By Matt Corley and David Crockett
December 15, 2014

Dark Money

The post-Citizens United transformation of American politics continued apace in the 2014 midterm elections as spending by outside groups broke new records, boosting both Democrats and Republicans. These outside players, some of whom do not disclose their donors, are now a major and permanent part of American elections. According to the Center for Responsive Politics, groups that do not disclose some or all of their donors spent at least $219 million to influence the outcome of the 2014 elections, up from $160.8 million in the 2010 election cycle.

Over the course of three election cycles, the outside groups unleashed by the Supreme Court have refined their techniques for evading disclosure. Today, Citizens for Responsibility and Ethics in Washington (CREW) kicks off a week-long series of blog posts examining one of the tactics groups have used to keep donors secret: dead end disclosure. As CREW has previously noted, this practice allows groups that are required to reveal their contributors to hide the ultimate source of funding by funneling donations through nonprofits that do not have to disclose their donors.

Dead end disclosure takes several forms. Some super PACs, for instance, are entirely funded by non-disclosing nonprofits. Others only receive a portion of their contributions in this manner. For some dead end disclosers, the pass-through vehicle is a social welfare organization while others use trade associations.  In this series of blog posts, CREW will examine the various modes of dead end disclosure using illustrative examples from the 2014 election cycle.

Super PACs with Affiliated Nonprofits

One of the most common techniques for dead end disclosure is for a nonprofit to give money to an affiliated super PAC, which then makes independent expenditures to influence the outcome of an election. This cash transfer can take the form of shared expenses and in-kind contributions as well as direct payments. Often times, the nonprofit also separately spends money to influence elections, though not necessarily as much as the allied super PAC and not always in a manner that requires reporting to the Federal Election Commission (FEC).

A prime example of dead end disclosure using partner groups is Women Speak Out PAC, a super PAC affiliated with the Susan B. Anthony List, an anti-choice nonprofit. In the 2014 election cycle, Women Speak Out PAC spent over $2 million on independent expenditures, half of which targeted Sen. Kay Hagan (D-NC).

Though Women Speak Out PAC raised money from hundreds of individual donors, including three who cut six-figure checks, by far the group’s top contributor was its nonprofit ally. According to Women Speak Out PAC’s pre-runoff report to the FEC, the Susan B. Anthony List contributed more than $1.5 million to the super PAC in 2014, roughly 41 percent of all the money Women Speak Out PAC raised this year. On its own, the Susan B. Anthony List reported spending more than $473,000 on independent expenditures in the 2014 election, in addition to another $136,000 spent on communications costs.  In total, the Susan B. Anthony List claims that combined with Women Speak Out PAC, the organization raised and spent $15.25 million on the mid-term elections – much of which was not reported to the FEC.

When the Susan B. Anthony List created Women Speak Out PAC in 2012, the group’s president, Marjorie Dannenfelser, described the super PAC as “another tool with which we will amplify the voice of pro-life women and expose the President’s true record on this issue.” In that election, Women Speak Out PAC spent more than $843,000 on independent expenditures, most of which targeted President Obama.  The Susan B. Anthony List was again the super PAC’s biggest contributor, providing $407,000. Separately, the Susan B. Anthony List spent more than $1.5 million on independent expenditures in the 2012 election cycle.

Where the Susan B. Anthony List got that money is unknown. As a tax-exempt social welfare group organized under section 501(c)(4) of the tax code, the organization is not required to disclose its donors. Some of its contributors have been revealed, however, through the tax filings of other organizations. In the past, the Susan B. Anthony List has received grants from other non-disclosing nonprofits that engage in politics or fund groups that do, including the Center to Protect Patient Rights, Freedom Partners Chamber of Commerce, and the American Action Network. At least one of their grants has been explicitly tied to electoral work. Between October 2010 and September 2011, Citizenlink, the political advocacy arm of Focus on the Family, gave the Susan B. Anthony List $220,000, which the organization said was meant to “assist with purchase of TV promotional spots & election help.”

Women Speak Out PAC is also clearly “another tool” for the Susan B. Anthony List to inject money into politics without revealing its source. Though the Susan B. Anthony List’s funding is obscure, the group has been around for a long time and its goals are clear: “electing candidates and pursuing policies that will reduce and ultimately end abortion.”  The motivations of other groups utilizing dead end disclosure are not always so apparent. Tomorrow, CREW will detail how an under-the-radar network of lawyers and political operatives inject millions of dollars into elections with minimal information about whose money they’re spending and why they’re spending it where they do.

9/18/14: Dead End Disclosure Lives on With Allied Groups.