Campaign finance primer: What do “soft,” “hard” and “dark money” actually mean?

Dark money. Soft money. Hard money.

When it comes to campaign cash, it’s complicated.

So, as the 2018 election cycle heats up, here’s some clarification about what certainly will be an infusion of tens of millions of dollars into Colorado campaigns, with examples and some resources to explore further. Also, a movie suggestion!

Disclosure: Congress and the Federal Election Commission set the rules for how much candidates and political action committees (PACs) may accept in contributions and how transparent they need to be in revealing where donations come from and where the money is spent. Traditional PACs are, for the most part, subject to donation limits, and are limited in the donations they make to candidates or other committees.

Super PACs may accept unlimited donations and spend unlimited amounts as long as they don’t coordinate with candidates, or their campaigns, but we’ll get to them in a bit.

At the state level, each state has its own laws and rules on campaign finance disclosure. The Washington-based Campaign Finance Institute has a super-cool online tool to explore disclosure laws in all 50 states. Among the things you’ll learn there: Colorado had the second-lowest donation limit for legislative candidates in the nation in 2016. Also, we’re one of only 10 states that didn’t require disclosure on all political ads in 2016.

Hard money: Typically, this is money whose donor is disclosed and is spent by candidates and/or political parties, according to the Center for Responsive Politics.

Soft money: This is money from groups outside a campaign or political party, and by law it’s supposed to be spent without input from either. At least, outside groups aren’t supposed to coordinate with candidates or political parties. This is the area where you’ll find…

Dark money: This term first surfaced in 2010 in coverage by the nonprofit Sunlight Foundation, which tracks money in politics.

Dark money comes from a political nonprofit that, under federal tax law, doesn’t have to publicly disclose its donors. These include 501(c)(4)s, known as “social welfare” groups; 501(c)(5)s, including labor unions; and 501(c)(6)s, which are business associations such as chambers of commerce or Pharmaceutical Research & Manufacturers of America, aka PhRMA.

“We know the money is spent, we know who is spending the money,” says Denise Roth Barber, managing director of the National Institute on Money in Politics. “But we don’t know where it came from.”

Nonprofits often spend dark money during periods between a primary and general election. As long as their efforts don’t mention the “magic” words of “vote for” or “vote against,” the money spent doesn’t have to be disclosed based on a 1976 court ruling. So, often, these ads praise a politician and suggest you call him or her and share that praise. Sometimes they criticize a politician and suggest you call and give them a piece of your mind.

One recent example is American Action Network’s TV ads and mailers praising Republican U.S.  Rep. Mike Coffman for his work on curbing the national opioid crisis. Coffman faces Democrat Jason Crow in a 6th Congressional District contest most consider a toss-up. American Action doesn’t disclose its donors, but some of the groups that donate to the network do have to disclose that money. Among them:, PhRMA, which gave $6,058,825 to American Action Network in 2016.

“At the federal level, if you route your spending through an opaque nonprofit … then it becomes utterly impossible for the public to find the original source of the money,” says Ciara Torres-Spelliscy, a law professor at Stetson University and a fellow with the Brennan Center for Justice at New York University School of Law.

Another dark money example is a recent TV ad campaign aired by Citizens United for Families. Those commercials criticize U.S. Rep. Scott Tipton, a Republican from Colorado’s 3rd Congressional District, for his vote to repeal the Affordable Care Act. Despite that criticism, the ads don’t go so far as to urge viewers to vote against Tipton in his contest against former state Rep. Diane Mitsch Bush, a Democrat, in the district that spans from Pueblo to the Western Slope. Citizens United for Families is a relatively new nonprofit, so there are no tax returns or other information that would reveal who’s bankrolling the group and the TV ads.

Sometimes nonprofits send money to state or federal super PACs that, under a couple of 2010 court cases, may accept unlimited donations and spend unlimited amounts as long as they don’t coordinate with candidates or their campaigns. That way, they’re legally able to tell voters to vote for or against a candidate or ballot issue, creating an extra, legal layer of darkness and secrecy shrouding where the money comes from.

“With the super PACs, as long as they’re independent, you can raise money from any source as long as it’s not foreign,” Torres-Spelliscy says. “They can take in money from anywhere in any amount.”

In the months leading up to Colorado’s gubernatorial primary in June, there were several examples of dark money spending..

The Sierra Club’s Colorado super PAC spent about $600,000 on TV ads and mailers supporting Congressman Jared Polis in the four-way Democratic gubernatorial primary. The money came from the national Sierra Club, a nonprofit. When asked who the donors were, a spokesman replied in an email, “our members and supporters.” Without any specifics about the source of those funds, they qualify as dark money.

In the four-way Republican primary, a super PAC called Coloradans for Fiscal Responsibility aired TV ads opposing businessman Victor Mitchell and supporting Treasurer Walker Stapleton. The ads cost nearly $500,000. Of that, $400,000 came from the nonprofit group Colorado Taxpayers’ Advocate Fund. It’s unclear where that group gets its money.

An effort to keep dark money from getting even darker: The nonprofit groups that often fuel the super PACs have been required to report their donors to the IRS, which regulates them. But a recent IRS rule would end that requirement, so even regulators wouldn’t know the source or sources of a nonprofit’s cash.

This week, Colorado U.S. Sen. Michael Bennet and others introduced the “Spotlight Act” to reverse that decision. The bill would have to pass the Senate and the House and be signed by the president to take effect. It impacts the nonprofits’ federal tax filings, which are due every April.

A legal battle to watch: Former Republican Congressman and 2006 and 2014 gubernatorial nominee Bob Beauprez is appealing a 2017 state ruling that his nonprofit, Colorado Pioneer Action, acted as a political committee when it researched and advocated for certain candidates in 2016. That included working for now Sen. Bob Gardner in his Colorado Springs primary against former state Rep. Gordon Klingenschmitt. The Denver-based group Campaign Integrity Watchdog, run by former Republican political consultant Matt Arnold, brought the case against Beauprez. If the ruling is ultimately upheld, Beauprez would have to pay a fine and disclose donors to Pioneer Action.

A movie to watch: Want a deep dive into the power of dark money? Consider the documentary “Dark Money,” which follows a Montana reporter trying to track down the influence of a nonprofit group there. It screens starting Friday at Denver’s Esquire Theatre. At the Saturday showing, Colorado Common Cause Executive Director Amanda Gonzalez will lead a question-and-answer session including Sarah Arnold, a Colorado resident (and Matt Arnold’s wife) who played a role in the Montana case featured in the film.

Photo by Eva Rinaldi via Flickr Creative Commons