximum value of 9.0. OECD (2008) discusses the practice and caveats of weighting index components by importance. Depending on where one’s organization falls in the index ranking, organizations would be expected to argue for different weighting that advantages their index value, in addition to selecting a different mix of components in the first place. Even the necessary truncation of the index components is, as OECD (2008) notes, a value judgement. The advantage of using a simple sum of unweighted index components is its straightforward nature and avoidance of at least the appearance of researcher bias.

A Pearson’s bivariate correlation matrix, shown in Table 2, indicates all but one index components are positively correlated (only one is negative, but is not statistically significant). The index component that is correlated most strongly with the others is salaries as a percent of total expenses. This makes intuitive sense, as a pass-through organization that exists mainly to channel money to other political organizations would not be expected to need employees itself.

Table 2:

Pearson’s correlation scores for index components, with 2-tailed tests of significance.

Board Volunteers Website 527 501c3 Political $ Salaries Net Assets Fundraising
Board 1 0.352 (0.009) 0.372 (0.006) 0.111 (0.425) 0.206 (0.134) 0.190 (0.158) 0.529 (<0.001) 0.215 (0.119) 0.484 (<0.001)
Volunteers 0.352 (0.009) 1 0.448 (<0.001) 0.169 (0.222) 0.226 (0.100) 0.038 (0.785) 0.327 (0.016) (0.004) (0.980) 0.260 (0.057)
Website 0.372 (0.006) 0.448 (<0.001) 1 0.292 (0.032) 0.558 (<0.001) 0.206 (0.134) 0.508 (<0.001) 0.133 (0.337) 0.205 (0.136)
527 0.111 (0.425) 0.169 (0.222) 0.292 (0.032) 1 0.233 (0.091) 0.149 (0.282) 0.309 (0.023) 0.229 (0.095) 0.034 (0.808)
501c3 0.206 (0.134) 0.226 (0.100) 0.558 (<0.001) 0.233 (0.091) 1 0.205 (0.137) 0.358 (0.008) 0.195 (0.159) 0.258 (0.059)
Political$ 0.190 (0.168) 0.038 (0.785) 0.206 (0.134) 0.149 (0.282) 0.205 (0.137) 1 0.134 (0.334) 0.290 (0.033) 0.177 (0.200)
Salaries 0.529 (<0.001) 0.327 (0.016) 0.508 (<0.001) 0.309 (0.023) 0.358 (0.008) 0.134 (0.334) 1 0.163 (0.239) 0.328 (0.016)
Net assets 0.215 (0.119) (0.004) (0.980) 0.133 (0.337) 0.229 (0.095) 0.195 (0.159) 0.290 (0.033) 0.163 (0.239) 1 0.424 (0.001)
Fundraising 0.484 (<0.001) 0.260 (0.057) 0.205 (0.136) 0.034 (0.136) 0.258 (0.059) 0.177 (0.200) 0.328 (0.016) 0.424 (0.001) 1
Significant at 0.01 level (2-tailed test)
Significant at 0.05 level (2-tailed test)

10 Dark Money Index Results

Table 3 shows a wide range of values for the composite index, from 0.8 (Fix the Debt Coalition Inc) to 8.3 (Majority Forward) out of a possible 9.0 points. As described above, the organizations in the dataset were chosen based on their involvement in economic policy advocacy, not on transparency characteristics. Thus, the organizations show a wide range of index values, budget size, and operational features. Total expenses in 2016 are shown to provide an indicator of size. The political lean is also provided, illustrating the mix of politically active C4s in this field. Variable values – number of board members, presence of volunteers, amount of website words, direct relation to a 527 or 501(c) (3) organization, among others, illustrate how these components range along with the total index. Additional index component values are provided in Table 4.

Table 3:

Economic policy organization descriptive statistics, ranked by dark money characteristics.

