Update, Sept. 11: For clarity, we have added two paragraphs to this story (see *) explaining that the IRS and FEC definitions of political spending are not identical, and have rephrased headlines to two charts. Building on our previous work on “dark money” nonprofits, the Center for Responsive Politics is rolling out new information on the activities of these groups that are playing an increasing role in U.S. elections.

Dark money groups — politically active 501(c)(4) social welfare organizations and 501(c)(6) trade associations that, under tax law, don’t have to disclose their donors — aren’t supposed to spend the majority of their resources on politics. But over the last six years, a combination of Supreme Court decisions that loosened restrictions on their electoral activity, coupled with regulatory confusion, has led to a surge in their political expenditures. Direct spending on federal elections by 501(c)(4) and 501(c)(6) groups has risen from $10 million in 2004 to well over $300 million in 2012 — and that’s just counting what they reported to the Federal Election Commission, which doesn’t include all of their political spending. And the nature of their activity has changed in recent elections. Nearly half of the political spending by these groups in 2004 went for communications to their own members — what the FEC calls “communication costs.” Now, it shows up almost entirely in the form of negative, often misleading ads aimed at influencing the outcome of elections. In 2012, only 2 percent of the spending by these groups was directed at their own members.

But trying to sort out exactly what these groups are doing ranges from very difficult to impossible, given how little information is available to the public. For example, the groups must disclose their total spending on their IRS Form 990s, due annually. But nowhere do they have to break down those expenditures in detail and say exactly how they spent the money, as unions must in reports with the Department of Labor. On top of that, the 990s are filed anywhere from five to 23 months after the spending in question actually takes place. Once they’re filed, the IRS offers no searchable database or machine readable data to the public. It provides only scant summary data.

To help get around some of the hurdles posed by the dearth of IRS data, CRP has manually input more than 14,000 records, with the aim of bringing more clarity to the financial activities of nonprofits that have spent money to influence, directly and indirectly, federal elections over the last three cycles.

CRP’s data includes all politically active 501(c)(4)s and 501(c)(6)s, whether or not they have been granted tax-exempt status by the IRS. Such groups as Crossroads GPS American Commitment , and Citizens for Strength and Security either have not received or not applied for exempt status. The IRS does not include such groups in the data it makes available. Also, CRP’s new data includes other information that’s absent from the IRS data: total expenditures, total grants and total political spending reported to the IRS, over a period of multiple years.

On the other side of the divide, at the FEC, these groups must file reports when they make certain political expenditures, but the agency doesn’t require them to provide identifying information — such as Employee Identification Numbers (EINs). So CRP has gone through three cycles of outside spending data and matched FEC filers with IRS identifiers, allowing us to link the two sets of data.

The result is that we are providing multiple years of data reported to the IRS and the FEC, matched over the same time periods that the spending took place. We’ve included direct political spenders as well as what we call “dark money mailboxes” that reported no spending to the FEC themselves, but sent more than half their funds to politically active nonprofits.

Not only have we matched spending reported to the FEC for the spenders themselves over the exact dates covered by each IRS report, but we have also incorporated recipient political spending into the donor profiles, so that users can get a better understanding of how much a donor’s grant recipients spent on politics. This information has never been provided anywhere until now.

Here are some of the larger findings that stand out in the new data.

From 2009 through 2011, overall spending reported to the IRS was often much greater during the election year.







Looking at overall spending reported to the IRS for the three-year period from 2009 to 2011, at least 27 dark-money groups active in the 2010 midterms reported election-year expenditures that were more than the combined total of the two off-years, 2009 and 2011. On average, during this three-year period, more than 70 percent of the groups’ expenditures came during the election year.

