Super PACs, Door Knocking, and Coordination

Our most recent book is titled Divided We Stand: The 2020 Elections and American Politics.  Among other things, it discusses party organizations and campaign finance.

David Drucker at The Dispatch:

The Federal Election Commission, in a little-noticed decision that could radically reshape campaign politics, is giving candidates the greenlight to coordinate with super PACs and other outside groups on door-to-door voter turnout activities.

Under the Texas Majority PAC advisory opinion the FEC issued on March 20, candidates for Congress and the White House are permitted to work directly with allied groups on the expensive, labor-intensive work of door-to-door voter canvassing. That includes giving strategic direction to supportive super PACs and other politically active organizations, as well as sharing preferred messaging. Additionally, the FEC’s advisory opinion also permits candidates to access the voter data collected from an allied group’s door-knocking—as long as their campaigns pay for it.

Political operatives on both sides of the aisle describe this development as consequential, saying it could change how candidates—especially presidential candidates—manage field operations. Some Republican insiders worry Democrats will gain yet another fundraising and infrastructure edge heading into November. “We’re concerned that it gives the Democrats an advantage because their outside groups are better funded and their people are easier to canvas,” a GOP election lawyer said, requesting anonymity to speak candidly.

Meanwhile, there are a few legal caveats.

The FEC’s Texas Majority PAC advisory opinion does not apply to phone banking, text messaging, or direct mail, crucial components of any get-out-the-vote effort. In other words, campaigns must still honor the ban on coordinating with outside groups vis-a-vis those activities. Additionally, election lawyers believe groups that coordinate door-to-door canvassing with candidates are going to have to “firewall” that effort from the rest of the organization, to ensure communications with the campaign, and the data gathered, are not used in advertising or messaging.

Until the FEC rendered this interpretation of campaign finance law, candidates were prohibited from communicating with outside groups—no exceptions.

So, even though super PACs can raise unlimited cash versus strict donor limits placed on campaigns, the inability to coordinate strategy and messaging—and to share in the trove of data—made relying on such groups for voter turnout risky. Further, it was usually ineffective. Exhibit A: Ron DeSantis and his 2024 president bid. The Florida governor delegated his ground game to a super PAC, Never Back Down. The effort devolved into infighting and produced a 30-point loss for DeSantis in Iowa’s caucuses.

With the barrier to coordinating on door-to-door canvassing lifted, farming out this key aspect of voter turnout to cash-flush super PACs and other resource-rich outside groups becomes eminently more feasible, strategically, since some of the problems that plagued DeSantis are less likely to emerge. Indeed, knowledgeable Republican sources tell Dispatch Politics that former President Donald Trump, the presumptive GOP nominee, and the Republican National Committee, are planning to cede door-knocking efforts to various outside groups.

Rules of Coordination

Matea Gold writes at The Washington Post:

“The rules of affiliation are just about as porous as they can be, and it amounts to a joke that there’s no coordination between these individual super PACs and the candidates,” said Rep. David E. Price (D-N.C.), who has sponsored legislation that would put stricter limits in place.

A close reading of FEC regulations reveals that campaigns can do more than just publicly signal their needs to independent groups, a practice that flourished in the 2014 midterms.

Operatives on both sides can talk to one another directly, as long as they do not discuss candidate strategy. According to an FEC rule, an independent group also can confer with a campaign until this fall about “issue ads” featuring a candidate. Some election-law lawyers think that a super PAC could share its entire paid media plan, as long as the candidate’s team does not respond.

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A sweeping boundary was drawn by the Supreme Court in its seminal 1976Buckley v. Valeo decision, which said that political activity by outside groups must be done “totally independently” of candidates and parties. A similar standard was set in the 2002 ­McCain-Feingold Act, which said that independent expenditures cannot be made “in cooperation, consultation, or concert” with a candidate.

But in practice, defining coordination has not been easy. The FEC wrestled mightily with where to draw the lines, issuing regulations that were challenged repeatedly in the courts.

A set of FEC rules approved in 2010 prohibits a campaign from coordinating with an independent group on a paid communication. The agency laid out specific tests to determine whether a campaign has illegally shared internal strategy used to guide an independent group’s advertising.

But the rules do not ban coordination in general — much less conversations between each side.

Donors Dread Post-McCutcheon Fundraising Pitches

Bloomberg Business Week reports:

Within hours of a U.S. Supreme Court decision paving the way for a new gusher of political cash, Ben Barnes’s telephone starting ringing.

He and his daughters had already given the maximum amount for this year’s congressional elections to candidates and committees under federal law. After that donation cap was overturned in a 5-4 court ruling issued by the justices yesterday, Barnes found himself on the telephone with two Democratic members of Congress seeking more money.

“This will make the phone ring all that much more,” said the longtime Texas donor who expects to be kept busy managing new solicitations in the days ahead. “Tomorrow’s going to be like Saturday at the grocery store,” said Barnes.