501(c) (4) Economic Policy Advocacy Dark Money Political Total Board Volunteers Website Related to Related to
Organization Name Index Value Lean Expenses Members Words 527 PAC 501(c) (3)
Fix the debt coalition Inc. 0.8 Centrist $533,127 7 Yes 145,320 No Yes
Citizen action of Wisconsin, Inc. 1.9 Left $894,799 22 Yes 91,733 No Yes
National Taxpayers union 2.2 Right $1,135,884 13 Yes >1,000,000 No Yes
Friends committee on national legislation 2.2 Left $3,105,264 12 Yes 643,968 No Yes
Ripon society 2.4 Right $2,958,556 21 Yes 51,131 No No
Heritage action for America 2.7 Right $12,154,755 4 Yes 17,455 No Yes
Bipartisan policy center action, Inc. 2.8 Centrist $2,435,596 7 Yes 162,030 No Yes
Kentuckians for the Commonwealth 3.0 Left $264,854 18 Yes 197,366 No Yes
Momsrising Together 3.1 Left $3,442,301 2 Yes 184,599 No Yes
Citizens for tax justice 3.2 Left $270,371 17 Yes >1,000,000 No No
Americans for tax reform 3.5 Right $4,222,143 2 No 501,368 No Yes
Americans for Prosperity 3.5 Right $58,306,180 5 Yes 338,747 No Yes
Open society policy center 3.7 Left $12,680,864 4 Yes 1024 No Yes
People’s action 3.7 Left $1,417,374 37 Yes 245,125 No No
NEO Philanthropy action fund 3.7 Left $8,101,542 2 Yes 97,988 No Yes
Maine People’s Alliance 3.7 Left $1,362,514 14 Yes 135,622 No No
Libre Initiative trust 3.8 Right $5,453,024 1 Yes 658,560 No Yes
Working Families Organization 4.0 Left $6,531,605 8 Yes 422,092 No No
Tesseract 4.0 Left $460,402 3 No 466,947 No Yes
Public Citizen, Inc. 4.0 Left $6,242,733 8 No 219,987 No Yes
Center for American Progress action fund 4.1 Left $8,240,074 9 Yes 139,494 No No
Ballot Initiative strategy center 4.1 Left $1,728,695 12 Yes 65,781 No No
Fair share, Inc. 4.2 Left $1,311,972 5 No 45,720 No Yes
FreedomWorks Inc. 4.2 Right $7,937,214 8 Yes 380,878 Yes Yes
People for the American way 4.3 Left $6,162,094 26 No 511,789 Yes Yes
Government Accountability Alliance 4.4 Right $6,745,944 7 No 0 No Yes
Campaign for America’s future 4.4 Left $311,793 4 Yes 40,938 Yes Yes
Center for freedom and Prosperity, Inc. 4.6 Right $117,218 2 No 542,470 No Yes
Taxpayers protection Alliance 4.8 Right $764,750 3 Yes 480,000 No No
Utah Taxpayers association 5.2 Right $467,247 23 No 10,311 No No
Americans for fair taxation 5.3 Right $101,252 9 No 160,459 No No
Job Creators network Inc. 5.4 Right $3,463,419 4 No 0 No Yes
Club for Growth 5.4 Right $9,778,725 6 Yes 97,000 Yes No
Illinois Opportunity project 6.0 Right $4,335,388 3 No 127,904 No No
16 Thirty fund 6.1 Left $19,660,860 2 Yes 1500 No No
Right way Initiative, Inc. 6.2 Right $2,453,303 2 Yes 0 No No
New futures fund 6.3 Left $618,691 3 No 0 No No
Real tax reform now! 6.3 Right $154,555 3 No 0 No No
Tides Advocacy/The advocacy fund 6.4 Left $9,560,779 4 No 19,500 No No
Main Street Growth and Opportunity coalition 6.5 Right $892,326 3 No 21 No No
America votes 6.7 Left $13,288,978 23 No 29,585 Yes No
Votevets action fund Inc. 6.8 Left $5,521,772 2 No 89,077 Yes No
American action network Inc. 6.8 Right $43,998,646 10 Yes 13,650 Yes No
Citizens for Strength & Security fund 6.9 Left $824,178 2 No 0 No No
Wellspring committee 7.0 Right $31,554,570 0 No 0 No No
Ending spending, Inc. 7.0 Right $7,550,713 2 Yes 439 Yes No
One nation 7.0 Right $63,285,306 1 No 27,735 No No
Crossroads grassroots policy Strategies 7.1 Right $15,485,402 2 No 62,131 Yes No
America Rising squared Inc. 7.4 Right $1,133,878 3 No 0 Yes No
Freedom Frontier 7.6 Right $5,905,454 3 No 0 No No
Americans for economic Growth 7.7 Left $2,219,040 2 No 0 Yes No
Patriot majority 8.0 Left $2,864,381 2 No 4883 Yes No
General Growth fund 8.2 Left $676,369 0 No 0 Yes No
Majority Forward 8.3 Left $35,766,803 2 No 81 Yes No
Table 4:

Operational characteristics of economic policy organizations by dark money index value.

