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With Spotlight on Super PACs, Nonprofits Escape Scrutiny

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Posted on Feb 4, 2012
boris.rasin (CC-BY)

By Kim Barker, Al Shaw and Ariel Wittenberg, ProPublica

When super PACs announced their 2011 fundraising numbers earlier this week, it provided an early glimpse into how the new way of financing political campaigns may work in the upcoming election.

The filings showed that super PACs are indeed fundraising juggernauts, pulling in more than $98 million, with an average donation of $47,718. But so far, their sources of funding are largely transparent, not clouded in the kind of secrecy that some campaign-finance watchers had feared, and not relying that much on connected nonprofits that don’t disclose donors.  

Instead, it was separate announcements this week from a cluster of politically active social welfare groups, known as 501(c)4s for their IRS tax code, that hinted at how secret money could factor into the upcoming election—and in a more direct fashion than initially forecast after the Supreme Court opened the door to super PACs two years ago.

On Tuesday, Crossroads GPS, the nonprofit arm of the GOP super PAC American Crossroads, announced it raised $32.6 million last year, far outstripping the super PAC itself, which raised $18.4 million.  Priorities USA and American Bridge 21st Century Foundation, the nonprofit arms of the two largest Democrat super PACs, announced they raised $5.1 million. The super PACs, Priorities USA Action and American Bridge 21st Century, raised $8.1 million.

Unlike super PACs, which are required to identify their donors, social-welfare nonprofits such as Crossroads GPS and Priorities USA—also referred to as “dark money” groups—don’t have to disclose contributions to the FEC, although they are supposed to report spending on political ads within a day or two. The nonprofits have to disclose their annual revenue and expenses to the IRS, but often delay such filings. A few have not yet filed their taxes for 2010. 

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Campaign finance watchdogs had worried that 501(c)4s, or “c4s” as insiders call them, would filter money from unidentified donors through super PACs, but, if the recent filings are any guide, they may spend funds directly. This means c4s could have a more muscular, proactive role than previously anticipated.

“Certainly the Crossroads announcement of their fundraising totals suggest the c4s will be big players, and could be even bigger players than the super PACs themselves,” said Paul Ryan, a lawyer for the Campaign Legal Center.

Though social-welfare nonprofits have been around for years, they emerged as bigger players in the 2010 midterm elections.

The Supreme Court’s ruling in Citizens United v. FEC in January 2010 led to the creation of super PACS, the turbo-charged political action committees that can raise unlimited amounts of money from donors, including corporations, unions and nonprofits, as long as they don’t coordinate with a candidate when they spend that money.

The ruling also jump-started a new crop of nonprofits. Fifty-nine social-welfare groups reported spending more than $78.6 million on political ads during the 2010 election cycle, according to numbers provided to ProPublica by the Center for Responsive Politics. That money was spent mainly by Republican-leaning groups, including more than $26 million spent by the GOP-leaning American Action Network and more than $17 million by Crossroads GPS. For a time, those groups shared the same offices. It’s unknown where any of their money came from.

After the 2010 election, Democrats started forming their own super PACs and connected social-welfare nonprofits, such as Priorities USA Action, the super PAC, and Priorities USA, the nonprofit. Both were formed by former aides to President Barack Obama, although he and other Democrats have expressed ambivalence and even anger over the role of anonymous money in politics.

Super PAC filings released Tuesday showed  few donations from social-welfare nonprofits, or from shell companies with mystery owners.

Republicans, engaged in a bitter primary, raised more than 74 percent of the super PAC money that could be attributed to partisan groups, according to data compiled by the Center for Responsive Politics. (Our “PAC Track” application keeps track of spending and donations to prominent super PACs, and has different numbers.) Of those groups, Restore Our Future, the super PAC supporting GOP frontrunner Mitt Romney, raised more than $30 million. American Crossroads, the super PAC led by former Bush White House strategist Karl Rove and other top Republicans, including former party chairman Ed Gillespie and Mississippi Gov. Haley Barbour, raised $18.4 million.


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Allan Krueger's avatar

By Allan Krueger, February 6, 2012 at 1:51 pm Link to this comment

Citizens of this country ought to band together and BOYCOTT the watching of ALL POLITICAL ADS! They are ALL, regardless of party or topic, full of distortions and outright lies! HELP PUT AND END to our DEMOCRACY FOR SALE political process DON’T WATCH!

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By MeHere, February 5, 2012 at 8:16 pm Link to this comment

ardee 2:43PM

I was not in my best mood today but reading your PS to the Brooklyn poster gave me a good laugh.

