While McGowan has received praise for founding and serving as CEO of the digital-first Democratic outfit ACRONYM, a nonprofit organization that aims to spend a massive $75 million on digital ads combating President Donald Trump during the 2020 election, she’s also received blowback.

In particular, her group’s sprawling and opaque structure has frustrated fellow Democrats, with some arguing that ACRONYM’s “company-within-a-company” collection of progressive news sites, consulting services and experimental merchandise vendors lacks transparency regarding its payments to consultants and staff, obscuring potential conflicts of interest or governance issues.

They point to the mix of for-profit entities under the nonprofit parent company as especially problematic.

“People are really frustrated and skeptical about the structure that Tara has created,” said one Democratic operative, who did not want to be quoted for risk of alienation. “There’s a nonprofit and then there are for-profits below it, like a nesting doll. It’s moving money around in a way that’s unclear to people.”

Other critics acknowledge that McGowan is a talented messenger — but argue she revved up her donors on the idea that her fellow Democrats were not doing enough while getting clobbered by Trump online in order to launch ACRONYM’s $75 million anti-Trump digital program, and then has been slow to spend the money she pledged to bring to the fight.

To them, Shadow’s failure in Iowa was not shocking, nor was the way ACRONYM sought to distance itself from the organization in the wake of the caucuses.

In a tweet on Tuesday, McGowan called Shadow an “independent company ACRONYM invested in.”

“We don’t have any information beyond the public statements the IDP has put out + like all of you, eagerly await learning what happened and who won the IA caucus,” McGowan wrote, referencing the Iowa Democratic Party. In a statement posted on Twitter, ACRONYM said it was “not a technology company” and had “not provided any technology to the Iowa Democratic Party, Presidential campaigns, or the Democratic National Committee.”

Here are the facts about @anotheracronym’s relationship to @ShadowIncHQ, an independent company ACRONYM invested in. We don’t have any information beyond the public statements the IDP has put out + like all of you, eagerly await learning what happened and who won the IA caucus. https://t.co/sWohZqZkPe — Tara McGowan (@taraemcg) February 4, 2020

But ACRONYM trumpeted the group in 2018, and Shadow staffers work in the same offices as ACRONYM, according to a person familiar with the group.

“It’s the cover-up that f---ing kills you. The idea that [McGowan] was out there saying no one has any idea who was involved with this. You’re telling me she had no idea the firm she launched was being hired to run this project?” said one longtime Washington Democratic operative.

Critics of ACRONYM declined to speak on the record because they are concerned about maintaining party unity and retribution from the group’s donors. Allies declined to speak on the record to POLITICO, too, saying they didn’t want to become a part of the online firestorm surrounding Shadow. McGowan is a talented operative who has rapidly built a powerful organization and helped the party in 2018, they said.

“From my perspective, she’s been able to raise a lot of funds and help state legislative races,” said one Democrat familiar with McGowan’s work.

Shadow’s failure in Iowa has fed skepticism of the increasingly popular venture-style approach to Democratic infrastructure that ACRONYM reflects. The organization, which has ties to big Silicon Valley donors including LinkedIn founder Reid Hoffman, is busting norms in Democratic politics. But while some Democrats see such risk-taking as being absolutely necessary in order for the party to win elections, others argue it has no place playing a role during a high-stakes caucus night.

Jane Kleeb, chair of the Nebraska Democratic Party and a critic of big-money investment in Democratic data infrastructure, said she would “never” consider using an app with funding from Silicon Valley to help Nebraska select delegates or with other processes.

“My bottom line as party chair is we should not be using electronic voting for any elections at the party level or for candidates,” Kleeb said. “It's just not an accessible form of voting and having your voice heard for older voters or for people with different disabilities, visual disabilities.”

McGowan, who is in her mid-30s, directed digital strategy at Priorities USA Action, the main super PAC aiding Hillary Clinton during her 2016 White House campaign. But McGowan clashed with Priorities USA Chairman Guy Cecil over how to approach digital advertising, which had become a major part of the election for the first time in 2016.

Even though both McGowan and Cecil run major anti-Trump Democratic groups, the two have had virtually no relationship since McGowan left Priorities USA after the 2016 election, according to multiple people familiar with the situation.

