October 17, 2016
Last week, CREW wrote about how Concerned Veterans for America is using a loophole in campaign finance law that allows the group to spend hundreds of thousands of dollars on candidate-focused digital ads without reporting them to the Federal Election Commission (FEC). But the Koch network-backed non-profit might not be the only group exploiting the loophole this election.
In the last two weeks, One Nation, a non-profit organization that is part of Karl Rove’s Crossroads operation, has posted several videos on its YouTube page that appear to be new “issue” ads targeting Senate candidates in Florida, Indiana, Missouri, Nevada, North Carolina, and Ohio. Each of the videos, which were posted in 15 second and 30 second versions, praises or criticizes a member of Congress who is also a Senate candidate and ends with a call to contact the named members of Congress about specific legislation.
It is unclear how much, if anything, One Nation is spending to place the ads in front of viewers’ eyes. In the past, the group has issued press releases announcing its ad campaigns, complete with information on where the ads will run and how much money is behind them. But the group hasn’t posted a press release since August 26, when it announced “a new two week, $1 million advocacy campaign in North Carolina” that praised Sen. Richard Burr (R-NC). Notably, One Nation went quiet exactly two weeks before the opening of the “electioneering communications” window that would require the group to report expenditures for election targeted TV ads to the FEC, even if they don’t explicitly call for the election or defeat of candidates.
In September, after the “electioneering communications” window opened, One Nation started reporting some expenditures to the FEC, but none of them appear to relate to the ads posted on YouTube, instead revealing payments for “postage/printing/production.” Before that point, the group, which does not have to disclose its donors, had already reportedly spent at least $25 million targeting Senate races, all without reporting a dime to the FEC.
If One Nation were running the YouTube videos as TV ads, the group would have to file reports with the FEC within 24 hours of publicly distributing them since paid ads that mention political candidates by name, even if they don’t expressly advocate for their election or defeat, must be disclosed if they are made within 60 days of a general election and are targeted at relevant voters. But those rules don’t apply to ads that run only on the Internet as current law only defines “electioneering communications” ads as those run on broadcast, cable, or satellite TV.
Thanks to this Internet loophole, One Nation could spend six-or-seven figures to place the ads before YouTube clips watched by voters in target states, and the FEC would never know about it. As a result, even though the ads appear designed to influence elections, One Nation likely would not report the spending as election-oriented to the IRS either, which is an important advantage for non-profits that need to spend less than half of their budgets on elections in order to retain the tax-exempt status that allows them to keep their donors secret.
The political operatives behind One Nation have abused this loophole before. In 2014, a non-profit called the Kentucky Opportunity Coalition (KOC), which had close ties to the Crossroads network of groups run by One Nation president Steven Law, spent millions of dollars boosting Sen. Mitch McConnell (R-KY)’s re-election efforts. As part of the spending, KOC spent $750,000 on a digital ad campaign, most of which ran between September 26, 2014 and Election Day. None of those ads were disclosed to FEC. After he was re-elected, Sen. McConnell personally encouraged Republican senators to “steer big donors to One Nation and the Senate Leadership Fund” instead of starting their own super PACs, according to Morning Consult.
Though it claims to be just an “issue advocacy nonprofit” when accused of running political ads, One Nation’s leaders regularly tout the group’s massive fundraising as part of overall efforts to keep Republican senators in the majority. Given that, it should come as no surprise that the organization might be exploiting loopholes in the law in order to spend as much money as possible without disclosure.