Paul Abowd stories from The Center for Public Integrity

How governors' associations keep donations secrets

2013-04-06T11:00:02-04:00

The two most prolific outside spending groups in state elections have found a new method for influencing elections and ballot initiatives — nonprofit groups.

As reported by the Center for Public Integrity on Thursday, the Washington, D.C.-based Republican Governors Association and Democratic Governors Association together have poured tens of millions of dollars of secret money into nonprofits to wage state-level battles over union rights, tax policy, gay marriage and, of course, gubernatorial seats.

The two nonprofit groups — the RGA’s Republican Governors Association Public Policy Committee and the DGA’s America Works USA — are not required to make their donors public, giving these contributors a secret avenue for funding RGA and DGA efforts.

The Internal Revenue Service, however, incorrectly released donor information for the RGA nonprofit, which the Center obtained.

The disclosure reveals several high-profile corporate executives and two healthcare giants supporting the RGA nonprofit’s efforts in 2011.

“Social welfare” nonprofits are not supposed to have a primary purpose of engaging in politics, according to IRS rules. But this has not stopped political operatives from using the groups to influence elections at all levels, and the RGA and DGA are no exception.

During 2011 and the first half of 2012, the DGA nonprofit America Works USA spent 70 percent of its budget on ads in gubernatorial races in West Virginia and Missouri, according to IRS records.

The RGA nonprofit, Republican Governors Association Public Policy Committee, promised the IRS it would spend only 20 percent of its resources on advertisements, but by 2011, had spent 50 percent of its budget on advertisements.

Spending by the RGA and DGA nonprofits has exploded in just two years and is poised to keep rising as 38 governors’ seats go up for grabs this year and next.

Full coverage:

IRS ‘outs’ handful of donors to Republican group

HCA INC. — 2013-04-04T06:45:40-04:00

A handful of donors to the nonprofit Republican Governors Association Public Policy Committee got a rude surprise when the Internal Revenue Service mistakenly outed them by making available part of a tax form that is supposed to be kept private.

The Center obtained a copy of the group’s Form 990 from a website that displays tax returns online. The return included one page of the “Schedule B” list of donors which the IRS does not require to be made public.

The total donations on the page make up a small percentage of the $5 million the nonprofit took in for calendar 2011, but also provide a rare if limited glimpse at who — or what — funds political nonprofits.

Among the donors:

HCA Inc., the largest operator of private hospitals in the country, which donated $89,000.

Healthsouth Corp., one of the largest operators of rehabilitation services in the country gave $10,500. A 2003 investigation by the Securities and Exchange Commission charged the company with systematically overstating its earnings. Two years later, the firm agreed to pay $100 million to settle the charges.

Boyden Gray, former U.S. ambassador to the European Union in the George W. Bush administration and White House counsel to President George H.W. Bush, gave $15,000. Gray is currently a board member of the conservative organization American Action Network.

David Humphreys, CEO of Missouri-based TAMKO Building Products, which manufactures materials for residential and commercial construction, gave $50,000. Humphreys is reportedly the second-largest donor to candidates in his home state since 2008, and is on the board of the Koch family-funded Institute for Humane Studies, a free-market economics center at George Mason University.

Robert Harris, president of a New Jersey consulting firm that advises drug and medical device companies, gave $50,000. Harris was selected to be on New Jersey Gov. Chris Christie’s transition team as an economic development adviser in 2010.

James Haslam, chairman and chief executive of Pilot Flying J, the largest truck stop chain in North America, gave $10,000. Haslam’s brother Bill is the Republican governor of Tennessee.

HCA Inc.’s donations helped the RGA nonprofit oppose the implementation of the 2010 health care reform law even though the company supported the bill’s passage in March 2010. This year it has backed states that have accepted the Medicaid expansion funds that the law provides.

The Tennessee-based corporation has also given $300,000 to the RGA’s 527 group since 2010.

The company, through spokesman Ed Fishbough, said it supports the RGA while “understanding we will not always have consensus” on “issues of concern.”

RGA spokesman Michael Schrimpf says that donor information is confidential, and “its partial disclosure by the IRS was erroneous and unauthorized. In fact, it is a felony to disclose the information.”

In an email to the Center, Grant Williams, a spokesman for the IRS wrote: “Federal privacy laws don’t allow the IRS to comment on specific situations or cases.”

The Center’s publication of the material is protected by the First Amendment.

Last year, the IRS also inadvertently released documents for a prolific nonprofit group Crossroads GPS, which the investigative outlet ProPublica published.

Governors’ groups rely increasingly on 'dark money' affiliates

2013-04-04T10:47:06-04:00

The Democratic and Republican governors’ associations are increasingly relying on nonprofit affiliates to get their candidates elected and influence ballot initiatives, a move that allows them to avoid disclosing the identity of their donors.

The Washington, D.C.,-based Republican Governors Association and Democratic Governors Association are the most prolific outside spending groups in state-level elections, but as so-called 527 political organizations, they are required to make their donors public.

Their nonprofit affiliates, however, are not.

The RGA’s Republican Governors Association Public Policy Committee nonprofit spent $1.3 million between 2005 and 2009. During 2011, spending spiked to nearly $10 million, Internal Revenue Service filings indicate.

The DGA, meanwhile, established a nonprofit called America Works USA in 2011, which raised and spent $4.4 million.

The governors associations still spend far more through their 527 groups. The DGA spent $49 million and the RGA spent $77 million during the 2012 election cycle.

But rising spending by the RGA and DGA’s nonprofits, which have funded state-level battles over union rights, supreme court seats, tax policy and national healthcare reform, has gone largely unnoticed — and is likely to increase this year and next when 38 governorships are up for election.

The increase, says RGA spokesman Michael Schrimpf, is because “the number of GOP governors has increased along with the importance of their role as policy leaders.”

The 2010 Citizens United Supreme Court decision allowed nonprofits to accept unlimited donations from corporations, unions and individuals and spend the money on advertising in an attempt to elect or defeat candidates.

As spending by nonprofits and super PACs has exploded in federal elections, the same trend can be seen at the state level, says Stetson University law professor Ciara Torres-Spelliscy.

“The governors associations are sophisticated players, so if there’s a new tool to influence politics, they’re going to be early adopters,” she said.

Primary purpose

The new prominence of nonprofits has come with controversy.

Watchdog groups, and now a U.S. senator, have called on the Internal Revenue Service to investigate and New York’s attorney general has proposed new disclosure rules for nonprofits that spend money on elections in the state.

At the center of the dispute are vague IRS rules that require 501(c)(4) nonprofit groups to be primarily focused on promoting “social welfare,” not election campaigns.

“The rule of thumb,” says Torres-Spelliscy, “is that 50 percent of a nonprofit’s money has to go to something other than politics.”

Despite the requirement, America Works USA — the Democratic nonprofit — spent about 70 percent of its budget on “media buys and production” in two races for governor in the last half of 2011 and the first half of 2012, according to a Center for Public Integrity review of unreleased tax records.

DGA spokesman Danny Kanner says America Works USA’s “primary purpose is not political.”

When the RGA nonprofit applied for tax-exempt status in 2004, it told the IRS it would host policy forums and workshops, not get involved in campaigns for elected office.

The RGA said 60 percent of its money would be devoted to educational forums and only 20 percent of its resources would go to “mass media, including direct mail, newspaper, radio and television advertisements and websites.”

By 2011, however, the nonprofit had spent only 2 percent of its budget — $196,000 — on conferences and 50 percent of its budget on ads, according to IRS filings.

