“Social Welfare Organizations” Behind Clandestine Campaign Funding

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February 27, 2012; Source: Open Secrets

Which nonprofits—501(c)(4) “social welfare organizations”—are particularly active this election cycle? Open Secrets notes that several 501(c)(4)s are raising and spending big bucks for partisan campaign ads and for transfers to PACs. The sources of their revenues are secret, protected by the wall of confidentiality accorded to donors to (c)(4)s.

Obviously, they have been raising money for some years, so Open Secrets notes moneys that these nonprofits have raised and spent in 2010 and as well as this election cycle. The point that Open Secrets makes is that the donors to these Republican nonprofits—the American Action Network, Crossroads GPS, and the American Future Fund—have overlapping interests. Some of the contributors to these (c)(4)s are nonprofits themselves. They may not reveal their own donors, but their reports to the IRS might identify the (c)(4)s and PACs they transferred money to.

For instance, let’s look at the Republican Jewish Coalition (RJC). The organization’s 2010 990 form shows that it raised over $13 million in the 2010 election cycle and gave out $8 million in grants, equally divided between Karl Rove’s Crossroads GPS and the American Action Network (AAN). The American Action Network shares office space with Crossroads GPS. The chair of the American Action Network board, former Sen. Norm Coleman, is on the RJC board along with former Nixon administration official Fred Malek, who is also on the AAN board. The political nesting of RJC is also evident in RJC board member Sheldon Adelson, the casino mogul, who is a huge contributor to the pro-Newt Gingrich Winning Our Future super PAC.

Overlapping interests are apparently not unknown to the RJC. Former Bush administration press spokesman Ari Fleischer is on the RJC board and also charges the Coalition $60,000 for consulting services through Ari Fleischer Communications, Inc. The Coalition’s executive director is also the guy who runs the RJC Political Action Committee and the National Jewish Policy Center, pulling total compensation of more than $530,000 from the RJC and the Policy Center.

501(c)(4)s are permitted to engage in partisan political activity, but it’s limited to half or less of their operations. How does the RJC give $8 million in two grants to two Republican campaign operations out of a total operating budget in 2010 of $12.4 million and claim that that is less than half of its operations? Is the RJC making the tacit assumption, with the wink-wink complicity of the Internal Revenue Service and the Federal Election Commission, that Crossroads GPS and American Action will use only half of the RJC donations for political activities, thereby reducing the RJC political expenditure from $8 million to $4 million?

The social welfare component of these 501(c)(4)s is all but invisible—certainly not visible enough to convince any sane person that it amounts to half or more of these organizations’ expenditures. The social welfare charade of 501(c)(4)s using money from secret donors is not only damaging to the democratic process, but damaging to the credibility of the nonprofit sector that is not involved with the likes of these organizations.—Rick Cohen