POLITICO: 2012: Year of the anonymous donor?
By Kenneth P. Vogel
If anyone had doubts about the role that anonymous and untraceable money will play in the 2012 campaign ad wars, a flurry of recent reports and voluntary disclosures should put them to rest.
The full extent of the anonymous giving is by definition impossible to know. But the recent disclosures as well as interviews with fundraising sources suggest that Republican-allied independent groups are outpacing Democratic ones in collecting undisclosed contributions to fund their political advertising, just as they did in 2010.
But, perhaps more significantly, they show that Democrats, who vociferously attacked that kind of fundraising last year, have set aside their qualms and are now active competitors in the anonymous donor arms race.
The three main anonymously funded Democratic outside groups – Priorities USA, American Bridge 21st Century Foundation and Patriot Majority – collected at least $3.7 million in untraceable contributions, and probably much more, in the first half of the year, according to voluntary disclosures and anecdotal information on ad buys.
While that’s not as much as the $5.8 million in fundraising reported in that same period by the sister organizations of those groups, which do disclose donors – Priorities USA Action, American Bridge 21st Century and Majority PAC — the feeling among some in Democratic fundraising circles is that the balance will likely tilt towards undisclosed donations as the groups seek to expand their donor bases.
And the fact that Democrats are soliciting undisclosed contributions at all at this early stage of the race illustrates the central role anonymous donors are expected to play in the run-up to the 2012 elections.
Democrats “don’t have a choice, because the other side is doing it – would you send David to fight Goliath without a slingshot?” said Erica Payne, a liberal strategist who helped create the Democracy Alliance, a network of major liberal donors.
Many such donors “feel more comfortable donating to groups that don’t disclose,” she said, because some are publicity averse and also because “as soon as their name appears in the paper as having contributed, their phone number goes on the speed dial of every congressmen, committee and party that wants to raise money.”
While it’s impossible to do an apples-to-apples comparison, conservatives seem to maintain a wide edge when it comes to anonymously funded political advertising, with groups that don’t disclose contributions including the U.S. Chamber of Commerce, Americans for Prosperity and the 60 Plus Association – which combined to spend tens of millions on ads boosting Republicans in 2010 – gearing up for even bigger campaigns headed into 2012.
And the biggest spending Republican group this year – Crossroads Grassroots Policy Strategies – is about midway through a two-month advertising binge attacking President Barack Obama and congressional Democrats that is expected to cost more than $20 million, alone.
Crossroads GPS, as the group is known, is registered under a section of the tax code – 501(c)4 – that does not require the disclosure of donors’ names, but it was actually started as a spin-off of another group that does disclose its donors – American Crossroads. That group, a new type of political action committee known as a super PAC, has seen its fundraising lag behind its non-disclosing sister group. In the first six months of 2011, according to a report filed late last month with the Federal Election Commission, it raised only $3.9 million.
The two-pronged structure of the Crossroads outfit was the model for the new Democratic outside efforts, which were created in response to the explosion of spending by a network of outside groups, including Crossroads, that were conceived by veteran GOP operative Karl Rove.
The Democratic outfits also pair 501(c)4 groups – including Priorities USA, American Bridge 21st Century Foundation and Patriot Majority – with super PACs, including Priorities USA Action, American Bridge 21st Century and Majority PAC.
Patriot Majority recently went up with $225,000-worth of ads in three states pushing back on Crossroads GPS’s attacks on Democratic senators, while American Bridge 21st Century Foundation and Priorities USA told POLITICO they’d raised $1.51 million and at least $2 million, respectively.
But such 501(c)4 groups won’t be required to file reports listing even basic information about their 2011 finances until well into next year — and they probably will never be required to disclose even a single donor’s name, making it likely that we’ll never know who funded many of the political ads aired in the run-up to the 2012 elections.
Meanwhile, the super PACs affiliated with those groups – combined with another linked super PAC called House Majority PAC – collected huge checks in the first six months of the year from labor unions and wealthy liberals in entertainment and finance, according to reports filed late last month with the FEC. And their donors are known.
