Introduction

Screenshot from an ad sponsored by conservative nonprofit Carolina Rising. YouTube

In the bitterly contested race for the U.S. Senate contest in North Carolina, a mysterious “dark money” nonprofit took to the airwaves in an effort to tip the balance in favor of the Republican candidate.

State House Speaker Thom Tillis, the Republican, was running against Democratic incumbent Sen. Kay Hagan in a pivotal race that would in part decide the balance of power in the U.S. Senate. The group, called Carolina Rising, ultimately ran nearly 4,000 ads praising Tillis.

“Thanks to Speaker Tillis and Gov. McCrory, when your kids go back to school this year, their future just got a little brighter,” said one ad that aired more than 1,700 times. The ad also mentioned North Carolina Gov. Pat McCrory, a Republican who wasn’t on the ballot this year.

In August, Carolina Rising ran more TV ads than either Tillis or Hagan, according to a Center for Public Integrity analysis of data provided by Kantar Media/CMAG, an ad tracking firm.

Interesting thing though, the ads weren’t really political — at least not according to the group that paid for them

“You’re the one who said we participated in the election,” Dallas Woodhouse, the group’s president and founder, told the Center for Public Integrity. “Those are issue ads. Those are not political ads.”

Woodhouse, a former North Carolina state leader of Americans for Prosperity, a nonprofit affiliated with billionaire brothers David and Charles Koch, maintains Carolina Rising jumped in to defend Tillis after it became clear Hagan and the Democrats were going to attack him based on the policies passed by the state legislature.

The group, he added, was just carrying out its mission by boosting policies passed by the sitting speaker of the state House.

To the average viewer, Carolina Rising’s TV spots sure looked like political advertising. But under the law, they are really known as “electioneering communications.” That means they name a candidate and run inside a certain timeframe but don’t tell voters to vote for or against anyone.

Number of groups sponsoring ‘electioneering communications’ in federal races Created with Highcharts 4.2.7 Number of groups 2010 2012 2014 0 10 20 30 40 50 60 Source: Center for Responsive Politics

Carolina Rising was one of only 10 outside groups this election cycle that chose to run electioneering communications, according to the Center for Responsive Politics. During the 2012 election cycle, 31 groups reported running such ads, down from 56 during the 2010 election cycle.

Electioneering communications’ current scarcity may be related to an ongoing legal fight over whether nonprofits that run the ads must reveal their donors. A court decision that would have required that was overturned, but there’s still a level of uncertainty regarding the issue.

According to Woodhouse, it really is about issues. Indeed, none of Carolina Rising’s thousands of TV ads overtly advocated for Tillis’ election. Rather, they frequently praised him for his work on such matters as autism legislation and education. Ads like that, which don’t specifically call for a candidate’s election or defeat, don’t always count as political activity under IRS rules.

The distinction can be an important one to groups like Carolina Rising, a nonprofit “social welfare” group organized under Sec. 501(c)(4) of the tax code. Such groups are permitted to keep their donors anonymous, but may not have political activity as their primary purpose.

The president and founder of Carolina Rising, Dallas Woodhouse. Carolinarising.org

Woodhouse describes Carolina Rising’s mission as “an issue mission,” which may have led the group to run positive ads, an approach that stood out in the negative North Carolina race.

Larry Noble, senior counsel at the Campaign Legal Center, said Carolina Rising’s positive ads are unusual, since “the conventional wisdom is you let the candidate run the positive ad and the outside group run the negative ads” to avoid backlash against the candidate.

Carolina Rising first rose in late March — a new nonprofit group led by a familiar political operative that promised to push back against “the radical political agenda of the liberal left.” It immediately clashed — face-to-face — with protestors critical of policies passed by the Republican governor and legislature.

But it wasn’t long before the new group shifted focus from grassroots antics to airing millions of dollars in ads boosting Tillis. The group ultimately spent about $4.7 million on the ads, Woodhouse said, and about $3.3 million of that had to be reported as “electioneering communications” to the Federal Election Commission. The contest established Carolina Rising as a major political force.

Tillis won, and Carolina Rising could easily have gone the route of other upstart nonprofits that — thanks to the Supreme Court’s Citizens United v. Federal Election Commission decision — spend big money during political campaign seasons, then all but disappear in off years.

“We have a large, diverse donor body that we have brought into this mission of helping the Republicans tell their story in North Carolina.” – Dallas Woodhouse, president of Carolina Rising

Woodhouse, Carolina Rising’s only employee at the moment, says he’s taking a vacation to enjoy Thanksgiving, but then plans to jump back into telling “the larger narrative” of what Republicans are doing in North Carolina.

That includes pushing back against protestors who have come out in opposition to the policies the party has pushed since taking control, including changes to unemployment benefits, school funding, and election law.

“It’s my view and the view of the people I’ve got behind this…the Republicans are doing good things, they’re just not explaining it very well,” he said.

Woodhouse won’t reveal the identity of the donors behind Carolina Rising.

Reports and speculation have linked the group to the billionaire Koch brothers, the high-profile conservative donors who are affiliated with his former employer, Americans for Prosperity.

And a Washington Post article said one contributor is North Carolina retail industry magnate Art Pope. To the reports, Woodhouse says, “They made that assumption. I don’t talk about donors either way. I will say the left likes to beat up on [Pope] and vastly overstate what he gives to certain causes.”

Woodhouse did say Carolina Rising is funded by multiple donors.

“And I’ll go as far as to say anybody who makes assumptions based on my previous associations are wrong,” he said. “Broadly speaking, we have a large, diverse donor body that we have brought into this mission of helping the Republicans tell their story in North Carolina. They are not the same old usual suspects.”

Asked if the donors are from North Carolina, Woodhouse answered, “Generally, that’s who I go after … I don’t want to be that specific.” He added: “Look, I don’t check people’s residency.”