Spreading the wealth

The RGA nonprofit and its Democratic counterpart have also channeled a good portion of their funds to a network of state-level nonprofit groups.

In what has become a common “Russian nesting doll” funding technique, the RGA nonprofit has given 40 percent of its budget since 2010 to other nonprofits — some of which passed the money onto other nonprofits and political committees.

For example, the RGA nonprofit gave $200,000 to a D.C.-based nonprofit called ReAL Action in 2010. ReAL Action is an affiliate of Renewing American Leadership, a nonprofit founded by former presidential candidate Newt Gingrich.

It is “dedicated to renewing America through the restoration and application of biblical values,” and shares an office with the conservative Christian nonprofit Concerned Women for America.

ReAL Action then distributed the funds to three Christian groups focused on unseating Iowa’s Supreme Court justices who had ruled unanimously in 2009 in favor of gay marriage rights.

One of those nonprofits, the political arm of the Mississippi-based American Family Association, in turn gave money to support yet another political committee called Iowa for Freedom.

Run by Republican and failed gubernatorial candidate Bob Vander Plaats, Iowa for Freedom ran ads attacking “liberal, out-of-control judges ignoring our traditional values,” and was successful in unseating the three judges who faced a retention vote in 2010.

Midwest battleground

The DGA nonprofit doled out a fifth of its budget to other nonprofit groups in 2011. It sent its largest grant to the Midwest, where the nonprofit Greater Wisconsin Committee was mobilizing against Republican Gov. Scott Walker’s budget bill.

Greater Wisconsin put the $425,000 grant toward a multimillion dollar ad campaign against Walker’s controversial budget plan, which sparked mass protest at the state capitol.

It also launched ads opposing David Prosser, a conservative candidate who won his re-election bid to the Wisconsin Supreme Court in 2011.

Both the RGA and DGA fueled a ballot initiative in Ohio to repeal Republican Gov. John Kasich’s law curtailing union bargaining rights for public employees.

The RGA made its largest grant to Make Ohio Great, a nonprofit, which shares a D.C. address with the RGA and supported Kasich’s law.

The nonprofit hired Rex Elsass, an Ohio-based political consultant whose business counted Kasich as a client and would later produce ads for Todd Akin, a former congressman and failed Republican candidate for U.S. Senate in Missouri.

Kasich’s anti-collective bargaining law was repealed by 61 percent of Ohio voters in a 2011 special election.

Funding phantoms

The RGA nonprofit gave a large grant to a shadowy Missouri-based nonprofit called Take Initiative America, even when it appeared the group was running afoul of the IRS.

The group is run by a Missouri lawyer and Republican operative named Charles A. Hurth III. His group has never filed annual tax returns, leading the IRS to revoke its exempt status in 2011.

Still, the RGA nonprofit gave $700,000 to the organization that same year, funds put toward “the expansion of public choice,” according to its tax filing.

Hurth was infamously arrested for biting a woman’s buttocks in a bar, for which a jury ordered him to pay $27,500 in damages. He did not respond to multiple requests for comment.

In 2010, Hurth’s group spent around $532,000 on a petition drive in Texas to place a Green Party candidate on the ballot for governor. The state’s Democratic Party, whose candidate lost to Gov. Rick Perry in the race, sued unsuccessfully to keep the Green candidate off the ballot.

RGA spokesman Schrimpf defended the contribution to Take Initiative America, calling it a “well-known” organization.

Meanwhile, the DGA nonprofit has itself has kept a low profile.

Its vague name, America Works USA, conjures no connection to its parent group. It has a shell of a website with no contact information on it, and nothing on the DGA’s website mentions its nonprofit group.

Kanner, however, says the DGA is “proud and open” about its support for America Works USA.

Detroit faces ‘emergency’ takeover despite voter disapproval

Detroit,Michigan,United States — 2013-03-01T16:52:10-05:00

Michigan Gov. Rick Snyder announced Friday that he will likely appoint an emergency financial manager in an effort to solve Detroit’s decades-long financial woes.

A state-appointed review board declared “financial emergency” in Detroit on Feb. 19, paving the way for Snyder’s announcement.

The move comes only four months after Michigan voters repealed Public Act 4, known as Snyder’s “emergency manager” law, which had given the governor vast powers over city government.

When voters repealed Public Act 4 in November, it appeared that Detroit would avoid a financial manager. The Center for Public Integrity chronicled the roots of the law and its effects on residents in Flint, Pontiac, Benton Harbor, the Detroit Public Schools and elsewhere.

But Snyder’s Republican administration fought back following the referendum.

The governor’s attorney general first released a legal opinion stating that an earlier emergency manager law passed in 1990 would replace the repealed law, preserving many of the same powers for the state government.

Then Snyder signed a replacement law, Public Act 436, in December’s lame duck legislative session. That new law, which also preserves many of the powers of Snyder’s 2011 law, is set to take effect March 28.

While Detroit Mayor Dave Bing says he will "respect" Snyder's decision, some members of City Council expressed opposition on Friday, urging the governor to continue working under a consent agreement forged in April between the state and city.

The governor had used the financial emrgency law to appoint managers in several cities and school districts since 2011. Managers have been given extensive powers to fire city council and the mayor, privatize city services, sell public assets, and break union contracts with public employees.

Opponents have launched lawsuits as well as a union-led effort to put the law up for referendum.

News outlets unearth more Donors Trust recipients

2013-02-26T11:37:25-05:00

Virginia-based charity Donors Trust has promised anonymity to donors who seek to fund “sensitive or controversial” issues.

A Center for Public Integrity report last week lifted that veil — at least partially — revealing dozens of conservative foundations that together in recent years have given tens of millions of dollars to Donors Trust .

Donors Trust, in turn, has funded a nationwide network of free-market think tanks, media outlets and university programs to the tune of nearly $400 million since 2002.

Recently, much of that funding has gone toward state-based policy efforts. For example, Donors Trust provided 95 percent of the funding for a conservative media clearinghouse called the Franklin Center for Government and Public Integrity, which runs a network of state-based blogs.

While many of the charity’s 193 donors remain anonymous, a variety of media reports have shown where Donors Trust money ends up:

Climate change-denial

In late February, The Guardian reported that 46 percent of Donors Trust grants in 2010 went to groups opposing climate science. Between 2002 and 2010, the group gave $118 million to about 100 such groups.

A detailed 2012 report published on DeSmog Blog ties Donors Trust to a vast climate science denial machine through its generous support for the Heartland Institute, a Chicago-based think tank that mobilized support for the tobacco industry before shifting its focus to climate change.

An October episode of PBS Frontline said Donors Trust has become “the number one supporter” of climate denial groups like Heartland and the Koch brothers-funded Americans for Prosperity after industry giants such as ExxonMobil curtailed funding to Heartland following public protest.

Islamic radicalism

Donors Trust made its largest grant in 2007 to a New York-based group called Clarion Fund. The $17 million donation went toward the production of a documentary called “Obsession: Radical Islam’s War Against the West.”

Seven weeks before the 2008 election of Barack Obama as president, Clarion distributed millions of copies of the movie, which stirred fear about Islamic radicalism, by inserting DVDs as ads in daily newspapers nationwide.

Reports later suggested that Chicago businessman Barry Seid may have passed the $17 million through Donors Trust to Clarion. Seid and Donors Trust director Whitney Ball co-chair another foundation called Chicago Freedom Trust.

Academic coups?

In 2010, a free-market professor of economics whose research is funded through Donors Trust laid out his “Free State” plan for libertarians to migrate to and take over the state of New Hampshire.

