Washington hates secrets.
But when an innocuous-looking group called the Impetus Fund received a $64 million donation from an anonymous source in the summer of 2020, it sparked a guessing game with broader political implications.
The anonymous donations were sent through a series of accounts and ultimately Joe Biden defeats Donald Trump In 2020 Presidential ElectionCritics say it's indicative of an increasingly opaque funding system. 2024 Election It could reach a scale far surpassing that of any previous election cycle.
The source of the donation remains unclear, but not for a lack of trying: Fox News first reported on the strange donation in 2023 but was unable to track down the donor's identity, and an entrenched army of public interest groups and investigative journalists trying to unmask big donors have also come up empty.
Most speculate that the money came from a single ultra-wealthy Biden supporter. But the money also may have come from closely held companies or shell corporations, an increasingly common tactic used by wealthy donors who want to add an extra layer of anonymity to their political giving. The mystery of the $64 million remains unsolved. While legal, critics say it highlights problems with today's campaign finance system.
“Without information about who is funding groups that are spending to influence elections, voters won't know who is trying to color their views and will be unaware of the potential conflicts of interest donors have and vested interests in the election outcome,” said Anna Massolia, editorial and research manager at Open Secrets, a nonpartisan watchdog group that tracks the influence of money in politics.
Massoglia is one of the most dogged detectives tracking the trail of money in American politics. She and other campaign finance watchdogs have developed a solid theory about how the money moved: After it got to Impetus Fund, a tax-exempt 501c4 organization, the donations passed through a series of organizations in a kind of shell game that hid from voters the interests and purposes behind the money and the messaging, with each step further obscuring the identity of the funding source. 501c4 nonprofits are required by the IRS to have promoting social welfare as their primary function and are not required to reveal their donors.
First, $55 million of the initial donations were transferred to Future Forward USA Action, the nonprofit arm of Biden's super PAC, which had been named by President Biden's allies as the main super PAC supporting his reelection. Then, just weeks before the 2020 election, Future Forward USA Action transferred $60 million to FF PAC, better known as the main election committee, which is also a super PAC. teeth Although Future Forward is required to disclose its donors, because it received the money from its own nonprofit, the source of the donations remained secret. As long as Future Forward did not explicitly align itself with the Biden campaign, it was free to spend the money on the campaign, including explicitly endorsing candidates.
“This kind of laundering of dark money is very commonplace now,” said Craig Holman, a campaign finance expert at Public Citizen, a campaign finance group that advocates for greater transparency in the campaign finance system. “It's an unfortunate situation.”
Future Forward declined to comment.
Democrats have long decried the lack of transparency in the campaign finance system and have called for shutting it down. Loan sharks This is a loophole that currently exists in the law, but some critics say it reeks of hypocrisy.
“For too long, the left has been playing the blame game on dark money while at the same time relying entirely on it to fuel Biden's reelection campaign,” said Caitlin Sutherland, executive director of Americans for Public Trust, a right-wing government watchdog group.
Some say it's unrealistic to expect Democrats to unilaterally disarm. “Not setting up super PACs and not taking dark money would be a big ask of Biden,” Public Citizen's Holman said.
Biden and his campaign have spoken out on both sides of this debate multiple times: In September 2022, the president appeared in the White House briefing room to endorse a “disclosure bill” that would require political groups and nonprofits to disclose donations over $10,000.
“There is a lot of dark money flowing that can influence our elections,” Biden said. “Dark money undermines public trust.”
But when asked directly about the proliferation of dark money that Biden's efforts are benefiting from, aides offered a different perspective. “The stakes in this election are enormous,” one Biden adviser told CBS News. “We're going to use every legal tool available to us to defend our democracy.”
Or, as one Democratic strategist put it, “You don't show up to a gunfight with a knife.”
A new era for anonymous donors
The most sweeping campaign finance laws of modern times were enacted almost 50 years ago. Watergate Scandal At the time, campaigns received unlimited, untraceable amounts of money, sometimes in suitcases of cash. In 1974, Congress placed major new limits on campaign contributions from individuals, corporations, and political groups. It also created the Federal Election Commission to enforce those limits.
But election watchdogs say money, like water, always seems to find a way. Within a few years, changes to federal election campaign law had ushered in an era of unlimited contributions from corporations and unions that were supposed to be limited to so-called “party-building” activities, but the limits were easily circumvented to benefit campaigns.