In a case brought by Shaun McCutcheon, an Alabama Republican official, the court struck the $123,200 overall limit on campaign contributions, which critics said hamstrung the number of candidates and committees that donors could support. The majority justices said the limit violated the donors’ free speech rights. The court left in place restrictions on how much a donor can give to one entity; for example, no more than $5,200 total to a candidate for a cycle's primary and general elections.
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Standing to gain the most from the change are the Democratic and Republican parties. Until now, aggregate limits were so tight that it prevented donors from giving the maximum amounts to all three of the national party committees: one for House candidates, another for Senate contenders and the third to finance operations at the national headquarters.

In addition, contributors may now give $10,000 per year to federal units attached to the 50 state parties. Those state parties can transfer money freely to one another, enabling those with hotly contested races to stockpile funds from less-competitive states.

The bottom line: On April 1, a donor could give no more than $74,600 to all of the political parties every two years. Today, party contributions can be as much as $1,194,400.

Politico reports that big donors worry that McCutcheon will subject them to endless hounding by party fundraisers:

“I’m horrified, planning to de-list my phone number and destroy my email address,” said Ken Kies, who, along with his wife, has bumped up against the federal political contribution limits.

“What I was really hoping for is a ban on lobbyists making contributions entirely.”

While it’s an open question how much new money will come in, it’s certain some will — and insiders are eager to make sure it greases the Washington economy.

“I’m poor again as a result,” joked Tony Podesta, a top lobbyist and major donor who is among the small number of K-Streeters who contribute nearly the maximum amount to candidates each election cycle. “The fundraising consultants are the only winner in today’s decision.”

Podesta said for those donors, the new rule “eliminates an excuse that people have to say I’m done for the cycle and I can’t do anymore, which means that people who do max out will end up giving more money than they used to to candidates.”

McCutcheon and the Parties

Eliza Newlin Carney writes at Roll Call:

Republican National Committee Chairman Reince Priebus could hardly contain his glee during a conference call with reporters shortly after the Supreme Court ruled to strike the aggregate limit on campaign contributions.

“We are excited about the outcome of this case,” exulted Priebus, noting that the RNC bankrolled the constitutional challenge brought by businessman Shaun McCutcheon from beginning to end. In McCutcheon v. FEC, the court ruled 5-4 to overturn the overall limit on what an individual may donate collectively to parties, candidates and PACs in one election cycle, which was capped at $123,200 total.

The ruling “allows us to go to our donors and say: Look instead of being able to give to only nine Senate candidates, you can now give to the 14 that are most in play,” Priebus told reporters. “And you can give to the Senate committee, the congressional committee and the RNC, and you can max out to all three.”

Priebus wasn’t the only party official rejoicing in the wake of the high court’s Wednesday ruling. One Democratic campaign committee operative confided that he was “happy as a pig in shit.” While advocates of campaign finance limits on and off Capitol Hill assailed the ruling as an invitation to corruption and campaign finance abuses, party officials welcomed the decision.

The national party committees have good reason to celebrate, election lawyers say. Under the old rules, an individual contributor could give no more than $74,600 overall to the political party committees in a given election cycle. The “base” limit that caps the size of the contribution — $2,600 on what an individual may give to a candidate per election, for example — remains intact. But in the wake of the ruling, a big donor may give the maximum to all three party committees.

Crossroads: Fundraising in 2013, Suit Against FEC

Politico reports:

The trio of conservative groups headed up by GOP consultant Karl Rove pulled in a combined $6.1 million in 2013, according to numbers obtained by POLITICO.

The super PAC American Crossroads took in about $1.6 million in the second half of 2013, while the nonprofit Crossroads GPS raised $1.1 million. The super PAC alone has $2.7 million cash on hand going into 2014.

A third group — the super PAC Conservative Victory Project — did no independent fundraising, aside from a $10,000 transfer from American Crossroads.

It’s a major comedown from the 2012 presidential race, when American Crossroads and Crossroads GPS together raised a whopping $325 million and poured money into competitive Senate races and presidential battleground states.

Typically, donor interest is much lower in non-presidential cycles. The two Crossroads groups raised about $7o million in 2010 — though much of that poured in during the final months of the election.

The Washington Times reports:

Two campaign finance watchdog groups on Friday sued the Federal Election Commission over the panel’s decision to dismiss a complaint against the conservative Crossroads GPS, co-founded by GOP strategist Karl Rove.

The suit grows out of a 2010 FEC complaint filed by Public Citizen against Crossroads for what critics said was a failure to register as a political committee and disclose its donors, despite spending massive amounts on political advertising in the 2010 election cycle.

In a statement released Friday, Public Citizen and the Campaign Legal Center contend that Crossroads GPS fits the legal definition of a political committee — a group that receives or spends more than $1,000 during a calendar year to influence elections and whose major purpose is to support or oppose federal candidates.

The FEC commissioners deadlocked 3-3 along party lines on a vote in December over whether to investigate charges American Crossroads had violated guidelines for a “social welfare” organization by engaging in political activity.

FEC Dismisses Complaint Against Crossroads GPS

Politico reports:

The Federal Election Commission has closed a long-running investigation into the activities of Crossroads GPS — the nonprofit group founded by GOP strategist Karl Rove.

According to a letter sent by the FEC to Crossroads GPS and provided on Tuesday to POLITICO, the election enforcement agency dismissed the complaint — which was filed in 2010 — because there were insufficient votes on the commission supporting allegations that Crossroads GPS violated campaign finance law.