In 2009, Donors Trust passed about $600,000 in donations to Shimer College while conservative Chicago businessmen, including Seid, attempted unsuccessfully to take control of the small liberal arts school.

'Fair representation'

A Donors Trust subsidiary called the Project for Fair Representation has led legal challenges to affirmative action programs and, more recently, to the Voting Rights Act, according to reports by Reuters and The New York Times.

The project sought out and tapped the majority-white Shelby County, Ala., as plaintiffs in a challenge to Section 5 of the Act, which gives the U.S. Department of Justice power to approve or reject changes to electoral laws in 16 states, mostly in the south. The case will be heard by the U.S. Supreme Court.

GOP super donor's foundation leans left

Dallas,Texas,United States — 2013-02-22T09:38:46-05:00

Republican mega-donor Harold Simmons considers President Barack Obama to be “the most dangerous man in America,” and in a bid to unseat him, fueled conservative political groups with tens of millions of dollars.

But the Dallas-based billionaire’s recent philanthropic giving has been anything but right-leaning, a Center for Public Integrity review of new Internal Revenue Service documents indicates.

The Harold Simmons Foundation in 2011 most notably contributed a combined $600,000 to an arch political foe of Republicans, Planned Parenthood, and its North Texas affiliate, IRS records show.

Simmons’ foundation also bolstered several other organizations rarely associated with political conservatives or partisan Republicans, including public television, the League of Women Voters and even a Washington, D.C.-based organization dedicated to curbing the influence of big money in elections.

The foundation’s 2011 funding came exclusively from the billionaire’s personal fortune and that of his holding company, Contran Corp. Together, they contributed more than $9.8 million in 2011 — the foundation’s only income aside from $5.6 million in investment and capital gains income. The foundation ended 2011 with nearly $52 million in reserve after distributing about $17.4 million during the year, IRS records show.

Simmons and his holding company, Contran Corp., provided major funding for Republican super PACs, including $23.5 million to Karl Rove’s American Crossroads. Simmons was second to casino magnate and fellow Republican-backing billionaire Sheldon Adelson among top donors to super PACs in the 2012 election.

Simmons or his company gave $2.3 million to the pro-Mitt Romney super PAC Restore Our Future, $1.2 million to pro-Rick Santorum Red White and Blue Fund, $1.1 million to pro-Newt Gingrich Winning Our Future and $1.1 million to pro-David Dewhurst Texas Conservatives Fund. (Dewhurst, the state’s lieutenant governor, lost a primary fight for U.S. Senate to tea party favorite and now-Sen. Ted Cruz.)

Contran Corp. also contributed $1 million to Make Us Great Again, a short-lived super PAC that supported Texas Gov. Rick Perry’s presidential bid.

Simmons’ seemingly contradictory giving patterns likely stem from an arrangement with two of his politically liberal daughters who he’s tapped to run his charitable foundation’s day-to-day operations.

While Simmons, 81, is the charity’s chairman, for more than two decades, Lisa Simmons has been approving and rejecting funding requests as president of her father’s foundation.

Sister Serena Simmons Connelly serves as the foundation’s executive vice president, IRS filings indicate. Connelly has personally donated more than $180,000 to several dozen Democratic political candidates and committees since the 2008 election cycle, including the presidential campaigns of Obama and Hillary Clinton and the Democratic National Committee.

Her father, on the other hand, gave $2 million in 2004 to Swift Boat Veterans for Truth, which ran the now-famous ads attacking Democrat John Kerry during his presidential bid.

The Simmons’ daughters declined to comment for this story, as did Contran representatives and Simmons himself.

Harold Simmons’ family life has been notoriously turbulent, fraught with divorces, lawsuits and allegations of criminality and campaign finance violations. His relationships with his four daughters are nothing if not complex.

During the 1990s, he paid two of his daughters $50 million each to settle their claims that he was misusing family trust money, according to the New York Times. Simmons remains on working terms with his other two daughters, Serena and Lisa.

The reclusive Simmons, who has vowed to give away half his wealth to charity, explained last year that the Supreme Court’s 2010 Citizens United decision prompted his expansive political giving.

"I have lots of money, and can give it legally now," he told the Wall Street Journal in a rare interview. "Just never to Democrats."

But Planned Parenthood, a Harold Simmons Foundation grantee, used its political action committee to donate more than $735,000 to federal candidates during the 2012 election cycle — 99 percent to Democrats.

The nonprofit Planned Parenthood Action Fund spent nearly $4.8 million on advertisements advocating Romney’s defeat, while the Planned Parenthood Votes super PAC spent more than $1.8 million on advertisements critical of Romney. The nonprofit added $1.1 million in pro-Obama advertising spending, federal records indicate.

Planned Parenthood performs abortions at many of its dozens of clinics and is a prime target of social conservatives who’ve sought to cut all government funding to the organization. Simmons has expressed indifference toward the legality of abortion, saying, “Let people make decisions on their own bodies.”

Planned Parenthood’s policy is to accept gifts and grants “for specific programs and purposes” provided that their intent is consistent with the group's “mission, policies, beliefs, and current priorities,” according to a statement provided to the Center.

Simmons’ foundation, however, also donated $10,000 in 2011 to the Dallas-based Council for Life, a pregnancy resource charity that states it supports the “sanctity of life” and affirms that “life begins at conception.”

Mona Wilson, president of the Council for Life,declined to comment, referring questions to the Simmons foundation.

“We don't share our donors’ information. We believe that is their prerogative,” Wilson said.

Among the dozens of other Harold Simmons Foundation grant recipients are the Human Rights Initiative, a Texas-based organization focused in large part on political asylum, violence against immigrants and human trafficking ($100,000); North Texas Public Broadcasting ($30,000); Catholic Charities of Dallas ($25,000); and the anti-death penalty group Equal Justice USA ($20,000).

The donation to Catholic Charities of Dallas helps fund the organization's Brady Center, which provides services for Dallas-area elderly. The group also opposes abortion and provides abortion alternative services among its many programs.

"Our donors are very understanding that funding is scarce, and the Harold Simmons Foundation is entitled to make grants as it sees fit," said major gifts officer Ashley Comstock. "We're still grateful, and we would definitely be open to and thankful for funding we might receive in the future."

Since 2010, the Harold Simmons Foundation has also given $50,000 to Public Campaign, a D.C.-based nonprofit that institutionally aims to “dramatically reduce the role of big special interest money in American politics.”

"I can see how it would seem ironic,” Public Campaign spokesman Adam Smith said.

Simmons’ foundation has focused its largest gifts on causes that usually draw support from across the political spectrum.

Major grants have gone to the Dallas-area arts scene and the city’s zoo and arboretum. His foundation is also in the midst of a multi-year, $50 million pledge to Parkland Hospital, a massive public facility near downtown Dallas.

On the political front, Simmons has most recently lobbed $600,000 into Los Angeles’ mayoral race, funding a super PAC that supports Republican talk radio host Kevin James ahead of the city’s March primary.

Donors use charity to push free-market policies in states

2013-02-27T11:44:34-05:00

In 2009, a network of online media outlets began popping up in state capitals across the nation, each covering the news from a clearly conservative point of view. What wasn’t so clear was how they were funded.

“The source is 100 percent anonymous,” said Michael Moroney, a spokesman for the Franklin Center for Government and Public Integrity, the think tank that created the outlets.

In fact, 95 percent of Franklin’s revenue in 2011 came from a charity called Donors Trust, according to Internal Revenue Service records.