The Service Employees International Union contributed a total of $1.1 million spread among the groups. Dreamworks Animation chief executive Jeffrey Katzenberg contributed $2 million to Priorities USA Action, Chicago media magnate Fred Eychaner gave $600,000 ($100,000 to House Majority PAC and $500,000 to Priorities USA Action), insurance magnate Peter Lewis gave $200,000 to American Bridge and billionaire financier George Soros gave $75,000 to House Majority PAC.
On the Republican side, American Crossroads received almost all of its cash in the first half of the year – $3.8 million – from just a handful of millionaires and corporations. Investor and former Univision chairman Jerry Perenchio gave $2 million through his trust. Dallas investor Robert Rowling, whose firm owns Omni Hotels and Gold’s Gym, gave $1 million. Texas homebuilder Bob Perry gave $500,000.
“Some people want their names listed because they want credit – they want that policymaker or candidate [supported by a super PAC] to know that they’re giving and they want them to know quickly,” said a Democratic operative involved in fundraising for independent groups. “Other people want to stay [anonymous] because they are afraid of retribution or controversy.”
Super PACs and 501(c)4s are barred from coordinating their spending with the candidates they intend to help. But the groups – which can accept unlimited contributions from individuals, corporations and unions – are often seen as a way for deep-pocketed donors to have more impact than by merely writing checks to candidates and parties, which are capped by federal rules that also bar union and corporate contributions to candidates.
It was the Supreme Court’s decision in Citizens United v. FEC that cleared the way for the advent of superPACs as well as the rise in popularity of 501(c)4s as vehicles for political advertising. The decision, which allowed corporations and unions to spend unlimited money on campaign ads, was widely criticized by Democrats, as was the explosion of advertising spending by anonymously funded conservative groups, which Obama called “a threat to our democracy. The American people deserve to know who’s trying to sway their election.”
But after the election, Obama’s allies dialed back their opposition to big-money outside spending and it wasn’t long before close allies of the president and Democratic congressional leaders had formed their own network of groups.
“We’re following all the same rules that Rove’s Crossroads is,” said Bill Burton, who served as deputy White House press secretary while Obama was attacking anonymous political spending, but now runs the Priorities groups. “We may not like the rules, but we’re not going to let Karl Rove and the (conservative billionaire) Koch brothers play by one set of rules while we are overrun with their millions.”
But Jonathan Collegio, a spokesman for the Crossroads groups, told POLITICO it’s “brazen hypocrisy” for the Democratic 501(c)4s to accept anonymous donations. “If they really believe it was a threat to democracy, I don’t think you’d get involved in one of these groups,” he told the St. Petersburg Times late last month.
Yet, back when Crossroads started out last year, it, too, shunned secret donations and extolled disclosure. Its chairman, Mike Duncan, described himself in May 2010 as “a proponent of lots of money in politics and full disclosure in politics,” and said Crossroads intended to “be ahead of the curve on” transparency.
Less than one month later, with American Crossroads struggling to raise money from donors leery of having their names disclosed, operatives spun off Crossroads GPS, and its fundraising team, led by Rove, began emphasizing to prospective donors the ability to give anonymous contributions.
Fundraising took off, and together, the groups ended up raising more than $70 million in 2010, with the majority of it – $43 million – going to Crossroads GPS.
Despite their increasing prominence in political advertising, Crossroads GPS and other 501(c)4 groups, which the IRS classifies as “social welfare organizations,” are still considered something of an uncertain legal proposition and also a somewhat more restrictive political vehicle, as a result of the tax code’s requirement that they spend more than half of their money on non-campaign-related activity.
Legalities aside, former Democratic Sen. Russ Feingold of Wisconsin, who for years was a leading crusader against big money in politics, suggested his party risked losing the moral high ground by joining the chase for undisclosed, unlimited cash.
Feingold – who last week launched a 501(c)4 group of his own but pledged to disclose all its contributions and to only accept only limited individual donations – told POLITICO “Democrats shouldn’t be in the game of influencing elections with anonymous, unlimited money. It’s dancing with the devil.”