The FEC said it would follow up with a statement to Crossroads GPS explaining its reasons for the closure of the complaint.

The initial complaint was filed against Crossroads GPS in 2010 by the watchdog groups Public Citizen and Protect Our Elections. It alleged that the 501(c)(4) nonprofit organization was actually operating as a political committee — like a PAC or super PAC instead of a tax-exempt nonprofit group. The complaint also claimed that Crossroads GPS should be forced to disclose its donors and list its expenditures — just like PACs, super PACs, campaigns and political parties.

IRS, FEC, and 501(c)(4)

The Center for Responsive Politics reports on 501(c)(4) groups:

In its first year, Crossroads GPS -- a sister group to the super PAC American Crossroads -- reported to the FEC that it spent $16.7 million on ads directly and indirectly advocating for or against candidates. (Even 501(c)(4) groups, while not required to reveal much to the FEC, must disclose when they run certain kinds of ads and how much they spend on them -- and they must do so promptly.) It later told the IRS, in its first tax form 990 filed with the agency, that it spent $15.9 million on politics. Both figures understate the reality of what GPS spent in the political arena by millions. In either case, they are well under half of GPS' reported overall spending of $42.3 million (including salaries, overhead and so on) that year.

Likewise, other members of the Crossroads-CPPR network were careful to abide by the 49 percent rule, at least in a technical sense. The 60 Plus Association reported to the FEC that it spent $7.1 million in 2010; that's just under half of its total IRS-reported expenditures of $15.5 million. Former New York Gov. George Pataki's Revere America filed expenditure reports with the FEC that came to $2.3 million, safely below half of the $6.3 million it spent that year.

Crossroads GPS' 2010 spending may well have helped the GOP take control of the House. And the group came out with guns blazing in 2012. In that election cycle, it told the FEC it spent more than $71 million -- almost as much as the entire GPS-CPPR network had spent, combined, in 2010. Crossroads likely won't send the IRS its form 990 for 2012, in which it will reveal its total expenditures last year, until autumn of 2013 (stay tuned for Step 4 of our series for more on the lag time), but logic dictates the group will need to show a $130 million increase over its 2010 overall expenditures in order to stay under the 49.9 percent threshold for political spending in 2012 -- by any measure, a staggering increase.

Crossroads GPS is one kind of shadow money group. But other kinds of politically active groups operate under the 501(c)(4) designation. They're little more than glorified mailboxes.

Foremost among them is the Center to Protect Patient Rights, which OpenSecrets Blog first uncovered last year. From 2009, when it was founded, until the end of 2011, CPPR raised $101 million. More than $70 million of that went out the door to other shadow money groups. CPPR has no activities of its own: It doesn't run ads for or against candidates; it doesn't conduct research; it doesn't spearhead public education campaigns. It appears to be little more than a conduit funneling money to other shadow money groups that spend the money. During the 2010 cycle, CPPR made $47.9 million in grants to groups that told the FEC they spent $37.2 million on political ads.

It  also explains some legal distinctions:

One might expect that whatever qualifies as reportable spending for the FEC would also count as political spending for the IRS. As it turns out, though, “politics” is in the eye of the beholder. The FEC defines it one way, the IRS another -- and that difference can work in a group’s favor.

Take American Action Network, a 501(c)(4) run by former Republican Sen. Norm Coleman, started the month after Citizens United was decided. AAN told the FEC it spent nearly $20 million on political ads in 2010 -- yet reported to the IRS that it had spent only about $5 million on politics. Since the group that year reported spending a total of $25 million in all, the larger amount most likely would have caused the organization to fail the “primary purpose” test that’s meant to keep a 501(c)(4)’s political spending to less than half of its overall expenditures.

Luckily for AAN (though lawyers probably had more to do with it than luck), most of the spending it reported to the FEC was for “issue ads” -- ads that don’t tell viewers to vote for or against anyone, but often close with a line that goes something like, “Call Bruce Voight and tell him to stop torturing chipmunks.” Groups must report what they spend on issue ads to the FEC only when the ads run close to an election, which AAN’s did -- thus the high number.

But in its 2010 form 990 for the IRS -- not sent to the agency until May 2012 -- much of the money AAN spent on ads had undergone a makeover. Now, the funds had been used for grassroots “lobbying.” The form hints how the group redefined some of its activities. The first version of the document revealed that it made a $500,000 grant to Crossroads GPS’s sister group, super PAC American Crossroads. AAN later amended the report to delete the grant, saying it had been “inadvertently reported.” In the same amended report, the groupincreased the amount it reported for “lobbying” by $500,000. Later, it came out that the grant was actually a payment to Crossroads Media, the political admaker that counts both American Crossroads and Crossroads GPS as clients and was cofounded by formerAmericans for Job Security President Michael Dubke.

Joint Fundraising Committees, Explained

At National Journal, Reid Wilson reports:

Between the beginning of 2011 and August 30, the last date for which publicly-filed records are available, Obama for America has raised $337 million. The Democratic National Committee raised $111 million. The Obama Victory Fund, a joint account that collects big checks and distributes money to other committees, raised $291 million. And the Swing State Victory Fund, another joint account, has raised $3 million (Those are the total receipts reported before distributions from other committees, so we're not double-counting any money).