Conservative foundations and individuals use Donors Trust to pass money to a vast network of think tanks and media outlets that push free-market ideology in the states — $86 million in 2011 alone. The arrangement obscures the identity of the donors wishing to keep their charitable giving private, especially “gifts funding sensitive or controversial issues,” according to the group’s website.

The $6.3 million donation to the Franklin Center was the second-largest gift made in 2011 by the group, a tax-exempt “public charity” that takes tax-deductible donations from donors “dedicated to the ideals of limited government, personal responsibility, and free enterprise,” according to its website.

Donors Trust includes 193 contributors, the majority of whom are individuals. “A lot of donors are flying totally under the radar,” says president and CEO Whitney Ball.

Donor-advised fund

Since its founding in 1999, Donors Trust and its affiliated organization, Donors Capital Fund, have distributed nearly $400 million, becoming major vehicles for tax-exempt giving from wealthy conservatives such as billionaire industrialist Charles Koch.

Koch is among an exclusive pool of donors who have used Donors Trust as a “pass-through,” says Marcus Owens, the former director of the IRS Exempt Organizations Division, now in private legal practice. “It obscures the source of the money. It becomes a grant from Donors Trust, not a grant from the Koch brothers.”

Ball helped found Donors Trust in 1999 as a “donor-advised” fund. Donors can open an account and protect their identity from the public and even the recipient of their grants.

In addition, donor-advised funds offer contributors an extra level of control over where their money ends up, which seeks to remedy what Ball sees as the tendency for foundation money to “drift left.”

This was a chief concern of Daniel Searle, the late philanthropist and pharmaceutical executive who was one of Donors Trust’s early board members.

In 1998, with help from Donors Trust co-founder and board chairman Kim Dennis, Searle established an endowment called the Searle Freedom Trust, now worth $114 million, which has in turn given generously to Donors Trust.

‘Great guys’

The Searle Freedom Trust is one of dozens of conservative foundations that have given tens of millions of dollars to Donors Trust from 2001 to 2011. Among the group’s donors is the Knowledge and Progress Fund, a Wichita, Kan.-based foundation run by Charles Koch.

The foundation gave almost $8 million to Donors Trust between 2005 and 2011.

Where those funds ended up is a mystery, though some Donors Trust recipients, including the Mercatus Center and the Institute for Humane Studies based at George Mason University in Virginia, have also received major funding from foundations set up by Charles Koch and brother David.

Nearly half of the revenue for David Koch’s Americans for Prosperity Foundation came from Donors Trust in 2010, in the form of $7.6 million in grants.

Representatives for the Koch foundations did not return calls for comment.

Before Donors Trust, Ball was the director of development for the libertarian Cato Institute, which Charles Koch was instrumental in founding.

“We think they’re great guys,” she says of the Kochs, “but if they weren’t around, we’d still be successful.”

At a private Koch fundraising meeting in the summer of 2010, Donors Trust hosted cocktails and dessert for what Ball called a “target-rich environment” of wealthy donors.

Several wealthy conservatives who have attended Koch fundraising parties have Donors Trust accounts, including Amway co-founder and longtime booster of conservative causes Richard DeVos; hedge fund billionaire Paul Singer; and Philip Anschutz, owner of the conservative Examiner newspapers.

Dozens of other major conservative philanthropies have Donors Trust accounts, including the Lynde and Harry Bradley Foundation, the John M. Olin Foundation and the Coors family’s Castle Rock Foundation, according to IRS records.

Money in the states

For a decade, Donors Trust has bolstered the efforts of D.C.-based conservative think tanks, including Cato, the Heritage Foundation and the American Enterprise Institute — whose president, Arthur C. Brooks, is on the Donors Trust board.

In recent years, it has taken a strong interest in the states, funding state-level think tanks and three national umbrella organizations that coordinate their activities: the American Legislative Exchange Council, the State Policy Network (SPN), and the Franklin Center.

“Gridlock” at the federal level of government means donors see “a better opportunity to make a difference in the states,” says Ball, who sits on the board of the State Policy Network.

SPN has become a major recipient of Donors Trust money — receiving $10 million in the past five years.

In 2011, the nearly $2 million in grants from Donors Trust made up about 40 percent of SPN’s revenue for the year, according to tax records obtained by the Center.

In the past five years, Donors Trust money has gone to at least 51 state-level think tanks affiliated with SPN, located in nearly every state. Last year, SPN used the money to incubate think tanks in Arkansas, Rhode Island and Florida, where it hosted its yearly gathering in November.

One workshop touted privatization of state and local government services. Another featured anti-tax crusader Grover Norquist. A third focused on how “property rights and markets provide the best way to protect the environment.”

SPN also sponsors the American Legislative Exchange Council, another D.C.-based clearinghouse for state-level policymaking that gets support directly from Donors Trust.

A laboratory for corporate-friendly laws in the states, ALEC hosts closed-door meetings where corporate lobbyists and state legislators meet to hammer out free-market legislation.

Ten state-level think tanks got a total of $200,000 from Donors Trust to attend ALEC meetings in 2011 including the Michigan-based Mackinac Center and the Arizona-based Goldwater Institute, which introduced a raft of anti-union model bills at ALEC’s spring 2012 conference.

The Mackinac Center has gotten $2.4 million from Donors Trust since 2008, according to the Bridge Project, a liberal think tank.

One Donors Trust grant to Mackinac Center was earmarked for “statehouse reporting” efforts. Mackinac put the money toward a media machine of blogs and research studies making the case for the state’s new “right-to-work” law.

The Mackinac Center works closely with other Donors Trust recipients, including the Franklin Center, which counts Mackinac’s “media” outlets in Michigan as affiliates.

The Franklin Center, Mackinac and another major recipient of Donors Trust cash, Americans for Prosperity, co-hosted a day-long training for “citizen watchdogs” featuring speakers on “school choice” and “union reform” from the Mackinac Center and Republican state Rep. Tom McMillin, who is also an ALEC member.

Against the tide

The California-based Tides Foundation, which Ball calls the “ideological opposite” of Donors Trust, also operates donor-advised funds.

In 2011, Tides raised $91 million and made $96 million in grants, including $26 million to overseas recipients.

Tides gives grants to the American Civil Liberties Union Foundation and liberal groups like the Center for American Progress and the National Resources Defense Council.

Since 2010, the foundation has received $10 million from George Soros’ Foundation to Promote an Open Society, which has assets of $2.2 billion. Tides has assets of $142 million, and the Donors Trust funds have combined assets of $62 million.

The Center for Public Integrity has received funding from Soros’ Open Society Foundations and the Tides Foundation.

Soros’ foundation listed the specific recipient of its grants to Tides, including its largest gift, a $1 million grant for school nutrition programs. The largest foundations contributing to Donors Trust do not identify the ultimate recipient of their funds, records show.

Donor-advised funds offer private foundations created by wealthy individuals several tax advantages and a degree of anonymity, but there are also advantages for recipients.

The Franklin Center, for example, maintains a tax-exemption as a “publicly supported” entity.

If the organization were perennially accepting 95 percent of its funding from a handful of wealthy donors “it would not count as public support” and could jeopardize its tax status, Owens said.

Though its donors remain anonymous, the Franklin Center touts “transparency, accountability, and fiscal responsibility as its watchwords.”

Franklin has numerous ties to the Koch-connected Americans for Prosperity like board member Rudie Martinson, a former assistant state director for AFP’s North Dakota’s chapter, and Franklin’s vice president of strategic initiatives, Erik Telford, who was director of membership and online strategy at AFP for four years.

