With the presidential election less than three months away, Republicans and Democrats are blanketing the airwaves with campaign ads. Much has been written about the super PACs behind these ads, but far less is known about social welfare nonprofits that are far outspending super PACs on TV advertising in the presidential race. As of August 8, these nonprofits had spent more than $71 million on ads mentioning a candidate for president, whereas super PACs have spent an estimated $56 million. And, unlike super PACs, these organizations enjoy tax-exempt status and do not have to disclose the identity of their donors. A new investigation by ProPublica reveals how these nonprofits are exploiting their special tax status to mount a secretly funded, permanent campaign. We speak to investigative reporter Kim Barker. [includes rush transcript]
AMY GOODMAN: With the presidential election less than three months away, Republicans and Democrats are blanketing the airwaves with campaign ads. Much has been written about the super PACs behind these ads, but far less is known about social welfare nonprofits that are far outspending super PACs on TV advertising in the presidential race. As of August 8th, these nonprofits had spent more than $71 million on ads mentioning a candidate for president, whereas super PACs have spent an estimated $56 million. And, unlike super PACs, these organizations enjoy tax-exempt status and do not have to disclose the identity of their donors. They also enjoy a 501(c)(4) tax-exempt status.
One of the so-called "social welfare" organizations that’s most politically active is Karl Rove’s Crossroads GPS. It operates out of the same offices and has many of the same staff as Rove’s conservative super PAC, American Crossroads. This is one of the group’s ads.
CROSSROADS GPS AD: America has suffered three years of crushing unemployment. Remember this?
PRESIDENT BARACK OBAMA: We’ll create nearly half a million jobs by investing in clean energy.
CROSSROADS GPS AD: What really happened? Billions wasted on failed investments. Thousands of Americans lost jobs while stimulus money went to companies that created jobs overseas, paid for by the $4 billion Obama has added to our debt every day. Tell President Obama, for real job growth, cut the debt. Support the new majority agenda at newmajorityagenda.org.
AMY GOODMAN: That was an ad from Karl Rove’s Crossroads GPS, a so-called social welfare organization with a 501(c)(4) tax-exempt status.
We turn now to a new investigation by ProPublica. It draws on documents filed with the Internal Revenue Service and the Federal Election Commission to reveal how these nonprofits are exploiting their special tax status to mount a secretly funded, permanent campaign. The investigation is called "How Nonprofits Spend Millions on Elections and Call it Public Welfare." For more, we turn to its author, Kim Barker of ProPublica.
Welcome to Democracy Now!
KIM BARKER: Thanks for having me.
AMY GOODMAN: So, explain why you call it dark money.
KIM BARKER: I call it—well, a lot of people call it dark money. And it’s called dark money because these groups do not have to disclose where the money is coming from. So they don’t have to say who their donors are. So, in other words, you can give $2,500 to a presidential campaign—for instance, give it to either Barack Obama or Mitt Romney—and your name and your address and your profession is disclosed on FEC reports. But you can give $2.5 million to one of these groups, and nobody is ever going to know.
AMY GOODMAN: So talk about who these groups are. Lay it out.
KIM BARKER: Well, there are many different groups. We took a look. We tried to do a forensic examination of more than a hundred groups that had spent money in 2010, because these groups were empowered much like super PACs were empowered after the Citizens United ruling. 2010 is the most recent year you can look at because only those—that year has got IRS returns that have been filed. So we took a look at more than a hundred groups that have spent money—that spent money in 2010 and just compared their IRS returns, their IRS applications, if they even made one, with their spending to the FEC.
And what we found were a lot of aberrations. You know, groups would tell the IRS in their initial application that they weren’t going to spend money on politics, and the same day they would be spending money on politics, or they had already spent money on politics, or they would soon spend money on politics. They would tell the IRS one thing in their tax returns, saying that they had spent no money on politics or much less money than they had actually reported to be FEC. And then we found a couple groups that were so dark that they didn’t report anything to the FEC or the IRS.
And the reason we wanted to do this story and take such a long look at 2010, because it might seem completely irrelevant at this point, but it’s really a dry run for what is going to be happening this year. And we’re not just talking about Karl Rove’s group or the Koch brothers’ groups. You’re going to see a lot of liberal groups, if they can get the money together, doing the same thing, because they most certainly did back in 2010.