501(c) (4) Economic Policy Advocacy Open Dark Money Political Total Political Salaries % Assets Fundraising
Organization Name Secrets Index Value Lean Expenses Spending % of Expenses Ratio Ratio
Fix the debt coalition Inc. No 0.8 Centrist $533,127 0% 79% 136% >100%
Citizen action of Wisconsin, Inc. No 1.9 Left $894,799 1% 83% 91% 9%
National Taxpayers union No 2.2 Right $1,135,884 0% 60% 154% 19%
Friends committee on national legislation No 2.2 Left $3,105,264 0% 45% 141% 28%
Ripon society No 2.4 Right $2,958,556 0% 39% 247% >100%
Heritage action for America No 2.7 Right $12,154,755 0% 28% 40% 18%
Bipartisan policy center action, Inc. No 2.8 Centrist $2,435,596 0% 46% 65% 0%
Kentuckians for the Commonwealth No 3.0 Left $264,854 48% 29% 68% 21%
Momsrising Together No 3.1 Left $3,442,301 2% 65% 3% 6%
Citizens for tax justice No 3.2 Left $270,371 0% 85% 56% 4%
Americans for tax reform No 3.5 Right $4,222,143 0% 39% 251% 18%
Americans for Prosperity Yes 3.5 Right $58,306,180 23% 38% 12% 11%
Open society policy center No 3.7 Left $12,680,864 12% 0% 74% 0%
People’s action No 3.7 Left $1,417,374 16% 33% 22% 3%
NEO Philanthropy action fund No 3.7 Left $8,101,542 0% 2% 0% 1%
Maine People’s Alliance No 3.7 Left $1,362,514 12% 71% 21% 4%
Libre Initiative trust Yes 3.8 Right $5,453,024 23% 43% 0% 0%
Working Families Organization No 4.0 Left $6,531,605 5% 63% 22% 7%
Tesseract No 4.0 Left $460,402 0% 56% 54% 15%
Public Citizen, Inc No 4.0 Left $6,242,733 0% 37% 63% 8%
Center for American Progress action fund No 4.1 Left $8,240,074 26% 70% 33% 1%
Ballot Initiative strategy center No 4.1 Left $1,728,695 0% 43% 67% 7%
Fair share, Inc. No 4.2 Left $1,311,972 2% 21% 273% 1%
FreedomWorks Inc. No 4.2 Right $7,937,214 0% 20% −24% 26%
People for the American way Yes 4.3 Left $6,162,094 0% 33% 22% 29%
Government Accountability Alliance No 4.4 Right $6,745,944 0% 30% 2% 4%
Campaign for America’s future No 4.4 Left $311,793 0% 55% −19% 28%
Center for freedom and Prosperity, Inc. No 4.6 Right $117,218 75% 87% 25% 15%
Taxpayers protection Alliance No 4.8 Right $764,750 0% 0% 36% 0%
Utah Taxpayers association No 5.2 Right $467,247 4% 75% 30% 0%
Americans for fair taxation No 5.3 Right $101,252 0% 0% 83% 2%
Job Creators network Inc. No 5.4 Right $3,463,419 0% 18% 0% 13%
Club for Growth Yes 5.4 Right $9,778,725 17% 28% 9% 22%
Illinois Opportunity project No 6.0 Right $4,335,388 30% 15% 6% 0%
16 Thirty fund Yes 6.1 Left $19,660,860 18% 2% 2% 0%
Right way Initiative, Inc. Yes 6.2 Right $2,453,303 41% 9% 1% 8%
New futures fund No 6.3 Left $618,691 0% 27% 97% 0%
Real tax reform now! No 6.3 Right $154,555 3% 32% 30% 18%
Tides Advocacy/The advocacy fund No 6.4 Left $9,560,779 3% 28% 7% 1%
Main Street Growth and Opportunity coalition No 6.5 Right $892,326 0% 0% 103% 0%
America votes No 6.7 Left $13,288,978 36% 33% 15% 7%
Votevets action fund Inc. Yes 6.8 Left $5,521,772 15% 16% 52% 5%
American action network Inc. Yes 6.8 Right $43,998,646 49% 4% 11% 3%
Citizens for Strength & Security fund No 6.9 Left $824,178 0% 0% 15% 1%
Wellspring committee No 7.0 Right $31,554,570 0% 1% 4% 0%
Ending spending, Inc. Yes 7.0 Right $7,550,713 42% 9% 78% 1%
One nation Yes 7.0 Right $63,285,306 40% 1% 4% 1%
Crossroads grassroots policy Strategies Yes 7.1 Right $15,485,402 0% 6% 30% 2%
America Rising squared Inc. No 7.4 Right $1,133,878 1% 17% 82% 5%
Freedom Frontier No 7.6 Right $5,905,454 75% 0% 10% 0%
Americans for economic Growth No 7.7 Left $2,219,040 0% 1% 56% 1%
Patriot majority Yes 8.0 Left $2,864,381 26% 9% 18% 2%
General Growth fund No 8.2 Left $676,369 24% 0% 19% 2%
Majority Forward Yes 8.3 Left $35,766,803 42% 1% 6% 1%