One of Franklin’s state-based blogs, New Jersey Watchdog, also received $50,000 from AFP in 2011, according to IRS records.

In 2011 alone, Donors Trust helped the Franklin Center expand by funding state-based reporting projects in Illinois, Iowa, Missouri, Nebraska, Nevada, Ohio and Virginia.

Recurring themes on the Franklin Center blogs include “union bosses,” “Marxian” senators and the perils of renewable energy.

Franklin has noted that its journalists’ work had landed on major networks from Fox to MSNBC. The details of several stories offered by the Franklin-funded outlets have been called into question, however.

One report from a New Mexico affiliate housed at a free-market think tank also funded by Donors Trust garnered national attention when it reported that millions of dollars in federal stimulus money had been allocated to non-existent congressional districts.

The government database on stimulus spending had indeed listed non-existent districts as receiving funds, but the Associated Press reported that the problem was due to data errors and that “’phantom congressional districts’ are being used as a phantom issue to suggest that stimulus money has been misspent.”

When asked to comment on the criticism, Franklin Center spokesman Moroney said: “Franklin Center adheres to the highest degree of journalistic integrity and we stand by our Watchdog.org reporting 100 percent. In this case, the Associated Press had it wrong.”

Adelson takes exception with Center blog post

Israel — 2013-02-09T10:51:01-05:00

A "Primary Source" report from earlier this week from the Center for Public Integrity about Sheldon Adelson's charitable giving clearly touched a nerve with the casino magnate, the nation's top donor to super PACs in the 2012 election.

Adelson, currently listed as the world's 14th wealthiest man, generally avoids speaking with the press.

The analysis detailed Adelson’s nine-figure financial support for pro-Israel organizations, most notably a foundation called Birthright Israel, which offers free trips to Israel for Jews around the world. An email sent to the Center for Public Integrity reads:

Who made you the prosecutor, judge, jury and hang man on the subject of "Israel's occupation of the West Bank and its economic blockade of Gaza?"

I certainly wouldnt (sic) vote for you...... and are you suggesting that there is something wrong with reporting charitable contributions? I would like to see how mucy (sic) you give.

Sheldon G. Adelson

Adelson’s personal assistant, Betty Yurcich, confirmed by phone that Adelson wrote the message and that she sent it through her email account on his behalf. The Center has requested a follow-up interview with Adelson. Yurcich said Adelson wasn’t immediately available.

Since 2007, Adelson has given Birthright Israel $123 million — fully 40 percent of the organization’s revenue.

Birthright Israel is in part sponsored by the Israeli government. In Gaza, Israel prohibits the import and export of many goods and materials, citing security concerns and rocket attacks originating in the territory.

Adelson and his family contributed more than $93 million to Republican-supporting super PACs last election cycle.

In his most extensive interview since the November election, Adelson in December told the Wall Street Journal that he intends to spend even more during the 2014 election cycle than he did in 2012.

Super PAC patron Sheldon Adelson pours riches into pro-Israel groups

2013-02-06T06:00:01-05:00

Republican mega-donor Sheldon Adelson isn't just interested in political giving.

Since 2007, the casino mogul has given into the hundreds of millions of dollars to pro-Israel causes through a Massachusetts-based foundation he and his wife operate, according to a Center for Public Integrity review of Internal Revenue Service filings.

The top recipient of tax-exempt gifts by the Adelson Family Foundation is by far a foundation called Birthright Israel. It has received $123 million from Adelson since 2007, IRS filings indicate.

Birthright offers free 10-day trips to Israel to Jews between age 18 and 26. The goal of the trips, according to Birthright, is to “send tens of thousands of young Jewish adults from all over the world to Israel as a gift” and is made possible through a “unique partnership” between the government of Israel and private philanthropists.

Foremost among those philanthropists is Adelson, whose support accounts for fully 40 percent of the money raised by the Birthright Foundation since 2007.

In 2008, Adelson’s $27.5 million gift to Birthright constituted 57 percent of all money raised by the organization. His patronage accounted for 19 percent of the group's revenue in 2011, the most recent year IRS records are available.

Adelson's reported contributions are, however, poised to increase: In its 2011 filing, the foundation reported it would provide a $20 million payment during the next year.

The program has been criticized for offering tours that gloss over Israel’s occupation of the West Bank and its economic blockade of Gaza.

Birthright is doubly controversial because of its sponsorship by the Israeli government. While it offers any member of the Jewish faith free travel to the country, the organization does not extend the same offer to non-Jews who consider Israel or Israeli-occupied lands their home. Israel has defied a decades-old United Nations Resolution 194 providing millions of Palestinian refugees the “right to return” to homes they were displaced from inside Israel.

During the 2012 election, Adelson and his family shelled out $93 million to super PACs making him the top donor to the political spending groups.

Adelson first bolstered the candidacy of former House Speaker Newt Gingrich, who most notably entered the Israel-Palestine fray by declaring Palestinians an “invented" people. Adelson echoed the sentiment and signed off on another $5 million gift to Gingrich’s super PAC weeks later.

When Gingrich dropped out of the race, the Adelsons contributed heavily to the Restore Our Future super PAC, which backed Republican presidential nominee Mitt Romney.

And Adelson’s casino fortune pervades both Israeli and American politics. He owns an Israeli newspaper that supports Prime Minister Benjamin Netanyahu, a member of the Likud Party, and is on the board of directors for the nonprofit Republican Jewish Coalition, which produced a slew of anti-Obama ads in 2012.

Since establishing his foundation in 2007, Adelson has made $191 million in contributions through it. Beyond Birthright Israel, his other charitable gifts include:

$19.3 million to the American Society for Yad Vashem, a New York-based organization devoted to Holocaust remembrance
$4.5 million to establish the Adelson Institute for Strategic Studies in Israel’s Shalem Center in Jerusalem in 2007. The academic research center sought to “develop, articulate and build support for the strategic principles needed to address the challenges currently facing Israel and the West,” and counted current Israeli Ambassador to the U.S. Michael Oren as its fellow. The center closed in 2009.
$2.3 million to American Israel Education Foundation since 2006, the 501(c)(3) arm of the high-powered U.S.-Israel lobby, the American Israel Public Affairs Committee.
$1.8 million to the Zionist Organization of America, a group that lost its tax-exempt status in 2012 after failing to file tax returns for three consecutive years. Adelson joined pundit Glenn Beck and Rep. Michele Bachmann (R-Minn.) at the ZOA’s 2011 annual dinner. More recently, ZOA urged opposition to President Barack Obama’s nomination of former Sen. Chuck Hagel, (R-Neb.) as defense secretary, citing his “virtually unrivaled record of hostility to Israel” and “bigotry towards Jews.”
$1 million to the One Jerusalem Charitable and Educational Fund, a New York-based organization that has, since 2001, pushed Israeli and American negotiators to maintain the Israeli occupation of East Jerusalem and consolidate control over the entire city — a key sticking point in negotiations with Palestinian authorities.

The Adelson Family Foundation’s tax filings can be found here:

Koch brothers pour more cash into think tanks, ALEC

2013-03-21T13:42:31-04:00

Updated (March 20, 5:00 p.m.)

Four foundations run by billionaire industrialists Charles and David Koch hold a combined $310 million in assets according to tax filings obtained by the Center for Public Integrity.

The documents also show that the brothers, principal owners of the second-largest privately held company in the United States, combined in 2011 to donate $24 million through those foundations with much of the money going to support free-market and libertarian think tanks and academic centers.