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race_to_the_bottom's avatar

By race_to_the_bottom, February 5, 2012 at 5:23 pm Link to this comment

By felicity, February 4 at 12:29 pm Link to this comment

“The structure of fascism is the corporate state.  Its structure is the union, marriage, merger or fusion of corporate power with governmental power.”

Corporate and government power have been fused for a long time, but we have not had fascism. During times of prosperity, the ruling class prefers to govern through “democratic” structures. This is a very stable arrangement where liberals and conservatives take turns ruling. However, during times of great crisis, like in the 20’s and 30’s of the last century and today, the finance capitalist class tends to discard democracy and adopt what the Comintern in 1935 defined thusly: “Fascism in power is the open, terroristic dictatorship of the most reactionary, the most chauvinistic, the most imperialistic elements of finance capitalism.”

This is a precise defination, chosen carefully.

Trotsky observed that “the historic function of fascism is to smash the working class, destroy its organizations, and stifle political liberties when the capitalists find themselves unable to govern and dominate with the help of democratic machinery”

Patriot act. National Defense Authorization Act. These are modern day incarnations of the Reichstag Fire Decree and the Enabling Acts in fascist Germany.

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By ardee, February 5, 2012 at 3:43 pm Link to this comment

BrooklynDame, February 4 at 12:45 pm Link to this comment

It’s frustrating that no matter which party we choose, it seems we still end up in a
never-ending downward spiral of corporate control ever since saint Reagan took
office.

You do not really choose differently when you vote for either of the major political parties. Vote third party, work to end the monoploy of the two corporate parties and end your frustrations.

We choose to blame Reagan but, in fact, this mastery of capitalism over the democratic process has been inherent in our system for a very long time.

P.S. As one born in the Bronx I do not hold your Brooklyn heritage against you. Well, not very much.

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By SkitSketchJeff, February 5, 2012 at 2:06 pm Link to this comment
(Unregistered commenter)

Beyond the Super PACS, a big part of Obama’s fund-
raising success has been his mega-bundling “Leadership Circles”... love it… kind of like a Google-Plus for the 1%... But Barack’s crisscrossing the U.S. in search of donations has me concerned about a different Obama asset. Who’s watching his pricey Chicago home while he’s away? If those walls could talk, I wonder if the words sound something like this humorous YouTube video. Enjoy: http://tinyurl.com/6sevqsj

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By MeHere, February 5, 2012 at 11:49 am Link to this comment

There are mountains of information with facts about how money has steadily been buying power under various guises and strategies.  Some people bother to learn about the names and numbers.  When you talk to the average person though, you
find that those who never bother with reports on political corruption don’t deny that it is a fact that plagues the two parties. It seems that it is no secret and that everyone knows about it. And yet, here we are one more time, with the citizens gearing up to vote for the same thing all over again.

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By gerard, February 4, 2012 at 5:38 pm Link to this comment

This is the saddest, bitterest set of statistics I have seen in my long lifetime.

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BrooklynDame's avatar

By BrooklynDame, February 4, 2012 at 1:45 pm Link to this comment

It’s frustrating that no matter which party we choose, it seems we still end up in a
never-ending downward spiral of corporate control ever since saint Reagan took
office. Super PAC is really just a nice way of saying that we’re ruled by
corporations—that is, unless something is done to overturn the Citizens decision
and put back the controls that Glass-Steagall had in place.

http://borderlessnewsandviews.com/

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By felicity, February 4, 2012 at 1:29 pm Link to this comment

ardee - Fascism is one of those pejorative words we
toss around without really understanding how it
applies in this country. The structure of fascism is
the corporate state.  Its structure is the union,
marriage, merger or fusion of corporate power with
governmental power.

Mussolini, “Fascism should properly be called
corporatism because it is the merger of state and
corporate power.”

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By ardee, February 4, 2012 at 12:38 pm Link to this comment

Perceptive remarks, Felicity. Money destroys democracy, unduly gives the wealthiest all the power.

Capitalism is far from dead here, simply moved to other markets.

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By felicity, February 4, 2012 at 12:27 pm Link to this comment

Hard to understand but confirmed, self-identified
believers in capitalism have been going out of their
way to destroy it in this country. 

Twenty-years ago we threw out laws against monopolies
(antithetical to capitalism.)  In 1999 by law we made
Glass obsolete which would, of course, allow the
financial sector to toss out sound banking practices
and replace them with practices which led to finance
capitalism (antithetical to capitalism)- and the
subsequent collapse of our economic system.

And now that capitalism is for all practical purposes
dead in this country, we’re hell-bent on replacing
our now flaccid democracy with fascism.

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