Over the weekend, the Obama campaign announced it had raised $181 million in the month of September across that Byzantine structure of committees and organizations. All told, Obama's campaign and the committees it controls have raised $923 million. If they raise just half as much in October as they did in September, Obama's campaign will indeed become the first billion-dollar campaign in history.

Given the pace at which Obama is fundraising -- he's in California today, the second part of a two-day Golden State fundraising swing -- a ten-figure campaign is all but guaranteed.

Individuals can give up to $75,800 to a victory fund, aka joint fundraising committee. How does this figure square with contribution limits?  As FEC explains, there is an aggregate limit of contributions to PACs and parties of $70,800. There is a contribution limit of $2,500 to candidates; however, the primary campaign and the general election campaign count separately, so $2500 can go to the Romney (or Obama) primary account and $2500 to the Romney (or Obama) general election account, 

In other words $70,800 + $2500 + $2500 = $75,800. 

And everything goes double for married couples! 

Romney Victory explains it this way:

Contributions to Romney Victory, Inc. (“RV”) are not tax deductible for federal income tax purposes. RV is a joint fundraising committee composed of Romney for President, Inc. (“RFP”), the Republican National Committee (“RNC”), the official Republican Parties in four states (the Idaho Republican Party, the Massachusetts Republican Party, the Oklahoma Leadership Council, and the Vermont Republican Federal Election Committee), the National Republican Senatorial Committee, and the National Republican Congressional Committee. Proceeds shall be allocated by the following formula:

Individuals and non-multicandidate PACs - The first $2,500 will go to RFP’s general account. Prior to August 31, 2012, the next $2,500 will go to RFP’s primary account. Beginning on August 31, 2012, should Romney for President have primary debt, that next $2,500 will go to RFP’s primary debt retirement account. The next $30,800 will go to the RNC. The remaining amount will be split evenly among the federal accounts of the Republican Parties of Idaho, Massachusetts, Oklahoma, and Vermont, up to a maximum of $10,000 per committee.

Multicandidate PACs - The first $5,000 will go to RFP’s general account. Prior to August 31, 2012, the next $5,000 will go to RFP’s primary account. Beginning on August 31, 2012, should Romney for President have primary debt, that next $5,000 will go to RFP’s primary debt retirement account. The next $15,000 will go to the RNC. The remaining amount will be split evenly among the federal accounts of the Republican Parties of Idaho, Massachusetts, Oklahoma, and Vermont, up to a maximum of $5,000 per committee.

Notwithstanding this allocation formula, a contributor may designate a contribution for a specific participant or participants. In addition, the allocation formula may change if any contribution would exceed applicable contribution limits. Contributions from corporations, labor unions, federal contractors, and foreign nationals are prohibited. Federal law requires us to collect and report the name, mailing address, occupation, and name of employer of each contributor whose contributions aggregate in excess of $200 in a calendar year (RNC and state parties) or election cycle (RFP).

The Obama version:

We are asking for a donation of up to $75,800 from individuals per election to Obama Victory Fund 2012. We are not asking for, and will not accept in connection with this solicitation, donations in any amount from registered federal lobbyists, registered foreign agents, federal political action committees, or minors under the age of 16. Contributions in any amount from corporations, labor organizations, national banks, federal contractors, and foreign nationals are prohibited. To enter by contributing money to Obama Victory Fund 2012, complete and submit the contribution form at https://donate.barackobama.com/dinner-with-barack-ovf or other web page specifically identified by Sponsor during the Promotion Period. No minimum contribution is necessary to enter. Entering via the contribution method described in this paragraph (c) will not increase your chances of winning the prize. The first $5,000 of a contribution to Obama Victory Fund 2012 will be allocated to Obama for America (with the first $2,500 designated for the primary election, and the next $2,500 for the general election). The next $30,800 of a contribution will be allocated to the Democratic National Committee. Any additional amounts from a contributor will be divided among the State Democratic Party Committees as follows, up to $10,000 per committee and subject to the biennial aggregate limits: FL (17%); OH (16%); PA (13%); CO (11%); NC (11%); VA (11%); NV (6%); WI (6%); IA (5%); and NH (4%). A contributor may designate his or her contribution for a particular participant. The allocation formula above may change if following it would result in an excessive contribution. Contributions will be used in connection with a Federal election.

501(c)(4) Groups Win in Court

Previous posts have discussed Van Hollen v. FEC, a case about 501(c)(4) disclosure. The Los Angeles Times reports:

Conservative groups pumping hundreds of millions of dollars into the 2012 campaign won a reprieve Tuesday when the U.S. Court of Appeals in Washington overturned a decision requiring organizations that run election-related television ads to reveal their donors.

In an unsigned decision, a three-judge panel said a lower court erred in finding that Congress intended to require such disclosure. It sent a case brought by Rep. Chris Van Hollen(D-Md.) against the Federal Election Commission back to the district court and called on the FEC to defend its regulations or issue new ones.

Practically, the ruling changes little in the short term: Nonprofit organizations such as the U.S. Chamber of Commerce, Americans for Prosperity and Crossroads GPS changed the type of ads they were running this summer in order to sidestep the lower-court ruling and keep their donors secret.