C4s with index values up to 3.0 could be characterized as transparent organizations. C4s with index values between 3.0 and 5.0 operate with some opaque characteristics. This category is contentious because several of the listed organizations such as Americans for Prosperity and Open Society Policy Center have come under criticism for being dark money operations. Americans for Prosperity is especially interesting, as its funding is opaque and said to be controlled by one or just a few high net worth donors. On the other hand, it has built a large presence on the ground with a huge employee base and strong engagement with the public. The index strata from 5.0 to 7.0 (quite opaque) and above 7.0 (very opaque) include many large advocacy organizations, as Table 3 shows, with very small boards, paltry websites, and nonexistent staffing.

11 Verification of Index Validity

To check the accuracy of the index, an external source of validating data is necessary. Of course, if a perfect indicator of dark money operations existed, there would be no need to construct an index. Several watchdog organizations track campaign finance (e.g. InfluenceWatch, SourceWatch). Among them, OpenSecrets criticizes both left- and right-leaning opaque political financing. Utilizing Federal Election Commission data on political spending and tax return reporting, OpenSecrets reviews the largest political spenders each election year.

The funders that do not disclose their donors (c4 organizations are not required to do so) were included on OpenSecrets’ list of dark money organizations – including such organizations with strong public engagement such as the NRA Institute for Legislative Action, League of Conservation Voters, Planned Parenthood Action Fund, and Humane Society Legislative Fund. For the presidential election year of 2016, OpenSecrets listed 95 organizations (both left- and right-leaning) as “dark money” groups ( 2021). These organizations span a range of advocacy topics and are thus not limited to organizations focusing on economic policy.

Although the OpenSecrets list of dark money groups is a flawed source for validating the index, 13 of the 54 organizations in the dataset appeared on OpenSecrets’ 2016 dark money list, as shown in Table 4. First, to test correlation of the OpenSecrets’ binary yes/no dark money designation with the nine index components, a second Pearson’s correlation matrix was constructed. The OpenSecrets indicator was statistically significantly correlated with four index components: relation to a 527 organization, percentage of expenses spent on political activities, salaries as a percent of total expenses, and unrestricted net assets as a percentage of total expenses.

Second, to evaluate the relation of the total index with the OpenSecrets designation, a logistic regression with OpenSecrets’ dark money designation as a dependent variable was run, with the index as the independent variable of interest. Control variables included the political lean, natural log of total expenses, and age of the organization (year founded). The Nagelkerke R squared value for the logistic regression was 0.529, which reflects the relatively small dataset size. The only statistically significant independent variable was total expenses; that is, the organizations appearing on OpenSecrets’ list of dark money organizations are more likely to be larger. Political lean was not significant, which confirms journalists’ observations that both left-and right-leaning advocacy organizations operate actively as dark money players (Vogel and Goldmacher 2022). The index was not statistically significantly linked to appearance in OpenSecrets’ listing. Certainly the larger C4s active in political advocacy garner more attention from investigative journalists, but the lack of the index’s identifiable link with the OpenSecrets’ dark money listing may simply reflect that the organizations included in this study were selected on the basis of advocacy topic, not on dark money characteristics. Thus, the validity of the index as a dark money indicator is more supported by the correlation results described above.