In 2002, Congress passed the McCain-Feingold Act, which aimed to close these loopholes. But just eight years later, a series of Supreme Court decisions struck down spending limits for corporations and unions, fundamentally changing the way campaign finance works. Whether they knew it or not, the Supreme Court ushered in the era of super PACs, and with them the proliferation of other nonprofits that aren't required by U.S. tax law to disclose their contributions.
So-called dark money began to flow in large quantities, and an ecosystem of opaque groups began to form to collect and distribute it, one of which was the Impetus Fund.
The Democratic Party's Dark Net
Located on the eighth floor of a Washington, DC, office building, the Impetus Foundation gives little impression of being anything more than a vehicle for raising and redistributing money. There's no mention of Impetus on the office directory in the hallway, and a receptionist who serves several businesses on the floor says she rarely or never meets anyone associated with the organization.
“They're virtual clients,” she says brightly. Its website is similarly plain, with a bland statement about its mission: “Impetus Fund works with changemakers across the country to create a more inclusive, accessible, and vibrant democracy,” it says. Impetus Fund's president is Ezra Reese, head of political law at the Elias Law Firm, founded by Marc Elias. Elias, a longtime Democratic lawyer who served as general counsel to Hillary Clinton and John Kerry's presidential campaigns, founded the firm with the goal of “electing Democrats, supporting voting rights, and helping progressives make change,” the website says.
Impetus was founded by Arabella Advisors, a progressive Washington, DC firm that manages a network of nonprofits that today funnel more dark money into U.S. elections and political campaigns than either side of the political divide. Founded in 2005 as a go-between for tax-exempt organizations and charitable donors, Arabella provides back-office functions for nonprofits, including legal advice, human resources and accounting.
One of the company's services is helping donors maintain anonymity. There are many valid reasons why charitable donors might want to remain anonymous. Some are rooted in modesty, others want to avoid being pressured into giving differently. When it comes to political giving, maybe they don't want to be controversial in these polarized times. But advocates of good government argue that voters have a right to know who is behind the tsunami of ads and other messaging that is overwhelming U.S. politics today.
“Transparency is crucial to a fully functioning government that is accountable to its citizens,” Open Secrets' Massouriah said.
Arabella is a dark money giant. Through its nonprofits, the group raised nearly $3 billion in dark money in the 2022 fundraising cycle. The Arabella network's giant, Sixteen Thirty Fund, raised nearly $380 million in the same cycle. In 2020, it raised $410 million to defeat Donald Trump and help Democrats retake the Senate.
While big political spending traditionally begins after the Fourth of July, they appear to already be gearing up for the current presidential election cycle. Arabella's group has funded progressive causes such as climate change and marijuana legalization. Lately, they've been pouring money into ballot initiatives, particularly in states with contested Senate and House seats, presumably as a way to boost voter turnout.
Arabella spokesman Steve Sampson declined to comment on Impetus' donation, saying only that Arabella provides consulting services to foundations and nonprofits and helps them comply with relevant laws and regulations. He added that “Arabella does not donate funds to political campaigns or candidates.”
Some of the money goes to super PACs like Future Forward.
Is there another $64 million mystery?
FF PAC announced in January that it had raised $250 million, which it plans to use to fund an unprecedented advertising campaign starting immediately after the Democratic National Convention in August and running through Election Day. A significant portion of this money is dark money, but the exact breakdown won't be known until all of the money raised is reported to the FEC.
Future Forward reported raising $16.2 million in its April campaign disclosures, two-thirds of which came from dark money sources through nonprofits. Groups supporting Donald Trump's election have also raised millions in dark money, but so far they have lagged behind Biden's efforts. But Politico reports that a new pro-Trump dark money group, Securing American Greatness, ran an ad in Pennsylvania last week criticizing Biden on the issue of inflation. And with more than five months until the November election, Trump supporters still have time to close the gap.
There is Indications The Trump campaign is starting to catch up in the overall fundraising race despite Biden's sizable lead over the past few months. But for now, Biden still has a big cash advantage and continues to bring money to his campaign, including by attending a fundraiser in Greenwich on Monday and mingling with hedge fund managers and entertainment industry figures.
Impetus has been quiet until now, but campaign finance experts have noticed activity. Earlier this month, Impetus launched a website after four years in operation. Getting in late to an election campaign, as it did in 2020, has its advantages: If Impetus ramps up fundraising efforts later this summer, dark-money watchdogs will have nothing to pursue until the election is over and public filings are made public. Impetus did not respond to a request for comment.
This could mean a new $64 million dark money mystery.
