Dems pressure Biden to crackdown on 'dark money,' despite benefiting from it in 2020 election

More than three dozen Senate Democrats are pushing President Biden to overturn a Trump-era policy that allows certain tax-exempt organizations to shield their donors' names, even as they pour money into U.S. elections.

"This policy weakens federal tax laws, campaign finance laws, and longstanding efforts to prevent foreign interference in U.S. elections," the lawmakers wrote in a letter addressed to Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig on Tuesday. 

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The group, led by Sens. Amy Klobuchar, D-Minn., Jon Tester, D-Mont., and Ron Wyden, D-Ore., took issue with a Treasury Department rule from July 2018 that certain nonprofits are no longer required to disclose donor identities and addresses in their IRS tax filings.

"As secret campaign contributions continue to pour into federal elections, this IRS rule is a major step backwards for transparency and will allow dark money to continue to corrode our political system," the senators said. "The IRS needs every tool at its disposal to ensure that these organizations are complying with the law."

The Democrats' pressure on the Biden administration to crack down on dark money comes even though their party benefited from a record-shattering amount of anonymous donations during the 2020 election.

A report published by the Center for Responsive Politics shows that "dark money" topped $1 billion during the recent election cycle. That includes about $660 million in contributions from anonymous donors to outside groups – with about $514 million going toward liberal groups, compared to the roughly $200 million that boosted Republicans. 

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Critics of dark money, which obscures the source of the funds, argue that voters should know who's funding political advertisements and campaigns. The Campaign Legal Center, a nonpartisan group, has called it a "serious threat to our democracy," and Issue One, another nonpartisan group that aims to reduce the influence of money in politics, has called it "the most toxic force in politics."

Although Democrats have previously introduced legislation to crack down on dark money donations, it did not stop them from benefiting anonymous donations themselves as they fought to defeat Donald Trump and win back control of the Senate.

Biden, for instance, benefited from about $174 million in anonymous donations to groups that supported him, far outstripping the $25.2 million spent on behalf of Trump, the report says.

Each of the top pro-Biden super PACs, including Future Forward USA and Priorities USA Action, received multimillion-dollar contributions from Sixteen Thirty Fund. 

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Sixteen Thirty Fund, which operates as a 501(c)(4) nonprofit and bills itself as "dedicated to supporting an entrepreneurial, creative, and ambitious start-up culture in the nonprofit advocacy world," is a dark money group that directs funds from secret donors to projects it sponsors. This effectively allows it to operate anonymously. It acts as a fiscal sponsor for more than 50 groups that lack tax-exempt status or do not exist as separately incorporated entities.

The group is closely tied to Arabella Advisors, a firm that advises donors and nonprofits about where to give money. It was founded by former Clinton administration appointee Eric Kessler, who serves as the president and chair of Sixteen Thirty Fund.