12 Individual Issue Entrepreneurship, Not Social Movements

The enthusiasm with which a few C4s are using donations and grants to finance political activities is illustrated with clarity among the organizations in this study with the highest index values. These C4s have sparse or no websites, have token boards of three or even fewer members, and often gather tens of millions of dollars in annual donations and grants despite little to no fundraising effort. Clearly, this is not an illustration of social movement-building by engaging the public in ultimate pursuit of a collective good or advancing the rights of the disadvantaged (Berry 1977; Buffardi et al. 2017; Greenspan 2014; Tesh 1984). Instead, the data supports the characterization of elite operators, described by Goss (2016) as issue entrepreneurs. Lacking evidence of a typically nonprofit collective managerial effort – robust board membership, volunteers, employees, and an energetic effort to communicate with the public – these high-index organizations may be illustrating “issue entrepreneurship” in a surprisingly strict sense of the phrase. That is, a single donor or handful of donors may easily control the activities of the C4 as they would a for-profit firm.

Beckel’s (2018) evidence with Federal Election Commission data regarding the overwhelmingly negative slant of dark money media financing adds a discouraging nuance to the C4’s financing role. Not only is there no transparency about where the financing originates from, but the money is being used primarily to attack political opponents. Beckel’s evidence suggests the collateral damage from a policy war among major donors may include democratic civility.

However illustrative the index in in this study may be, its limitations include several concerns. First, there exists no perfect validating source for the index because of the anonymity of the process itself. The construction of the index requires attention to detail and truncation of certain outlier component values. Each component of the index measures perfectly legal activity; it is only when several characteristics are combined into the index that the behavior of certain organizations appears to be concerning. Finally, the source data – the Form 990 reports – are available to the public only after two or more years, leaving an organization with plenty of time to operate without any public scrutiny.

It is hoped, however, that indexing might serve as a reference tool when little information is forthcoming from the organization’s bland name or innocuous website. Measuring opaque tactics and publicizing a summary indicator can help draw attention to the community of C4s engaged in shielding major donors from public knowledge of their political influence. Publication of the index may encourage all advocacy organizations to consider how to enhance their transparency to the public. The index can easily be utilized in the study of other policy arenas, including but not limited to educational reform, entitlement reform, basic rights, environmental regulation and climate change mitigation, voting reform, and constitutional reform.

The C4 organizational form itself is above reproach: As Koulish (2016) describes, C4 organizations enhance our democracy with a wide variety of beneficial activities. Surely, however, the presence of both left- and right-leaning dark money players in politics begs for a bipartisan intervention effort. If single or very small groups of corporations or individuals are the sole sources of the funding, this behavior places the very definition of a C4 social welfare organization under doubt: an organization “promoting the common good and general welfare of the community” (IRS, Chick and Hennchey 1995). Further, the utilization of a C4 as an end run around Federal Election Commission campaign spending limits for individuals suggests that the C4 is functioning as a “straw donor” for that individual (FEC 2014); a practice that is strictly illegal.

Publicly reporting the source of the largest donations (regardless of the circuitous re-granting route taken) would reveal the individuals behind the largest C4 political financing operations. Federal Election Commission regulations already perform this transparency function for political campaign gifts that are direct from small-donation individuals: This courtesy to the public should be extended by shutting down the C4 anonymizing loophole for large gifts.

Corresponding author: Renée A. Irvin, School of Planning, Public Policy & Management, University of Oregon, 1408 University Street, Eugene, OR, 97403-1299, USA, E-mail:


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Received: 2022-07-15
Accepted: 2023-02-28
Published Online: 2023-03-23

© 2023 the author(s), published by De Gruyter, Berlin/Boston

This work is licensed under the Creative Commons Attribution 4.0 International License.

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