This is the sixth story in an exclusive series about the funding behind politically active tax-exempt organizations that don’t disclose their donors. You can read the other stories in the series here.

Crossroads GPS, the group linked to the super PAC American Crossroads, took in a weighty $48.4 million in its first year of operation, and a total of almost $77 million by the end of 2011. The many multimillion-dollar gifts it received included two of $10 million each.

It spent heavily, too, on 2010 ads attacking Democrats — and both GPS and the super PAC, founded with the help of Republican uber-operative Karl Rove, will do so again this year, having made a good start on their aim to shell out as much as $300 million to defeat President Obama.

But groups like Crossroads GPS, which is a 501(c)(4) tax-exempt organization, must spend the bulk of its money on “social welfare” in order to preserve that status. How does a highly politicized group swing that? The way Crossroads did it in 2010 was to be exceptionally generous with grants to other politically active (c)(4) outfits — many of which also ran ads critical of Democratic congressional candidates in 2010.

That 501(c)(4) designation is highly prized for reasons other than tax consequences: It allows groups to take in donations without revealing their names to the public, yet still spend significant amounts of money on political activity.

Crossroads reported spending $16 million on ads expressly advocating the defeat or election of candidates in the 2010 election cycle, according to its filings with the Federal Election Commission. It reported a similar number to the Internal Revenue Service on its Form 990 tax return, which it filed this week and released to the public.

It also told the FEC it spent $1.1 million on electioneering communications, or issue ads that refer to or show a candidate for federal office within 30 days before a primary or 60 days before a general election. That’s a category of political spending that the group needn’t disclose to the IRS, under the tax agency’s rules.

The sum of those two figures may not be all that Crossroads spent on politics in the 2010 cycle, though, since some spending — depending on when and where it occurred, and in what form — wouldn’t necessarily be reported to the FEC or the IRS.

And, being careful to keep its spending on politics below 50 percent of its overall spending, Crossroads GPS gave grants to a dozen other 501(c)(4) organizations, including such groups as National Right to Life Association, American Action Network and Americans for Tax Reform. For each one, Crossroads listed “social welfare” as the purpose of the grant.

Five of the grantees spent more than $1 million on political ads in 2010. Americans for Tax Reform, for instance, received $4 million from Crossroads GPS, and spent $4.1 million on ads promoting or attacking candidates that year. The Center for Individual Freedom, a group that originally had ties to the tobacco lobby, got a $2.75 million gift from Crossroads, and spent $2.5 million on electioneering communications that benefited Republicans.

The chart below lists groups that received money from Crossroads GPS during the year ending May 31, 2011, as well as the political spending — independent expenditures and electioneering communications — of those groups, as reported to the FEC.



Group From GPS in 2010 2010 Political Ad Spending American Action Network $500,000 $26,088,031 60 Plus Assn $50,000 $7,096,125 Americans for Tax Reform $4,000,000 $4,140,044 Center for Individual Freedom $2,750,000 $2,500,617 Republican Jewish Coalition $250,000 $1,143,465 National Federationof Ind. Business $3,700,000 – National Right to Life $2,025,000 – Freedom Vote, Inc. $900,000 – Repub. Governors Public Policy Cmt $750,000 – NRA Institute $600,000 – American Justice Partnership $300,000 – Indiana Right to Life $35,000 –

Crossroads is careful to say in its IRS Form 990 that the grants couldn’t be used for the kind of advertising that expressly promotes the election or defeat of a candidate.

“Grants are accompanied by a letter of transmittal stating that the funds are to be used only for exempt purposes, and not for political expenditures, consistent with the organization’s tax-exempt mission.”

But money is fungible, and walling off a Crossroads grant for some specific purpose frees up other funds that can be used for other purposes, such as political ads.

According to Politico, some of the groups that received funds are part of a close-knit set called the Weaver Terrace Group, which meets periodically in Crossroads’ downtown Washington offices to plot advertising strategy. They include American Action Network, the National Federation for Independent Business, ATR, the 60 Plus Association and the Republican Jewish Coalition.

So far this year, Crossroads GPS said in March it was spending $650,000 to run an ad attacking Obama’s energy policy in Ohio, New Mexico and Nevada — all battleground states that the president was visiting as part of a made-in-America energy tour. The group didn’t advertise in the fourth state he visited, Oklahoma, a solidly red state.

And earlier this month, it announced it was spending $1.7 million to attack Obama on energy in half-a-dozen battleground states. Its sister group American Crossroads has reported spending only $1 million so far this year, but was sitting on more than $26 million as of Feb. 29.



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