Top 10 Group IRS 2009 IRS 2010 IRS 2011 Election- Year Crossroads GPS $0 $42,344,884 $22,375,630 65% American Action Network $1,446,675 $25,692,334 $11,482,833 67% America Votes $3,474,968 $14,193,741 $9,635,163 52% American Future Fund $1,913,598 $21,352,090 $3,637,462 79% Americans for Tax Reform $4,593,543 $11,379,668 $3,114,979 60% Republican Jewish Coalition $2,858,109 $12,409,886 $3,143,053 67% Americans for Job Security $3,490,547 $12,417,809 $2,481,855 68% Susan B Anthony List $2,837,834 $7,000,004 $3,531,134 52% Americans for Limited Government $1,840,743 $8,613,552 $1,038,919 75% Faith & Freedom Coalition $880,421 $5,661,250 $3,582,897 56% Likewise, some of the most prominent donor organizations — 10 dark money mailboxes, for example — demonstrate the same trends. Dark Money Mailbox IRS 2009 IRS 2010 IRS 2011 Percent Election-Year Spending Center to Protect Patient Rights $12,048,952 $60,245,391 $23,172,155 63% Freedom & Values Alliance $0 $1,070,585 $651,557 62% Wellspring Cmte $664,628 $11,521,432 $2,204,730 80% TC4 Trust $7,758,262 $30,880,071 $0 80% American Justice Partnership $2,225,711 $8,147,071 $1,849,827 67% Patriot Majority USA $76,269 $5,315,658 $0 99% America’s Families First $0 $7,647,638 $800,093 91% Alliance for Freedom $0 $4,375,434 $197,433 96% Common Sense Issues Coalition $9,054 $201,954 $23,924 86% Atlantic Advocacy Fund $18,963,628 $43,462,445 $13,964,521 57% Significance? We know that dark money groups engage in a lot of political activity during periods that are outside the FEC’s reporting windows, which means that their spending as reported to the FEC is often not an accurate measure of their participation in the electoral process. Unfortunately, those FEC reports are often the best metrics we have. That’s because the financial information reported to the IRS partially or entirely lacks important details like the group’s vendors, how much they were paid, for what products or services, and on what dates. Given the shortcomings of both IRS and FEC financial data on nonprofits, it’s important to look at the available information from different angles. Checking the ebb and flow of overall spending reported to the IRS and how it relates to election cycles is one way to do this.

Dark Money Mailboxes Multiply.

Dark money mailboxes are nonprofits with no direct federal political spending of their own and no substantial programs, staff, or volunteers. A majority of the spending by these groups goes for grants to other politically active nonprofits. (CRP has detailed the activities of several dark money mailboxes in our Shadow Money Trail series.) These organizations have proliferated with every election cycle, and as the 2012 filings start coming in, there may well be new discoveries. The following is a list of the top 10 such groups. Dark Money Mailbox IRS Spending Grants Percent Grants Center to Protect Patient Rights $95,466,498 $70,189,431 74% Green Tech Action Fund $28,243,610 $23,547,726 83% Wellspring Cmte $23,745,592 $16,886,369 71% TC4 Trust $38,638,333 $36,778,493 95% American Justice Partnership $15,693,198 $10,487,000 67% Patriot Majority USA $5,315,658 $2,896,708 54% America’s Families First $8,447,731 $7,794,000 92% Atlantic Advocacy Fund $103,089,084 $100,317,633 97% Freedom & Values Alliance $1,722,142 $1,717,346 100% Alliance for Freedom $4,572,867 $4,515,000 99% (The Patriot Majority USA listed above is only one of three iterations of Patriot Majority USA.)

Significance? From a practical standpoint, dark money mailboxes serve two purposes. First, they add another level of opacity in a system where the sources of funds that ultimately are spent on politics are already difficult or impossible to find. If the IRS were to investigate, say, the Help us keep government accountable by making a donation today.

From a practical standpoint, dark money mailboxes serve two purposes. First, they add another level of opacity in a system where the sources of funds that ultimately are spent on politics are already difficult or impossible to find. If the IRS were to investigate, say, the 60 Plus Association ‘s sources of income, it would also have to investigate the provenance of the money given out by three of its largest donors: the Center to Protect Patient Rights TC4 Trust and Free Enterprise America , two of which are now defunct. Dark-money mailboxes have been tied to questionable activities around the country. In California, millions of dollars were funneled through a daisy chain of three nonprofits, including the Center to Protect Patient Rights, in what the California Fair Political Practices Commission called “campaign money laundering.” Also, dark money can be used to diminish the likelihood of IRS scrutiny. Large contributions from one individual or corporation can trigger an audit to evaluate whether or not the recipient organization is serving the financial interests of the donor, a major no-no in the 501(c) world. To get around this, a donor, or small set of donors, can establish a constellation of nonprofits that then channel contributions to the same ultimate destination.

Tens of millions of dollars in political spending goes entirely unreported to the IRS.

In 42 instances over the last four years, groups that reported at least $25,000 in spending to the FEC did not report political spending to the IRS. In nearly three-fourths of the cases, the spending they reported to the FEC was above $100,000, and in nine it was above $1 million. In 14 instances, the unreported political spending made up at least one-fifth of the group’s total spending as reported to the IRS, and in eight instances, the unreported spending ranged from 40 percent to 65 percent of the group’s expenditures. Such high levels of political spending could have raised suspicions at the IRS.

The following groups had the largest amount of unreported political spending that also made up more than 20 percent of total spending the group reported to the IRS over the specified period.