But the appellate court decision was hailed by conservative groups as a major victory in their broader battle against the push for donor disclosure — a fight that took on new stakes after recent federal court rulings unshackled corporations and groups of wealthy individuals to spend freely on campaigns.

From Rick Hasen:

You can find the unanimous opinion of the DC Circuit here.
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More from National Journal, Politico, Roll Call, The Hill, AP, Huffington Post, Bloomberg BNA.

See the statements by Fred Wertheimer, Sunlight, CLC, Steve Hoersting, Center for Competitive Politics.

Crossroads GPS and the Window

A previous post dealt with a legal quirk that will encourage 501(c)(4) groups to do more express advocacy.

Gregory Krieg writes at ABC:

The FEC mandate, which comes as the result of a case brought by Rep. Chris Van Hollen, D-Md., and argued in part by The Campaign Legal Center's Paul Ryan, means that the groups must now use, as Ryan says, certain "magic words like 'vote for' or 'vote against'" in order to legally keep their donors' names out of the public sphere.

"The irony," he explains, "is that the more explicitly the ad pushes one particular candidate, the less disclosure is required."

That's where the IRS comes in – or could - Ryan says, if it chooses to be more engaged.
Crossroads GPS maintains its tax-exempt status specifically because it does not – or has not to this point – released so-called independent expenditure ads. That's the legal term for spots that openly push for or against a candidate's election. If the FEC ruling in the Van Hollen case pushes groups like Crossroads GPS too deep into that kind of advertising, the IRS could revoke their exemptions and put a crimp in their finances.

Matea Gold picks up the story at The Los Angeles Times:

Electioneering communications are television spots that refer to federal candidates but stop short of advocating for their election or defeat and that air within 30 days before a primary (or before the first day of a national nominating convention) and 60 days before the general election.

According to the FEC, the electioneering communications window before the Democratic National Convention begins Aug. 4. However, the commission has offered confusing guidance on the topic: Last week, its website identified the start the period as Aug. 7, which the FEC then said was a mistake, noting the correct date was Aug. 4.

“The commission regrets the error,” the FEC said in a statement posted on its website Friday.

“The commission will exercise its prosecutorial discretion and will not take enforcement action with respect to communications disbursements made in reasonable reliance on the erroneous information on the website in connection with EC reporting.”

Officials with Crossroads GPS appear confident that because of the confusion, the group will not be forced to reveal its contributors

“Crossroads has no plans to air ads that will trigger reporting in the [electioneering communications] window,” spokesman Jonathan Collegio said in a statement.

Electioneering and 501(c)(4) Groups

A recent court ruling requiring disclosure regarding electioneering communications will have two unanticipated consequences:  changing the timing of ads, and encouraging more express advocacy.

At The Huffington Post, Dan Froomkin and Paul Blumenthal write about the complex rules involving 501(c)(4) groups:

A recent federal court ruling has actually accelerated the pace of spending by politically active non-profits in the early months of the campaign.

The ruling in Van Hollen v. FEC invalidated a regulation those groups had used to justify keeping secret the names of donors buying broadcast ads that refer to a federal candidates in a prescribed period before an election -- called “electioneering communications.”

Good-government advocates rejoiced. But non-disclosing groups have simply pushed up their spending to the summer -- before that prescribed period begins. (They have also said they intend to run explicitly political ads once the period begins.)

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Campaign finance watchdogs said the lack of disclosure makes it harder to police one of the few rules governing the unlimited spending of outside groups: coordination between independent groups and candidates and party committees is forbidden.

"They're not supposed to coordinate, but if they're sharing a consultant with a candidate that they're looking to advance, how do we know they aren't coordinating?" asked Sunlight Foundation managing editor Kathy Kiely. "If you don't reveal who's working for you, there's no way that the public or the FEC can tell if you're coordinating."
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The only clear view the public gets of how these groups spend their money comes more than a year after that money is spent, when nonprofits file their annual IRS Form 990 returns with the IRS. Tax-exempt groups are required to list their top five outside contractors.

For most of these groups, the most recent 990 reports available cover 2010 -- ancient history in a 24/7 news cycle. The reports do reveal, however, how some of these groups rely on steady support from a network of consultants.

For Crossroads GPS, the Karl Rove-linked nonprofit, top consultants all have roots back through Rove and the Bush administration.

At Reuters, Alison Frankel explains an oddity of the law:

On its most basic level, the ruling means that groups like the U.S. Chamber of Commerce, Crossroads GPS, Americans for Prosperity and other non-profits that run a particular kind of election-related advocacy ad must reveal who is giving them money. (The case doesn’t affect political action committees, which have their own set of rules.) “This is a very important victory in the battle to end secret contributions being funneled into federal elections,” said Democracy 21President Fred Wertheimer, who was co-counsel for the plaintiff in the underlying case, Representative Chris Van Hollen, a Maryland Democrat. “This case represents the first major breakthrough in the effort to restore for the public the disclosure of contributors who are secretly providing massive amounts to influence federal elections,” Wertheimer said in a statement. (Here’s an excellent overview of the case from the L.A. Times.)