AMY GOODMAN: Earlier this year, Karl Rove appeared on Fox News and defended the right of American Crossroads to keep secret the names of its donors.
KARL ROVE: We’ve seen this before. In the 1940s and '50s, a number of state attorneys general attempted to force a particular 501(c)(4) to disclose its donors. Their purpose was to intimidate people into not giving to that organization. The group was the NAACP, which is a 501(c)(4) — has a 501(c)(4) and does not disclose its donors. That effort failed. In fact, the Supreme Court, in a 1954 case, upheld the right of organizations like that not to make their donors' names public.
Let’s be honest what this is about. This is about a group of people on the left who have used this vehicle, 501(c)(4)s, to run advertising and to run attacks on Republicans for years, who now object when Republicans begin to duplicate their tactics, and they want to intimidate people into not giving to these conservative efforts. And I think it’s shameful. I think it’s a sign of their fear of democracy. And it’s interesting that they have antecedents, and the antecedents are a bunch of segregationist attorney generals trying to shut down the NAACP. Goes to show the base emotions and the base philosophy that’s behind most of this.
AMY GOODMAN: Kim Barker, that’s Karl Rove.
KIM BARKER: Yes. I mean, I find it interesting for a couple of reasons. Number one, you’ve got Fox putting him up there. And on the side of it, I saw the words "American Crossroads." Well, that’s not what he was talking about. He was talking about Crossroads GPS, the 501(c)(4), as opposed to American Crossroads, which is the super PAC. That’s how confusing it is. Nobody understands that there is a difference here. Nobody understands that there are these groups that can actually go out there and spend money on ads that don’t have to disclose their donors. And, yes, he was talking about the 1958 Supreme Court case that was involving NAACP and Alabama. And what the Supreme Court said in that case was that groups do not have to disclose their members because of fear of retribution. And that’s exactly what he’s talking about. It’s a defense that these groups on both sides of the aisle have used as to why they should not have to even say who is paying for ads.
AMY GOODMAN: You begin your piece with the Republican Jewish Coalition.
KIM BARKER: I do.
AMY GOODMAN: Talk about it.
KIM BARKER: I went to a luncheon that they held in May in New York, and it was on the 24th floor of a law firm, where it was essentially like you got your food, you sat down, and you were listening to about 45 minutes to an hour of why this year is the most important election year. Yes, most definitely they were talking about how Obama was bad for Israel and that Romney would be better, but it was entirely about the election. It was entirely about trying to show the ads that had been run and to say, "Hey, give money. Give what you can to the $6.5 million plan. And your names will not be disclosed."
AMY GOODMAN: How does someone find out where this—all this money is coming from? And is any of it illegal, or is it just about loopholes?
KIM BARKER: It’s about loopholes. I mean, look, unless you’re not filing your tax return or unless they can demonstrate that you’ve done something incredibly willfully, it’s about loopholes. And it’s about the fact that there’s nobody out there actually enforcing this. The IRS could be taking a look at it, but the FEC is very deadlocked, to the point that, you know, you can go to the FEC and say, "I want to do X," and be able to do it in a way that, like, average people would see this as a campaign ad that should be reported. But the FEC doesn’t.
AMY GOODMAN: In 2006, groups that didn’t report donors made up less than 2 percent of the outside spending.
KIM BARKER: Yeah.
AMY GOODMAN: By 2010, more than 40 percent?
KIM BARKER: Yes, this is true.
AMY GOODMAN: How are these groups considered tax-exempt social welfare groups?
KIM BARKER: Well, they’re tax—these social welfare groups have always been able to do a limited amount of politics, right? And they’ve done lobbying. They’ve been allowed to do these things that’s the reason they’re different than 501(c)(3) groups, which are charities. And your donations to a (c)(3) group are going to be tax deductible. Your donations to a (c)(4) group are not tax deductible. But there’s been a real debate over what exactly does it mean to be primarily involved in social welfare. What does it mean to be able to do—
AMY GOODMAN: Five seconds.
KIM BARKER: —a certain amount of politics?
AMY GOODMAN: Well, I want to thank you very much, Kim Barker, and we’ll link to your report on dark money. Kim Barker, reporter for ProPublica.