Top 10 Group Period Total IRS Spending FEC spending Percent Americans for Job Security Nov 2007-Oct 2008 $12,343,781 $8,084,268 65% Vets for Freedom Jan 2008-Dec2008 $9,095,588 $4,757,685 52% American Rights at Work July2008-June2009 $16,450,569 $3,667,018 22% Let Freedom Ring Jan 2008-Dec2008 $7,364,554 $3,535,786 48% Center for Individual Freedom Oct 2010-Sept 2011 $5,757,719 $2,482,313 43% Women’s Voices Women Vote Action Fund Jan 2010-Dec 2010 $2,728,232 $1,128,162 41% Americans for Job Security Nov 2008-Oct 2009 $3,490,547 $890,488 26% Ending Spending Jan 2011-Dec 2011 $2,282,332 $688,090 30% Judicial Confirmation Network July2008-June2009 $1,405,553 $571,063 41% American Energy Alliance Jan 2008-Dec2008 $1,675,617 $485,307 29% Two organizations — Let Freedom Ring and Nevada Advocates for Planned Parenthood — answered “yes” to a question on their tax forms asking whether they had engaged in efforts to influence the outcome of elections, directly or indirectly. Yet they did not report any political spending to tax authorities.

Two other organizations — Americans for Job Security and Vets for Freedom — neglected to report political spending to the tax agency on two separate occasions. The largest discrepancies were in 2008, when Americans for Job Security’s $8 million in unreported political spending made up 65 percent of its total spending reported to the IRS; and Vets for Freedom’s $4.8 million in spending reported to the FEC, but not the IRS, made up more than half of the groups’ total outlays. *It’s worth noting that the FEC and IRS definitions of political spending are not identical. The IRS asks all filers of 990 forms to answer the question: “Did the organization engage in direct or indirect political campaign activities on behalf of or in opposition to candidates for public office?” That’s more vague than the FEC’s reporting requirements and, on its face, would seem to include all spending reported to the FEC and possibly more. However, as the Congressional Research Service (CRS) noted in a report issued last year, spending on issue ads that run shortly before an election and must be reported to the FEC might not necessarily be required to be reported to the IRS. The only two rulings the IRS has released on when issue advocacy becomes campaign spending indicate that the agency applies a complicated “facts and circumstances” test, and, as CRS notes, there are no “bright-line rules.” However, some experts say that organizations should not imagine there’s a practical difference between what the two agencies are asking for. “I have never been presented with an example of spending that is sufficiently political to be reported to the FEC, but would not be political under the IRS definition,” said tax attorney Marcus Owens, a former head of the exempt organizations office at the IRS. Significance? The IRS has The IRS has no system in place to monitor spending reported to the FEC, and, as we’ve noted, even if it did, the FEC doesn’t require nonprofits to provide their EINs; without those unique identifiers, it would be hard for the IRS to check political spending by the organizations it oversees. To assess the political activity of a nonprofit, the IRS relies to a great degree on how much the group claims to have spent engaging “in direct or indirect political campaign activities on behalf of or in opposition to candidates for public office.”

Millions more are only partially reported to the IRS.

At least thirteen groups that reported spending more than $25,000 to the FEC in either 2008 or 2010 reported spending much less than that on politics when they filed their 990s with the IRS. Together, these groups reported more than $51.6 million in spending to the FEC, while only reporting political spending of $24 million to the IRS over the exact same period.

Top 10 Groups Period Total IRS Spending Spending Reported to FEC Political Spending Reported to IRS American Action Network July 2010-June 2011 $25,692,334 $18,885,679 $5,535,845 Freedom’s Watch Jan 2008-Dec 2008 $36,933,305 $16,307,398 $10,745,848 Americans for Job Security Nov 2009-Oct 2010 $12,417,809 $7,696,267 $4,351,478 Americans for Tax Reform Jan 2010-Dec 2010 $11,379,668 $4,160,299 $1,859,239 Republican Jewish Coalition Jan 2008-Dec 2008 $6,521,230 $1,163,002 $104,567 Alliance for a Better Minnesota Jan 2008-Dec 2008 $3,752,685 $1,415,453 $754,500 Alliance for America’s Future Feb 2010-Dec 2010 $7,669,093 $703,772 $343,776 West Virginia Conservative Foundation Jan 2010-Dec 2010 $652,574 $534,974 $49,829 Citizens for the Republic Jan 2010-Dec 2010 $1,177,452 $195,411 $88,456 Citizen Action of Wisconsin Jan 2010-Dec 2010 $680,456 $110,617 $88,460 In all, about $67 million less in political spending was reported to the IRS than to the FEC in 2008 and 2010 by all groups that either failed to report or underreported political spending to the tax agency.

Significance? The IRS can’t effectively evaluate the political activity of a particular organization if it is not getting all the information it needs. The agency does not systematically monitor spending that’s reported to the FEC, so it relies to a large extent on the political spending claimed by the filers on their 990s.

Some organizations’ 2012 political spending alone surpassed their entire 2010 budgets.