But here’s the thing: The D.C. Circuit’s ruling may have the entirely unintended effect of pushing more money from politically active non-profits into television and radio ads that directly call on voters to support (or vote against) particular candidates. According to both election law professor (and blogger) Rick Hasen of the University of California at Irvine and Hispanic Leadership Fund counsel Jason Torchinsky of Holtzman Vogel Josefiak, there’s now a peculiar distinction between the ads at issue in the Van Hollen case – so-called electioneering communications that talk about particular candidates but stop short of recommending a vote for or against them – and “indirect expenditures,” in which groups run ads specifically urging you to vote for or against a candidate. The Van Hollen suit didn’t address indirect expenditures, so, according to Hasen, if non-profit groups want to keep their donor lists secret, they may switch their spending to ads that contain express advocacy.

Hasen said the groups risk losing their tax-exempt status if they do, but since none have apparently suffered that fate, “I think [the D.C. appellate ruling] is going to cause a shift.”

Coordination, Coincidence, Consistency: An Example

Dave Levinthal writes at Politico:

Call it coordination or call it coincidence, but it’s clear there’s no robust mechanism, and little government appetite, to dissuade moneyed campaigns and super PACs from dancing near or around rules governing concerted activity and messaging which, strictly speaking, isn’t legal.

That’s largely because of the high bar for proving a campaign or super PAC violated established law. And the Federal Election Commission has of late internally disagreed on what actually constitutes coordination between a federal campaign and political committees making independent expenditures that support them.

Punishments, rare as they are, would almost certainly come in the form of fines that could effectively be paid out of a moneyed campaign’s petty cash drawer and come months, even years after an alleged infraction.

Tuesday’s American Crossroads video begins: “Obama’s attacking private equity. But what’s his record on public equity investing?” It continues: “Obama invested our tax dollars in Solyndra. Lost half a billion.”

The Romney campaign video, meanwhile, states: “President Obama is spending your tax dollars to create jobs. How’s he doing? You’ve heard of Solyndra. They took $535 million in taxpayer loan guarantees and went bankrupt.”

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“It is not a surprise that American Crossroads would attack Obama on a very obvious vulnerability. However, Crossroads is an entirely independent entity,” said Romney spokeswoman Andrea Saul. “The Romney campaign has nothing to do with its choice in Web ads.”

Where to Give?

At The Wall Street Journal, Rachel Louise Ensign offers advice for people who want to give political money:

You should also be aware that some of these organizations now operate in tandem with super PACs. One of the most powerful conservative pairings of this kind is American Crossroads, a super PAC, and Crossroads GPS, a 501(c)4. The difference between the two: "On the policy side, Crossroads GPS, we are working to stop President Obama's agenda. On the political side, American Crossroads, we're looking to replace him as president," says Nate Hodson, a spokesman for both organizations.

One appeal of 501(c) groups is the promise of donor anonymity. If you give more than $200 through the traditional system or to a super PAC, your name, address and size of donation will be disclosed by the Federal Election Commission and published online. With these politically active 501(c) organizations, that's not the case.

"It's something that's worth a moment's thought," says Mr. Samples of the Cato Institute. "A Google search will frequently turn up these things."

But a word of caution: The promised anonymity may not be guaranteed. A U.S. district-court judge ruled last month that the FEC went beyond its authority when it allowed nonprofits to keep secret the identities of donors who financed certain election ads. This sets the stage for a battle over donor anonymity, says Mr. Mann of the Brookings Institution.

Meanwhile, the Internal Revenue Service—which is responsible for granting 501(c)4 status to organizations—recently asked for extensive details from certain conservative groups applying for that status, including the names of donors.

That suggests some groups may fail to pass muster, leaving their donors' names open to public scrutiny. So donors who expect anonymity should at least be sure that an organization has secured the necessary status before making a contribution

Crossroads GPS: Whence the Money Came, Where It Went

Danny Yadron writes at The Wall Street Journal:

Crossroads GPS, the well-connected conservative advocacy group, raised $76.8 million from fewer than 100 donations in its first 19 months in operation, according to tax forms the group released Tuesday.

It’s the first time the nonprofit, co-founded by Republican operative Karl Rove, has released such data. The documents showed that Crossroads received two dozen donations for $1 million or more, as well as two for $10 million apiece between June 2010, when the group was founded, and the close of 2011.

Open Secrets reports that Crossroads GPS spent about $16 million on express advocacy in 2010, along  with another million on electioneering communications.

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.

...
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.

Kenneth Vogel wrtites at Politico:

Crossroads’s role as a funder of the right was intended to mimic — and help offset — the millions of dollars that labor unions for years have directed to an array of liberal groups that help Democrats, including environmentalist and gay-rights outfits and, more recently, Democratic super PACs.

“The unions have spent literally hundreds of millions of dollars in this way,” asserted Crossroads spokesman Jonathan Collegio. Crossroads is merely taking “a page out of the unions’ playbook by supporting philosophically aligned groups that share many of the same policy goals and have complementary assets,” he told POLITICO, adding that the “cross-fertilization of like-minded groups is critical to building an infrastructure for long-term policy change.”

The extent of Crossroads’s money role was revealed Tuesday when Crossroads Grassroots Policy Strategies – the shadowy nonprofit sister of the better known American Crossroads super PAC — released its tax filings for 2010 and 2011.