McGowan launched ACRONYM after Trump’s election as a “digital-first political organization" with the goal of electing progressive Democrats, mostly in state legislative races. The group quickly attracted attention, especially in Silicon Valley, from newly galvanized major donors including LinkedIn’s Hoffman, who was wading into politics and looking for projects to disrupt the Democratic status quo. (Hoffman and other donors in his network “took a chance” on ACRONYM, McGowan told POLITICO in 2019.)

More recently, longtime Democratic donors Steven Spielberg and Hollywood producer Jeffrey Katzenberg cut six-figure checks to the group’s affiliated super PAC, PACRONYM.

McGowan created ACRONYM as a 501(c)(4), an increasingly common type of political nonprofit. But then she did something highly unusual: She began buying and forming new, for-profit companies affiliated with ACRONYM but still separate from it.

Those for-profits include Shadow, which ACRONYM launched in January 2019 after spending nearly $1 million to acquire a peer-to-peer texting company called Groundbase that provided the underlying technology, according to information shared with POLITICO at the time. McGowan is also raising $25 million for a liberal local news network, Courier Newsroom, that will generate left-leaning political news content and then pay to have the content placed favorably in individuals’ Facebook feeds.

McGowan’s own digital consulting company, Lockwood Strategy, also received $1 million in payments from ACRONYM’s PAC during the fall of 2018, disclosures show, for work marked as “Digital Ad Buy.”

Proponents of McGowan’s approach say Democrats need to be willing to experiment and move quickly, investing in projects like Shadow and Courier Newsroom, if they want to match Trump’s prowess online.

But skeptics in the Democratic Party are unsure why Shadow or Courier Newsroom are being run as separate, for-profit companies, which shields them from even the minimal transparency that ACRONYM is subject to. When ACRONYM files mandatory tax disclosures, it must reveal top employees’ salaries and payments to its biggest consultants, and provide assurances that the ACRONYM empire’s different arms aren’t paying the same people multiple salaries — basic assurances to the nonprofit’s donors.

“Everything may be perfectly above board here. Then again, it may not be,” said nonprofit attorney Marcus Owens, a partner at Loeb & Loeb. For example, a nonprofit like ACRONYM may want to maintain a for-profit company so it can offer shares in the company to top employees, Owens said. It will be possible to discern some more information about ACRONYM’s relationship with the companies when more tax filings for the group are publicly available, Owens said.

Kyle Tharp, spokesman for ACRONYM, did not answer questions POLITICO posed about ACRONYM’s structure.

ACRONYM ballooned in 2019, thanks in part to support from David Plouffe, Obama’s celebrated 2008 campaign manager and a former senior vice president at Uber. Plouffe joined the group’s board in the fall of 2019. In November, ACRONYM announced it would spend $75 million on digital advertising to counter Trump’s online spending onslaught.

Three months later, that deluge of spending has barely begun, despite McGowan’s public urgency: ACRONYM spent only $781,000 on advertising on Facebook and Google since the start of November, according to the tracking firm Advertising Analytics. (It has likely spent some money other places online, but Google and Facebook are major hubs for political advertising.)

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ACRONYM had also announced last year it would spend $1 million on digital ads focused on impeaching Trump, but with its total spending at less than $1 million, it’s not clear whether that spending materialized.

Tharp, the ACRONYM spokesperson, wrote in an email that ACRONYM has spent “spent several million dollars since July 2019 across Facebook, Google, Hulu” under various campaign and brand names.

On Monday, Shadow was one part of a caucus meltdown that could have ramifications for years to come on Iowa’s first-in-the-nation status. Precinct captains reported issues logging into Shadow, and the Iowa Democratic Party said a “coding issue” was to blame for the technical woes.

By Tuesday, Shadow had issued an apology, tweeting, “We sincerely regret the delay in the reporting of the results of last night’s Iowa caucuses and the uncertainty it has caused to the candidates, their campaigns, and Democratic caucus-goers.”

And the Nevada Democratic Party, which has also paid Shadow, preemptively announced that it would not use the app.

“NV Dems can confidently say that what happened in the Iowa caucus last night will not happen in Nevada on February 22nd. We will not be employing the same app or vendor used in the Iowa caucus,” state party chairman William McCurdy II said in a statement.

Zach Montellaro and Laura Barron-Lopez contributed to this report.

