Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right

by Jane Mayer

When Congress created the legal framework for “social welfare” groups almost a century earlier, it never anticipated that they would become a means by which the rich would hide their political spending. In fact, to qualify as tax-exempt, such groups had to certify that they would be “operated exclusively for the promotion of social welfare.” The IRS later loosened the guidelines, though, allowing them to engage marginally in politics, so long as this wasn’t their “primary” purpose. Lawyers soon stretched the loophole to absurd lengths. They argued, for instance, that if a group spent 49 percent of its funds on politics, it complied with the law because it still wasn’t “primarily” engaged in politics. They also argued that one such group could claim no political spending if it gave to another such group, even if the latter spent the funds on politics. Experts likened the setup to Russian nesting dolls. For example, at the end of 2010, the Center to Protect Patient Rights reported on its tax return that it spent no money on politics. Yet it granted $103 million to other conservative groups, most of which were actively engaged in the midterm elections.