A $4.4 million grant to the George Mason University Foundation makes up 15 percent of the university foundation’s grant revenue for 2011. The school is the largest recipient of Koch foundation money since 1985, and it houses several free-market and libertarian research centers including the Institute for Humane Studies, which received $3.7 million from the Koch foundations.

The D.C.-based American Legislative Exchange Council received $150,000 to help finance its activities, including meetings where corporate representatives draft model legislation with state legislators. The Koch brothers have decades-long connections with ALEC, which gave the brothers the Adam Smith Free Enterprise Award in 1994.

Two of the Koch-run foundations are among dozens of conservative endowments that give money to Donors Trust, a charitable vehicle that has passed $400 million in anonymous grants to “liberty-minded” think tanks in the last decade.

Other think tanks that received Koch foundation grants in 2011:

The above grants came from foundations run by Charles Koch. His brother David’s foundation focused all of its $10 million grant giving in 2011 to the renovation of a theater in New York City.

The Koch brothers' complete Internal Revenue Service Form 990 tax filings for 2011, which were not publicly available before now, may be viewed here:

Why is 2013 an important year for campaign finance? Dave Levinthal and Michael Beckel will answer that, and many other questions about the money-in-politics world in a live chat on Monday, Feb. 4, at 1 p.m. ET.

Donor profile: American Federation of Teachers

2013-01-30T22:03:15-05:00

Ranking: 15

Total contributions to super PACs: $5.8 million*

$2 million to Majority PAC (pro-Democratic)
$1.5 million to Priorities USA Action (pro-Barack Obama)
$1.1 million to Workers’ Voice (pro-Democratic), formerly known as AFL-CIO Workers’ Voices PAC
$700,000 to House Majority PAC (pro-Democratic)
$250,000 to DGA Action (pro-Democratic)
$100,000 to Ohio Families United (pro-Sherrod Brown)
$100,000 to Women Vote! (pro-Democratic)

Notable federal hard money and 527 contributions:

$10,000 to the Ohio Democratic Party

Notable state-level contributions:

$5 million in support of or opposition to California ballot measures (2004-2012)
$1.2 million in support of or opposition to Michigan ballot measures (2006-2012)
$617,500 to the Ohio Democratic Party (2000-2012)
$250,000 to the California Democratic Party (2006)

Total spent on federal lobbying (2007-2012): $6.6 million

Lobbying issues: Federal budget and appropriations, education, labor and workplace issues, health care, Medicare and Medicaid, retirement, taxes, trade, civil rights and civil liberties as well as issues pertaining to the District of Columbia

Biography:

The American Federation of Teachers is the nation’s second-largest teachers union next to the National Education Association. The AFT claims 1.5 million members, and it represents K-12 teachers and school employees in the nation’s largest urban school districts. In addition, the AFT counts teachers in post-secondary schools, public employees and health care workers among its membership.

The union mobilized support for President Barack Obama’s re-election bid with large voter registration, phone-banking, door knocking and get-out-the-vote efforts.

It also launched a bus tour through swing states in the final weeks of the campaign. At a stop in Toledo, Ohio, AFT President Randi Weingarten urged teachers to support Obama, saying GOP presidential candidate Mitt Romney had a “binder of bad ideas” for public education.

The union sent donations to candidates in key U.S. Senate races, helping Democrats to victory in Ohio, Pennsylvania, Virginia, Missouri and Massachusetts. It supported high-profile congressional races featuring women, including Democrat Tammy Duckworth of Illinois, who won a House seat, and Tammy Baldwin of Wisconsin, who won a U.S. Senate seat.

In a statement soon after Obama’s re-election, Weingarten celebrated AFT’s ground game as contributing to a “victory for people power over money power.”

Last updated: Jan. 30, 2013

*2011-2012 election cycle. Source: Center for Responsive Politics and Center for Public Integrity analysis of Federal Election Commission records. Totals include contributions from individuals, family members and corporations that are controlled by the individual super donor.

Donor profile: Plumbers and Pipefitters Union

2013-01-30T22:38:06-05:00

Ranking: 23

Total contributions to super PACs: $4.2 million*

$2.4 million to Priorities USA Action (pro-Barack Obama)
$725,000 to Majority PAC (pro-Democratic)
$500,000 to Workers’ Voice (pro-Democratic), formerly known as AFL-CIO Workers’ Voices PAC
$436,000 to House Majority PAC (pro-Democratic)
$75,000 to The American Worker (pro-Democratic)
$26,000 to Stronger Together (pro-Democratic)
$10,000 to Connecticut's Future PAC (pro-Chris Murphy)

Notable federal hard money and 527 contributions:

$30,000 to the Democratic Congressional Campaign Committee
$20,000 to the Democratic Senatorial Campaign Committee
More than $2.2 million to federal Democratic candidates during the 2012 election cycle, according to the Center for Responsive Politics

Notable state-level contributions:

$100,000 to Jay Nixon, Democratic candidate for governor of Missouri
$55,000 to John Gregg, Democratic candidate for governor of Indiana
$50,000 to the Maryland Democratic Party
$50,000 to the Ohio Democratic Party
$50,000 to the Democratic Governors Association

Total spent on federal lobbying (2007-2012): $3.1 million

Biography:

The United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry is without doubt the most ponderously named super donor. The national labor organization represents 340,000 workers who build, install, weld and maintain various types of pipe systems.

The UA takes stands on issues specific to the pipe industry, including support for investments in “water infrastructure” and to “preserve our nation’s water quality and health.”

It is also an avowed supporter of the controversial Keystone XL pipeline project, which the union argues will provide “reliable, long-term access to Canadian oil and gas” and “create more than 13,000 good-paying jobs with benefits during construction.”

The support has placed the union on the opposite side of environmentalists, another key Democratic constituency.

The union has been a strong supporter of Democratic candidates in federal and state races, and devoted its resources on efforts to re-elect President Barack Obama. It gave the maximum contribution of $5,000 directly to numerous Democratic candidates for Congress, and it doled out larger sums in state governors races, including a $50,000 check to the primary spender in Democratic gubernatorial races, the Washington, D.C.-based Democratic Governors Association.

UA President William Hite criticized Republican presidential nominee Mitt Romney’s choice of Wisconsin Rep. Paul Ryan as his running mate. In a sharply worded August press release, Hite warned that Ryan “would happily shred the social fabric of our nation without a second thought,” and called the congressman the “architect” of plans to “abolish Medicare” and “gut health care for families in need.”

Hite called on Ryan to “explain to the American people why he wants to wage war on the middle class and the disadvantaged among us.”

When the Democratic National Convention convened in North Carolina, a state known for its aversion to unions, Hite dismissed the notion that organized labor was "not fully behind this convention or this party" and vowed his union’s continued support for Democratic leaders, which have failed to deliver on some of labor’s biggest agenda items since Obama first took office.

Last updated: Jan. 30, 2013

*2011-2012 election cycle. Source: Center for Responsive Politics and Center for Public Integrity analysis of Federal Election Commission records. Totals include contributions from individuals, family members and corporations that are controlled by the individual super donor.

ALEC's decades of 'right-to-work' effort pay off in Michigan

Michigan,United States — 2012-12-13T14:17:52-05:00

Amid protests by labor unions, and objections from the state’s congressional delegation and even the president, Michigan’s Republican Gov. Rick Snyder signed a “right-to-work” bill into law Tuesday, drawn word-for-word from a 32-year-old “model bill” pushed by a corporate-funded, conservative think tank.

