Case Study 36.1: Dark Money in Arizona — Tracing the Undisclosed

Case Study 36.1: Dark Money in Arizona — Tracing the Undisclosed

Overview

Arizona has been one of the most competitive Senate battleground states in recent elections, attracting massive outside spending and significant dark money activity. This case study uses Arizona as a vehicle for developing the investigative research skills needed to trace dark money through the multi-entity structures designed to obscure its origins.

The Challenge of Tracing Dark Money

Dark money leaves a partial data trail across several disclosure systems. No single database provides a complete picture, but cross-referencing multiple sources can illuminate significant portions of the funding chain. The primary sources available to researchers:

FEC filings: Show Super PAC receipts and expenditures. Will show 501(c)(4) contributions to Super PACs. Will not show who funded the 501(c)(4).

IRS Form 990: 501(c)(4) organizations must file 990 tax returns with the IRS, which are publicly available through ProPublica's Nonprofit Explorer and the IRS TEOS system. 990s show the organization's revenue, expenses, and major grants made to other organizations — but not (since 2018 rule changes) individual donor names. 990s can reveal: who received grants from the 501(c)(4), sometimes revealing the next step in the chain.

State charity registration: Many states require charitable organizations (including 501(c)(4)s) to register and file annual reports. State-level disclosure requirements vary but sometimes reveal information not available in federal filings.

Corporate disclosures: Publicly traded companies are required to disclose political spending in their annual proxy statements if shareholders demand it. ESG-focused shareholders have successfully pushed for political spending disclosure at many Fortune 500 companies, revealing corporate contributions to dark money organizations.

Lobbying disclosures: FARA (Foreign Agents Registration Act) and federal lobbying disclosure filings sometimes reveal relationships between organizations that are not visible in campaign finance data.

Investigative journalism cross-referencing: Organizations like the Arizona Mirror, the Arizona Center for Investigative Reporting, and national outlets (ProPublica, The Intercept, OpenSecrets News) have done tracing work that can be combined with data analysis.

Arizona Case: The Infrastructure Network

In recent Arizona Senate elections, a network of interconnected 501(c)(4) organizations — collectively referred to as "the infrastructure network" in investigative reporting — has operated as a conduit for large-donor political money.

The chain structure: Investigators have traced the following structure: - A "civic education" 501(c)(4) receives contributions from several large donors (visible in partial corporate disclosures) - That organization makes grants to two other 501(c)(4)s focused on "policy research" and "community outreach" - Those organizations contribute to Super PACs that run ads in Arizona Senate races - The Super PAC filings show the organizational names as donors; the individual human sources are three steps back

What 990 cross-referencing reveals: By matching 990 filings across the organizations, researchers can establish the grant flow. A 990 filing from Organization A shows "grants to affiliated organizations: $X million." A 990 filing from Organization B (which received that grant) shows "program services revenue: $X million" in the matching year. The financial flows are visible; the original human sources are not.

What corporate disclosures add: A Fortune 500 company in the technology sector disclosed in its 2022 proxy statement a contribution of $500,000 to a named "civic education" 501(c)(4). Cross-referencing this with the 990 filing for that organization shows it was one of the 501(c)(4)s in the chain. The corporate disclosure establishes one human source while leaving others invisible.

The Arizona Research Methodology

Researchers who have traced Arizona dark money have developed a multi-step methodology applicable to other states and races:

Step 1: Super PAC identification. Search FEC independent expenditure records for Arizona Senate races. Identify all Super PACs making significant independent expenditures. Note which Super PACs list 501(c)(4) organizations as major contributors.

Step 2: 501(c)(4) 990 research. For each identified 501(c)(4), retrieve 990 filings from ProPublica Nonprofit Explorer. Document: total revenue, major grants made, self-described program activities, and officer/director names.

Step 3: Officer/director cross-referencing. The officers and directors of dark money organizations often have documented connections to campaigns, party structures, or specific donors. Cross-referencing names through lobbying disclosures, corporate boards, campaign finance records, and news archives can establish organizational connections.

Step 4: Grant flow mapping. Map the grant flows between 501(c)(4)s revealed by 990 filings. This reveals the organizational network even when individual donors are hidden.

Step 5: Corporate disclosure research. Search proxy statements of major corporations (using SEC EDGAR) for political contribution disclosures. Cross-reference disclosed organizations against the organizational network identified in steps 1–4.

Step 6: Investigative journalism integration. Incorporate findings from investigative reporting organizations that have done primary source interviews and document requests unavailable to database researchers.

Analytical Findings from Arizona Research

The application of this methodology to Arizona Senate races has produced several analytically significant findings:

Industry concentration: The majority of traceable dark money in Arizona Senate races originates from real estate, financial services, and technology industries — consistent with those industries' stated policy interests in specific Arizona Senate candidates' positions.

Recycling structure: The same organizational shell structure — civic education 501(c)(4) → policy research 501(c)(4) → Super PAC — appears in multiple election cycles with variations in the organizational names but continuity in officers, bank accounts (inferred from 990 filer information), and grant flow patterns. This suggests a designed, reusable infrastructure rather than ad hoc organization.

Cross-state consistency: Several of the 501(c)(4)s active in Arizona are simultaneously active in other battleground states (Nevada, Georgia, Pennsylvania), suggesting coordinated national dark money infrastructure rather than state-specific organizations.

Limitations and Epistemic Humility

Despite the substantial tracing that multi-source methodology enables, significant opacity remains:

Post-2018 rule changes: The Trump administration's 2018 IRS rule change eliminated the requirement that 501(c)(4)s provide the IRS with the names of large donors (Schedule B). This change, combined with existing non-disclosure to the FEC, means that individual donor names in current dark money organizations may be effectively unretrievable through public data methods.

LLC structures: Some contributions to 501(c)(4)s come from single-member LLCs, adding another layer of obscurity. Tracing an LLC to its human owner requires state LLC formation records, which vary in disclosure requirements.

Attribution confidence levels: Research should explicitly state confidence levels for attribution claims. "This 501(c)(4) appears to be connected to donors in the real estate sector" based on corporate disclosures is different from "we can prove these specific individuals funded this specific dark money organization." The former is defensible; the latter may overstate what the data supports.

Discussion Questions

The methodology described in this case study is available to any researcher, journalist, or campaign with resources and technical skill. Is this a satisfactory accountability mechanism, or does it represent a structural failure of disclosure that should be addressed through law?
The 2018 IRS rule change eliminating Schedule B disclosure requirements significantly reduced dark money transparency. Should the IRS rulemaking process have constitutional significance for campaign finance research? What should advocates of transparency do in response to this rule change?
Arizona dark money networks appear to be national infrastructure operated across multiple states. How does this change the analytical framing from "following the money in Arizona races" to something broader?