When Citizens for Sanity, Inc., a recently-formed nonprofit organization run by former Trump administration officials, applied for a license to solicit charitable contributions in North Carolina this past August, the group submitted a “targeted budget” predicting that it would spend $1 million overall in 2022. Yet the group, which has drawn attention to itself with racist ads, quickly rose to the top ranks of outside spenders in the month before the midterm elections.

Despite spending at least $40 million on political ads in just a few months, Citizens for Sanity has not reported any of its spending to the Federal Election Commission. That’s because the group is exploiting loopholes in federal campaign finance law.

For example, some of Citizens for Sanity’s ads avoided the need to file disclosures by omitting explicit references to the election and by focusing on President Joe Biden and Vice President Kamala Harris, who were not up for election, or Democrats and progressives more broadly. Others directly addressed candidates, but appear to only have run on mediums, including the Internet, where billions are now spent on political ads, that are not covered by current law.

For instance, in the weeks leading up to Election Day, Citizens for Sanity spent more than $175,000 with Google on a video ad claiming Pennsylvania Democratic Senate candidate Lt. Gov. John Fetterman had plans that will “keep the drugs flowing, the killers killing, and the children dying.” Another ad the group ran declared that Fetterman is “helping killers kill again.” Citizens for Sanity also spent more than $100,000 on an ad saying Sen. Mark Kelly (D-AZ) “means open borders and more crime” and more than $40,000 on an ad claiming Sen. Catherine Cortez Masto (D-NV) “puts criminals first.”

Paid ads that mention federal 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. Under the law though, groups that spend more than $10,000 a year to make and run these “electioneering communications” ads are only required to report the spending to the FEC if the ads are run on broadcast, cable, or satellite TV. Newspaper, billboard, and online ads are not covered by the law.

In all, as of today, Citizens for Sanity has spent more than $2.5 million on Google ads, most of which targeted Democratic candidates with incendiary rhetoric. The group also spent hundreds of thousands of dollars on Facebook to run similar ads attacking the same candidates.

Citizens for Sanity also dedicated significant resources to attacking Democratic candidates offline, reportedly paying for at least 70 billboards in Phoenix, AZ alone that declare “Mark Kelly = Open Borders.” The group’s Twitter feed highlights a wide assortment of newspaper ads it purchased criticizing Democratic candidates, including one that says “why does John Fetterman love murderers” and another that says, “Thank you, Patty Murray for voting to free violent murderers from jail. We deserve to be punished.”

Citizens for Sanity was incorporated in June 2022 and made its public debut in mid-August 2022 when Politico reported that the group planned to “spend millions of dollars in the run-up” to the midterms and had “begun running a television, newspaper and billboard advertising campaign in battleground congressional districts.” OpenSecrets subsequently reported that the group’s board – Gene Hamilton, Ian Prior, and John Zadrozny – all previously worked in the Trump administration and have ties to America First Legal Foundation, a nonprofit founded by former Trump White House official Stephen Miller that ran ads accusing the Biden administration of “racism against white people.”

As a nonprofit organized under section 501(c)(4) of the tax code, Citizens for Sanity is not required to disclose its donors, which is why groups like it are commonly referred to as dark money groups when they engage in political activity. As CREW has previously noted, one  reason that dark money groups may seek to exploit loopholes in electioneering communications rules is because by not reporting the money to the FEC, it’s easier for the groups, who cannot have politics as their primary activity, to avoid scrutiny if they don’t report the expenditures as election-oriented on their tax returns. The IRS’s standards for defining political campaign intervention are broader than the FEC’s in such a way that many electioneering communications could be expected to be considered political activity by the agency. Indeed, a federal judge underscored the political nature of electioneering communications in 2016 by ruling that at a minimum, “many or even most electioneering communications indicate a campaign-related purpose.”

Electioneering communications were first defined in 2002 – years before YouTube, Facebook, or Twitter even existed – and the definition has not been updated since to account for the growth of social media and Internet streaming. The digital loophole now represents a huge hole in the FEC’s disclosure requirements as spending on digital political ads has exploded in recent years, totalling $1.6 billion in the 2020 cycle. The fact that if the same exact paid ad ran during both the broadcast of a TV show and a stream of it on a service like Hulu only the former would trigger reporting underscores how out of sync the current law is with how modern political communications operate.

There are efforts to close the digital electioneering communications loophole but they have thus far been stymied. The bipartisan Honest Ads Act would expand the law to include paid Internet or digital communications and was incorporated into the Freedom to Vote Act, but the latter legislation, which also expanded voting rights, was blocked earlier this year by a Republican filibuster. Until some reform is successful, groups like Citizens for Sanity will continue to be able to spend large sums on political ads while exploiting loopholes to avoid disclosure. 

Read More in Investigations