... 

Some of the groups that received GPS funding directly participate in the so-called Weaver Terrace Group strategy sessions held regularly in Crossroads’s downtown Washington offices, where groups coordinate advertising strategy for different races across the country.
American Action Network, which accepted $500,000 from GPS in 2010, is a core member. Other attendees include NFIB; Americans for Tax Reform, which accepted $4 million from GPS; the 60 Plus Association, which accepted $50,000 from GPS; as well as the Republican Jewish Coalition. That group shares a pair of board members with American Action Network — former Minnesota Sen. Norm Coleman and veteran fundraiser Fred Malek — and in 2010, it donated $4 million each to Crossroads GPS and American Action Network, according to its tax filings.

Maxing for Mitt

The Campaign Finance Institute reports:

Mitt Romney continues to have a more top-heavy fundraising profile than his opponents. Romney has raised 81% of his money from donors who have given a total of $1,000 or more; 66% from donors who have given the maximum amount of $2,500 (see Table 3). These are not only much higher percentages than his current opponents’. They are higher than any the Campaign Finance Institute has calculated for major candidates since 2000 (see Table 4 for 2008). 

Potentially more troublesome politically is that 40% of Romney’s 40,011 itemized donors have given the legal maximum (see Table 5). They cannot give to the campaign again, which may help explain the tactical importance of the Super PAC supporting Mitt Romney, Restoring Our Future. Super PACs may accept unlimited contributions but must remain independent of candidates. (See Table 6 for the major Super PACs associated with the leading presidential candidates.)

FEC & Crossroads GPS

Jonathan Salant writes at Bloomberg:

The Federal Election Commission said it won’t consider requiring organizations that air political advertisements to disclose their donors.

On a 3-3 party-line vote, the FEC decided today not to proceed on a request for such a rule by Representative Chris Van Hollen, a Maryland Democrat.

Van Hollen filed his petition in April, more than a year after the U.S. Supreme Court’s Citizens United decision, which removed restrictions on political ads funded by corporations and unions. Senate Republicans twice in 2010 blocked legislation that would require public disclosure of contributors.

The FEC did agree to begin changing regulations that conflict with the court decision. Chairwoman Cynthia Bauerly and fellow Democratic commissioner Steven Walther called the action “the bare minimum necessary” in a statement. Democrat Ellen Weintraub voted with Bauerly and Walther to consider a disclosure rule.

...

 Of the five Republican-leaning groups that spent the most money, four kept their donors hidden, led by the U.S. Chamber of Commerce and Crossroads Grassroots Policy Strategies, which former Republican White House aide Karl Rove helped create.

Crossroads GPS and its affiliated American Crossroads, which does disclose donors, said they planned to raise more than $240 million for the 2012 elections. Democrats have countered with their own political groups, including some that won’t disclose donors.

FEC and Independent Expenditures

At Campaigns and Elections, Allen Dickerson writes about two recent FEC advisory opinions:

The first case involved a leadership PAC affiliated with Sen. Mike Lee (R-Utah). Leadership PACs are affiliated with candidates or officeholders, and gather donations that are, in turn, contributed to other candidates. So while Lee could not receive any of his PAC’s funds, he could direct that money to the campaigns of allied candidates.

Lee’s leadership PAC seized on this distinction, and asked the FEC whether it could raise unlimited contributions for use in IEs. Lee’s camp argued that IEs don’t give funds directly to candidates’ campaigns so they can’t be corrupting. Why should it matter, the Lee camp’s thinking goes, if the funds went to a leadership PAC? They still couldn’t be used for any of Lee’s election activity, and so they couldn’t corrupt him or anyone else.

The FEC disagreed—in a unanimous vote. And because a federal statute was directly on point, capping contributions not only to federal candidates but also their agents and any affiliated entities, the commission had little choice.

...

The issue presented by American Crossroads, an IE-only PAC affiliated with GOP strategists Karl Rove and Ed Gillespie, posed a more challenging question—and deadlocked the commission. In the wake of Sen. Ben Nelson’s (D-Neb.) coordination with the Nebraska Democratic Party on issue advertising, American Crossroads asked the FEC if it could make ads discussing political issues and featuring elected officials and candidates. The PAC conceded that these ads would be “coordinated” with the candidates, but argued that because they didn’t explicitly call for the candidates’ to be elected, the ads were not in-kind contributions to their campaigns.

A technical scuffle broke out over whether such ads were covered “communications,” a debate that is interesting almost exclusively to lawyers. It caused a split decision. Three commissioners viewed these ads as clearly favoring and benefitting candidates, and three viewed them as constitutionally protected attempts to discuss the issues of the day. The end result is, once again, a regulated community left without helpful guidance.

Coordination Rules

At ProPublica, Marian Wang writes about the loose FEC rules on coordination:

“The restrictions on interactions between candidates and Super PACs are far more modest than the public believes,” said Paul Ryan, a lawyer with Campaign Legal Center [3], a campaign-finance advocacy group.

...

In guidance handed down [10] by the FEC in July, the commission allowed candidates to help fundraise for the supposedly independent groups, on the premise that it was, after all, only coordinated spending that was banned.

