Introduction

Dow Chemical Co. steered $2 million to a Michigan “dark money” nonprofit in 2012 whose ads helped defeat a union-backed ballot measure aimed at protecting collective bargaining rights, the Center for Public Integrity has learned.

The giant chemical maker was one of several corporations that helped finance a web of so-called “social welfare” nonprofits and trade associations that are active in politics but not legally obligated to publicly identify their funders.

An examination of corporate “good governance” disclosures, however, shows several of these politically active Michigan-based nonprofits received donations from companies including health insurer Aetna Inc., Johnson & Johnson and cigarette maker Reynolds American Inc.

Ahead of the 2012 election, unions pushed for a ballot measure that would have enshrined collective bargaining rights in the state constitution. The top underwriters of the ballot measure’s opposition were the Michigan Chamber of Commerce and the Michigan Alliance for Business Growth.

Protecting Michigan Taxpayers — the public face of the opposition — raised about $23 million, including $6.4 million from the Michigan Chamber and $5.5 million from the Michigan Alliance for Business Growth, according to state campaign finance records.

In ads, the group blasted the union-endorsed Proposal 2 as the “Union Boss Ballot Initiative” and a “special interest power play.” Supporters of Proposal 2 countered that they faced a “movement to crush labor unions.”

Michigan 501(c)(4) groups accepting corporate cash Nonprofit Corporate contributions Number of known corporate donors Party affiliation Michigan Jobs and Labor Foundation $17,500 6 Republican Richardville Fund $7,500 1 Republican Make Michigan First $6,750 5 Republican West Michigan Community Preservation Fund $5,750 6 Republican On Duty for Michigan $5,500 3 Republican Fund for Michigan’s Future $5,000 1 Republican Future Michigan $4,000 3 Republican Michigan Quality of Life Fund $3,000 2 Democrat Committee for a Prosperous Michigan $2,500 1 Democrat Forward Michigan Fund $2,500 1 Republican Source: Center for Public Integrity analysis of corporate records.

Voters soundly defeated the measure.

Because the politically active nonprofits were not required to reveal their contributors, they effectively hid the identity of the donors who fueled the opposition.

Dow Chemical — one of the largest companies in Michigan — gave $2 million to the Michigan Alliance for Business Growth in 2012 and another $611,700 to the Michigan Chamber, according to records posted by the company on its website.

Tax records indicate that no other donor gave more that year to the Michigan Alliance for Business Growth.

Sara Steele, a Dow Chemical spokeswoman, declined to answer specific questions about the company’s financial support of the two groups.

Michigan lawmakers have also benefited from politically active nonprofits.

Michigan Attorney General Bill Schuette, a Republican, is connected to a nonprofit called On Duty for Michigan, a nod to his campaign slogan, which raised $202,000 in 2012, according to tax records.

Corporate records show this nonprofit has received money from agriculture giant Monsanto Co. ($2,500), Aetna ($2,000) and CVS Caremark Corp. ($1,000).

Troy Cumings, executive director of the group, said On Duty for Michigan was established to assist in the transition between attorneys general in 2010, and that it engages in issue advocacy and other programming to “defray taxpayer cost.”

Cumings added that donors who contribute to the group this year will be identified, although this new disclosure policy would not affect past contributors.

Meanwhile, Kim MacMaster, the wife of GOP state Sen. Greg MacMaster, heads a social welfare nonprofit called the Fund for Michigan’s Future, which collected $5,000 from Aetna in 2012.

In September, on the heels of MacMaster’s announcement that he would run for a new, open state senate seat, the fund produced ads that thanked citizens for letting MacMaster be their “trusted voice in northern Michigan.”

Similarly, the pro-Republican Michigan Jobs and Labor Foundation raised about $630,000 in 2012, which it used for “polling and educational seminars,” among other expenditures, according to tax records.

Corporate donors to the group that year included energy company Exelon Corp. ($10,000), Aetna ($2,250), Pfizer Inc. ($2,000), Johnson & Johnson ($1,250), CVS Caremark ($1,000) and Reynolds American ($1,000), according to a Center for Public Integrity review of company records.

When the Center for Public Integrity attempted to contact the Foundation, it received this email from Steve Linder, the president and managing partner of the Sterling Corp., which is affiliated with the group: “Do not contact anyone from the Michigan Jobs and Labor Foundation again. No one will respond.”

Democratic lawmakers have also dived into the political nonprofit game.

The Michigan Quality of Life Fund was originally founded in 2001 by former Democratic state Rep. Kwame Kilpatrick — who went on to serve as mayor of Detroit and is now serving time in prison following corruption convictions — although more than a dozen Democratic leaders in the Michigan House of Representatives have been associated with the group.

The nonprofit’s current president is Democratic state Rep. Brandon Dillon. State Rep. Sam Singh serves as its vice president. And state Rep. Pam Faris also serves as a director.

The group helps Democrats by hosting trainings, “community forums” and “leadership retreats” for “community leaders, activists and students.”

In 2012, the Fund received $2,000 from Aetna and $1,000 from CVS Caremark, according to a Center for Public Integrity review of company records.

All the while, Michigan’s already weak rules requiring that outside groups report only the most basic of information about political ads have gotten even weaker.

Under legislation signed by Republican Gov. Rick Snyder in December, makers of so-called “issue ads” — those that mention candidates ahead of Election Day but don’t overtly call for their election or defeat — need not report their expenditures, let alone the donors who fund them.

The disclosure of such spending would usually be required in federal races.

Rich Robinson, president of the Michigan Campaign Finance Network, worries that politically active nonprofits will now become even more pervasive in the state’s politics.

“The direction of the legislature is going the wrong way right now in terms of transparency and accountability in our campaigns,” he said.