The legislation deals a severe blow to organized labor in a state that has the fifth-highest union density in the country, and it marks the revival of an effort long promoted by the influential American Legislative Exchange Council, a Washington, D.C.-based nonprofit that has seen its share of controversy recently.

Since 1973, ALEC has hosted corporate-sponsored meetings where state legislators and lobbyists meet behind closed doors to write and vote on model legislation. In a 1992 annual report, the free-market think tank boasted that it “provides the private sector an unparalleled opportunity” to influence state legislation.

One of its first priorities was passage of “right-to-work” laws, which now exist in 24 states. The 16 states with the lowest union density in the country have right-to-work laws, mostly in the American South and West, while the 13 states with the highest union density do not, until this week.

‘Forced unionism’

In a publication celebrating its 25th year, ALEC said it “began striking out against forced unionism and for the right to work in 1979.” ALEC members endorsed the law as model legislation and began introducing it in states in 1980.

Federal law prohibits workplaces from requiring employees to belong to a union and pay dues. However, employees, be they union members or not, may still enjoy the benefits of a union-negotiated contract.

While labor organizations cannot compel workers to join the union, they can require workers at a unionized workplace to pay an “agency fee” to cover the cost of negotiating contracts on a worker’s behalf.

Unions argue that these fees, which are less than membership dues, prevent “free riders” who would reap the benefits of union representation without chipping in.

Right-to-work laws ban this arrangement, creating “open shops,” where new employees at a workplace that is unionized do not have to join the union, pay dues or pay the lesser agency fee.

Back to work

At its November conference in D.C., ALEC members on the Commerce, Insurance, and Economic Development Task Force voted to re-endorse 55 pieces of model legislation it has passed over the years, including the “right-to-work” bill, according to documents released by the liberal watchdog group Common Cause.

Since 2010, members of the task force have included some of the nation’s largest non-union and anti-union companies, including McDonalds, Wal-Mart, Bank of America and MillerCoors. All four of the companies quit the organization this year after ALEC faced scrutiny for its sponsorship of voter ID legislation.

Though long on ALEC’s agenda, “right-to-work” has been a tough sell in the states for decades. Since ALEC created the model legislation, only four states have passed it into law. In 1992, ALEC members introduced the bill in 11 state legislatures, including Michigan.

None of them passed.

In 1995, ALEC reported that its legislator-members introduced the bill in nine states, but again none passed new laws, according to ALEC annual reports. Idaho passed the law in 1985, but no state would pass it again until 2001, when 54 percent of Oklahomans approved a “right-to-work” constitutional amendment. The text of the Oklahoma law matched, word-for-word, that of ALEC’s model bill.

In 2012, a slew of ALEC members sponsored the bill in Indiana, which Republican Gov. Mitch Daniels signed into law in February.

Key parts of the Michigan law are identical to the text in the ALEC model bill.

Snyder flip flop

Michigan’s governor reversed his stance on what he had repeatedly called a “divisive” law that was not on his agenda. But last week, hours before the bill introduced, Snyder announced he would sign a bill if it arrived on his desk.

In a press conference, Snyder said the measure would help the state compete with “right-to-work” Indiana by enticing businesses to set up shop in a state plagued by the sustained flight of manufacturing jobs. He also passed the microphone to three “real Michigan workers” who gave support for the law. Hours later, the Michigan House and Senate, in a lame duck session, made a preliminary vote to approve the legislation without committee hearings.

At the time, Michigan state police locked protesters out of the state Capitol building in violation of a court order, while legislators prepared to vote. Some of Michigan’s Democratic state representatives briefly walked off the floor of the House chamber in protest.

When the Legislature reconvened a few days later to take final votes on the bills, which will apply to both public and private sector workers, thousands of pro-union protesters met them at the Capitol. After House members approved the bills, some began a sit-in at Gov. Snyder’s Lansing office, urging a veto.

Failed referendum

The “right-to-work” measure comes after 57 percent of Michigan voters rejected a union-backed ballot initiative in November which would have made “right-to-work” laws unconstitutional. Union membership in the state has dropped significantly since 1989, according to the Bureau of Labor Statistics.

A month later, the measure’s opponents mobilized. The Chamber of Commerce, which backed a $26 million effort to sink the ballot initiative, endorsed the “right-to-work” bill soon before it was introduced in the Legislature.

The Michigan chapter of Americans for Prosperity, a national organization funded by the conservative billionaire brothers Charles and David Koch (who are also backers of ALEC), pitched a tent on the Capitol lawn that broadcast speeches by former President Ronald Reagan.

A nonprofit group called Michigan Freedom Fund cropped up in November. Run by an adviser to former Republican gubernatorial candidate Dick DeVos of the Amway family fortune, the group bought radio and television ads supporting the bills in December.

Another supporter of “right-to-work” laws on the ALEC Commerce, Insurance, and Economic Development Task Force is a Michigan-based think tank called the Mackinac Center. Mackinac’s Director Michael LaFaive wrote in December that the center has been pushing “right-to-work” laws since 1990.

In 2007, Mackinac released a “model” constitutional amendment for the law, which mirrored the text of the ALEC model bill.

Opponents and proponents disagree about the economic impact of the laws.

A study by the liberal Economic Policy Institute reports that right-to-work laws push down wages for all workers in a state “by an average of $1,500 per year” and that the rate of employer-sponsored health coverage was 2.6 percent lower in states with the law.

If Michigan adopted a “right-to-work” law, it would lead to lower wages, less access to health insurance and weakened pension benefits, wrote University of Oregon professor Gordon Lafer in a report on the potential impact of the law in Michigan.

GOP gov's group raises $100 million in mostly losing effort

2012-12-12T13:12:27-05:00

Despite outraising its Democratic counterpart by a 2-to-1 margin, the Republican Governors Association won only four of 11 races in the 2012 election, a far cry from the success it enjoyed two years ago.

The Washington D.C.-based political organization raised almost $100 million, according to recently released Internal Revenue Service data. The group targeted six states it considered winnable, losing five of them. Overall, Democrats won seven of this year's 11 contests, but the GOP still managed to pick up one seat in North Carolina, long held by Democrats.

The top donors to the so-called “527” organization, which can accept unlimited contributions from billionaires, corporations and unions, are familiar Republican Party patrons — No. 1 is Bob Perry, a Texas homebuilder and perennial RGA supporter, who gave $3.25 million. That’s a little more than half of what he gave in 2010.

Billionaire casino magnate Sheldon Adelson is No. 2, with $3 million in donations between him and his wife. According to the latest Federal Election Commission reports, Adelson is the top donor to super PACs in 2012, doling out more than $93 million along with his family.

Conservative billionaire David Koch — who has not made any contributions to super PACs — was the organization’s third-highest donor, writing two checks totaling $2 million. Koch is co-owner of the second-largest privately held company in America, Koch Industries, an energy conglomerate.

Seven of the RGA’s top 10 donors are corporate executives who gave at least $1 million. Two of them, Paul Singer and Kenneth Griffin, are hedge fund managers.

Six of the Democratic Governors Association's top donors were unions. The American Federation of State County and Municipal Employees topped the DGA donors list, giving about $1.3 million. The Service Employees International Union gave about $1.1 million while the American Federation of Teachers gave at least $772,000.

Top corporate donors to the DGA included pharmaceutical giants Pfizer, which gave almost $700,000, and AstraZeneca, which contributed nearly $600,000. The companies also gave comparable sums to the RGA. The DGA also got corporate support from health insurer United Healthcare Services Inc., and AT&T.