The FEC did place [11] a few restrictions: Candidates still can’t solicit unlimited donations or corporate donations to the Super PACs, but they can ask for contributions within the traditional $5,000 contribution limits that apply to direct donations. Whether that limit is meaningful is up for debate — donors can still give as much as they want.

...

Last month, Democratic Sen. Ben Nelson of Nebraska appeared in a political ad. No, not an ad by his own campaign, but a supposedly uncoordinated ad [18] paid for by Democratic Party officials.

The ad prompted American Crossroads, a Republican-leaning Super PAC set up by Karl Rove, to ask the FEC for permission to do the same — to create advertisements that “would be fully coordinated [19]” [PDF] with candidates “insofar as each Member would be consulted on the advertisement script and would then appear in the advertisement.”

How can “fully coordinated” ads not run afoul of the limits on coordination?

The FEC has a two-part coordination test that’s as detailed as it is permissive: The first part is whether groups and candidates have conducted themselves in a way that’s coordinated, such as discussing the particulars of an ad buy. The second part is a more complicated test that looks at the timing to an election and the content of the ad, such as whether it essentially advocates for or against a candidate.

In its request, American Crossroads announced its intent to fully coordinate its ad with a candidate, but argued that the ad it intends to produce could also be interpreted as an issue ad that happens to improve the public image of a candidate for office, but not an ad that advocates for the candidate’s election.

The request was spoofed by Stephen Colbert in a must-read comment letter [20] to the FEC. The issue has yet to be decided by the commission.

Crossroads, Candidates, and Super PACs

Holly Bailey writes at Yahoo about a potential new wrinkle in campaign finance rules, courtesy of American Crossroads:

American Crossroads, a conservative "super PAC" linked to former Bush adviser Karl Rove, is asking the Federal Election Commission for permission to use federal candidates and office holders in its ads.

The request, filed Wednesday with the FEC, could potentially undermine campaign finance laws that have long prohibited direct coordination between outside groups and political candidates.

But in a letter sent to the FEC, attorneys for American Crossroads argue they are simply seeking permission to do what Democrats are already doing. As evidence, they site a series of recent campaign ads starring Nebraska Sen. Ben Nelson, in which he is shown explaining his votes on the debt ceiling and other hot button issues.

The spots look like campaign ads for Nelson, who is facing a tough path to re-election next year. But they were paid for by the Nebraska Democratic State Central Committee, an offshoot of the state Democratic party, with funds routed to the committee by the Democratic Senatorial Campaign Committee, the fundraising arm of Senate Democrats in Washington.

Nicholas Confessore writes at The New York Times:

In a sign of the intensifying fight for control of the House, allies of Congressional Republicans are forming a new Super PAC to raise and spend unlimited amounts of money to defend the G.O.P. majority next year.

The new group, the Congressional Leadership Fund, will be loosely affiliated with the American Action Network, a nonprofit advocacy organization that spent about $26 million in 2010 to help Republicans win control of the House. The network’s founder, the businessman Fred V. Malek, will sit on the board of the new fund, and Brian Walsh, the network’s president and a former political director of the National Republican Congressional Committee, will run it.

The arrangement mirrors that of the leading Republican-oriented independent group, American Crossroads, a group founded by Karl Rove that is paired with a nonprofit group, Crossroads Grassroots Policy Strategies. The combination allows for more flexibility in raising and spending money: The Super PACs must disclose their donors but can advocate explicitly for or against a candidate, while the nonprofits may keep donors secret but are technically restricted to issue advocacy.

Super PACs and Disclosure

At The Huffington Post, Paul Blumenthal has a long piece on Super PACs and nonprofits:

Nonprofit spending increased as the groups were freed to spend money on express advocacy advertisements. While more than half the money spent by non-disclosing groups went to so-called electioneering communications, issue ads that had previously been allowed, almost the entire growth in spending by non-disclosing groups came from the newly-allowed express advocacy, which grew from $6.9 million in 2008 to $62 million in 2010.

Super PACs have even gotten in on the secret money act. While Super PACs are required to disclose their donors, they can accept contributions from nonprofits that do not disclose their donors and from corporations, some of which either do not identify their owners or dissolve upon making a large donation. This has already caused controversy for the Romney-backing Restore Our Future, which received three $1 million contributions from corporations that appear to do no business, one of which dissolved a few months after making the donation.

"The money has shifted to the fringes and it's become less and less transparent," said Center for Responsive Politics Executive Director Sheila Krumholz. "It's shifting away from the parties, the candidates, the PACs, and shifting to these unregulated groups and becoming much and much more secret."

The decrease in disclosure was aided by a 2007 ruling by the FEC that gutted a provision of the McCain-Feingold campaign finance reform law requiring the disclosure of donors to groups spending money on election ads, whether they be issue ads or express advocacy.

"We had 100 percent disclosure for nonprofit spending on electioneering communications in 2004," explained Craig Holman, the lobbyist for the watchdog group Public Citizen. "The FEC changed the disclosure rule in 2007 to only require disclosure for contributors who earmark their donations for [express advocacy and issue] spending, which no one does. Now, everyone has figured out that they don't have to disclose at all."