Among groups that spent more than $50,000 on politics in 2012, 10 emerge as standouts because they spent more on politics in 2012 than they spent on everything in 2010. Group IRS 2010 FEC 2012 Crossroads GPS $42,344,884 $71,161,698 American Future Fund $21,352,090 $25,404,956 Americans for Prosperity $24,064,187 $36,364,103 Americans for Tax Reform $11,379,668 $15,794,552 American Energy Alliance $1,019,928 $1,361,500 Center Forward $130,358 $2,057,089 Hispanic Leadership Fund $228,613 $838,417 Emergency Cmte for Israel $439,081 $827,965 Michigan League of Conservation Voters $219,775 $860,237 Colorado Family Action $64,578 $78,045 These 10 groups spent a combined total of almost $155 million in 2012 on politics, according to what they reported to the FEC — more than all of the spending reported to the FEC by 501(c)(4) and 501(c)(6) groups in 2010. In order to keep that total safely within IRS limits of political activity, they’re going to have to report more than $380 million in combined total expenditures to the IRS when they file their 990s covering 2012. That’s $280 million more in combined total IRS spending than these groups reported in 2010. Crossroads GPS alone accounts for $136 million of that increase. Its 2012 political spending of more than $71 million, as reported to the FEC, is nearly double its total 2010 budget. In order to keep that $71 million well under half of its total expenditures, it will need to report more than $177 million in total expenditures in 2012 on its tax return. Significance? It is normal for organizations promoting an agenda to be more active during an election year. Naturally, that is the time when the public and the media are paying the most attention, so organizations take advantage of election-year conditions to gain traction for their cause. Of the groups CRP tracks, 160 filed 990s in the three-year period from 2009 to 2011, and 134 reported a rise in expenditures during 2010. But when a group’s spending surges dramatically in election years, particularly when the group in question is known to have made large political expenditures, it raises questions. Over the four-year period from 2009 through 2012, nine of the 10 groups listed here will have made, at a minimum, between 71 and 93 percent of their total expenditures for those four years combined during the election years of 2010 and 2012. Viewed together, these 10 groups reported a combined total of $68.7 million in total spending during the off years of 2009 and 2011. Using their total spending from 2010 and the spending they reported to the FEC in 2012, we’ve calculated a projected minimum estimate of what we expect their overall expenditures to be when they file their 990s covering last year. That analysis shows that the combined election-year overall spending totals for these 10 groups will come in at more than $483 million, a nearly seven-fold increase over off-year spending.

Attributable political spending puts some groups over the limit.



Dark money groups rarely report that more than 30 or 40 percent of their total expenditures went towards political activities. One way they get around reporting too much in direct political expenditures is to make large grants to like-minded dark money groups and, sometimes, coordinate the expenditures. Factoring in this recipient political spending — by comparing the size of the grant to the group’s spending as reported to the FEC, then taking the smaller number — puts nine groups over the 50 percent political spending limit. Not factoring in recipient political spending shows just one group, American Action Network , spending above the limit. Group Period Total IRS Spending Donor’s FEC Spending Attributable Recipient Spending Total FEC Spending FEC Spending with Recipients Center to Protect Patient Rights Jan 2010-Dec 2010 $60,245,391 $0 $36,675,105 0% 61% Crossroads GPS June 2010-May 2011 $42,344,884 $16,564,728 $11,095,406 39% 65% American Action Network July 2010-June 2011 $25,692,334 $18,885,679 $200,000 74% 74% Republican Jewish Coalition Jan 2010-Dec 2010 $12,409,886 $1,143,465 $8,000,000 9% 74% Environment America July 2008-June 2009 $10,573,775 $214,848 $6,514,090 2% 64% Green Tech Action Fund Aug 2008-Dec 2008 $2,375,000 $0 $2,375,000 0% 100% Freedom & Values Alliance Jan 2010-Dec 2010 $1,070,585 $0 $1,067,000 0% 100% Common Sense Issues Coalition Nov 2009-Oct 2010 $201,954 $0 $195,000 0% 97% Annual Fund July 2011-June 2012 $103,612 $0 $100,000 0% 97% Even with recipient political spending factored in, these estimates are still on the low end for most groups, because many have state-level political expenditures and unreported “issue advocacy” that isn’t included here. For example, in 2012, Americans for Job Security spent more than $1 million in judicial races in Michigan, according to the Michigan Campaign Finance Network , on top of the $16 million it reported spending at the federal level in 2012.

Significance? These totals do not attribute all political spending by recipients to the donor. We compare the size of the grant with the recipients’ spending as reported to the FEC over the same period, then take the lower figure. The aim is to get an estimate of how much political spending was facilitated by the donor. The IRS has not yet made it clear whether giving large grants to other organization with political activities is a valid “social welfare” function. If not, the agency could take action against the groups that do this on a large scale.



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