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Defying the Odds

Defying the Odds
New book about the 2016 election.

Monday, September 9, 2013

Super PACs, Dark Money, Dark Money Mailboxes

Politico reports on new super PACs that got lots of attention but have raised little money.
Republicans for Immigration Reform, started by former Commerce Secretary Carlos Gutierrez and GOP rainmaker Charlie Spies, launched with much fanfare at the end of 2012. Gutierrez described it as “something real that could have an impact on the outcome of the election,” and he was dubbed the “GOP’s pro-immigration moneyman.”

But by the end of June, the super PAC had brought in about $190,000 even though immigration has been a hot issue all year. It received contributions from some big-name donors, but like many other GOP super PACs, it ultimately brought in a not-so-impressive haul.

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Republicans for Immigration Reform is still doing better than Rove’s Conservative Victory Project, which reported raising $5,660 — all of which was transferred from another Rove-affiliated super PAC American Crossroads.
Conservative Victory Project launched with a story in The New York Times, and its goal, to get involved in GOP primaries to make sure fringe candidates don’t make it to the general election, was criticized by tea party and right-wing groups for weeks and was expected to spark a civil war within the party.

Jonathan Collegio, a spokesman for the group, says CVP hasn’t kicked off fundraising yet, but it’s started a discussion that will in itself serve the GOP. “The announcement sparked a critical conversation about the importance of candidate quality, which we believe will pay dividends in 2014 and beyond,” he said in an email.

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.

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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.)

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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.