The DGA raised nearly $50 million, the organization's "strongest fundraising year ever," according to spokeswoman Kate Hansen.

The DGA and RGA have devised national strategies for collecting unlimited funds from unions, corporations, and wealthy individuals, and funneling the money into state races. Using a network of state-based PACs, the RGA and DGA have maneuvered around various state limits on campaign giving.

“They’ve had an enormous impact on state elections across the nation,” said Ciara Torres-Spelliscy, an election law expert at Stetson Law School. “In many states they were consistently a top spender.”

The circuitous methods used by both organizations to inject corporate and union cash into state races and mask the identity of its donors have raised legal questions, prompted lawsuits, and tested the capacity of state election boards to enforce limits on outside spending.

Both organizations have told the Center for Public Integrity that they fully comply with campaign finance laws, and that they report their donors and spending to the IRS.

The RGA set up a federal super PAC called RGA Right Direction, and fed it with $9.8 million in contributions. The super PAC — another type of organization that can accept unlimited donations from individuals and corporations — then made a large contribution to Indiana Republican candidate Mike Pence, and bought ads in tight state races in Montana, Washington, New Hampshire, and West Virginia.

Super PACs are normally used to spend money on federal campaigns. By passing the funds through the super PAC, which reported its sole donor as the RGA, the association effectively shielded the identities of the donors who paid for ads in the state races.

In North Carolina, the RGA spent millions of dollars, directly from corporate treasuries to win in a state long led by Democratic governors. The unlimited contributions from dozens of corporations across the country went toward ads supporting Republican candidate Pat McCrory, who won convincingly over Democratic Lt. Gov. Walter Dalton.

The DGA, too, used a network of state-affiliated PACs, to fund ad campaigns in battleground states like Montana and North Carolina. It was the primary funder of a PAC called North Carolina Citizens for Progress, which purchased ads attacking McCrory.

While America’s wealthiest corporate executives tend to prefer the RGA, and unions give almost exclusively to the DGA, some donors played both sides this election.

Agricultural giant Monsanto, credit card company Visa and health insurance company Humana were large donors to both the RGA and DGA — each giving about $100,000 to both groups.

Despite the Republicans' win-loss record, RGA spokesman Michael Schrimpf called 2012 "a successful year by any standard" with Republicans now in control of governorships in 30 states. Most of those gains, however, came in 2010. The North Carolina win and the failed effort to recall Scott Walker, Wisconsin's Republican governor, in June, were high points for the GOP.

In addition, in five states targeted by the RGA where it lost, the Democrats held advantages unrelated to fundraising.

Missouri and West Virginia featured Democratic incumbents. Three other states — Montana, Washington and New Hampshire — had open seats where a Democrat had previously been in power.

The two organizations will put their fundraising powers to the test again in 2013, when Virginia and New Jersey choose their next governors.

Michael Beckel contributed to this report.

After big U.S. Supreme Court win, Montana nonprofit suffers string of losses

Montana,United States — 2012-12-06T15:53:30-05:00

The secretive nonprofit known for its efforts to dismantle Montana’s campaign finance laws has had a rough go of it lately.

In November, American Tradition Partnership failed to sink Democrat Steve Bullock’s bid for governor despite plastering the state with issues of a fake newspaper, one of which displayed the Democrat’s photo alongside pictures of sex offenders.

Bullock beat Republican Rick Hill in a race punctuated by debates over the future of Montana’s stringent campaign finance laws. Bullock ran on his record of defending the state’s spending limits as attorney general, when he faced off with ATP in court.

Bullock’s victory was not the only setback for the organization.

Though the nonprofit and its lawyer, Jim Bopp, won a high-profile U.S. Supreme Court decision in June that knocked down Montana’s century-old ban on corporate and union spending on elections, ATP’s other court challenges to Montana’s disclosure rules and contribution limits have stalled.

ATP’s high-profile lawsuits have also exposed it to a wave of scrutiny regarding its funding and tactics.

In court proceedings, the state’s lawyers obtained the group’s bank records and early donors.

Meanwhile, media reports have laid out evidence of possible illegal coordination with candidate campaigns alongside indications that ATP may have misled the Internal Revenue Service.

The group, founded in 2008 to lob mailers into Montana and Colorado legislative races attacking environmentalists and moderate Republicans, has also come to represent the questionable tactics used by nonprofit groups to cover the tracks of donors and funnel unlimited money into elections, say reform advocates.

“This is cloak-and-dagger stuff,” said Edwin Bender of the National Institute on Money in State Politics.

A 501(c)(4) social welfare organization “may engage in political campaign activities” according to the IRS, as long as those activities “do not constitute the organization’s primary activity.”

According to Bender, law firms across the country have established an endless stream of (c)(4) groups “with innocuous sounding names that really exist to inject money into political campaigns.”

The law firms that establish these nonprofits, he says, “hide behind attorney-client privilege” to deflect questions about the political operations of (c)(4) groups.

Donors anonymous

Last month, the Center for Public Integrity revealed that the bulk of ATP’s early funding came from a network of obscure nonprofit (c)(4) groups established by a Denver law firm called Hackstaff Law — where current Colorado Secretary of State Scott Gessler was once a partner.

Gessler’s old firm also was involved in the establishment of ATP, representing it in a challenge to campaign finance limits in Longmont, Colo., in 2009, and is listed as its registered agent in Colorado.

Because nonprofit 501(c)(4) groups like ATP do not have to disclose donors to the public, they have become conduits for donors who wish to impact elections but would prefer to remain anonymous.

ATP operative Christian LeFer defended the use of (c)(4)s to conceal the identities of its donors in an email to the Center, citing fear of violence from radical environmental groups.

“There is no reason to provide unhinged political activists with ready-made enemies lists so they can target their opponents with threats of violence, economic retaliation and harassment.”

One nonprofit group, Coloradans for Economic Growth, made two donations totaling $500,000 to ATP in 2008. Another, called New Leadership Colorado, gave $45,000 to ATP. Both groups listed Hackstaff lawyers as their contacts, and have the Denver law firm as their sole address.

In 2010, another mysterious nonprofit called Spur Education Fund was also established through Hackstaff Law, and soon became ATP’s primary donor, sending $110,000 to the group via several wire transfers.

The three nonprofits appear to be inactive, and have been described as temporary conduits for anonymous donations to support other political committees and causes.

Tax experts say an individual or a law firm can create an unlimited number of nonprofit groups, which can then be dissolved before the IRS gets around to examining whether they played by the rules governing (c)(4) groups.

“They’re like mushrooms after the rain,” said Marcus Owens, the former director of the IRS Exempt Organizations Division. “They pop up, and after a day in the sunlight, they’re gone.”

The groups have no website and no spokesperson, and list only the phone number and email for Hackstaff’s Denver office.

“My client has instructed me not to reveal that information,” said Hackstaff attorney Mario Nicolais, when the Center inquired about the nonprofit groups’ contact information and leadership.

Nonprofit ninja tactics

In addition to their contributions to ATP, Coloradans for Economic Growth and New Leadership Colorado spent millions in a failed 2008 ballot effort to establish an anti-union “right-to-work” law in Colorado.

Such laws allow employees at union shops to remain covered by a union contract but opt out of their union dues payments, and have drained union membership in 23 states.

The $500,000 gift from Coloradans for Economic Growth to ATP in 2008 was actually on its way to another nonprofit group — the nation’s largest advocate for anti-union causes. In a matter of days, the half-million dollars went through bank accounts at three nonprofits.

It eventually landed in the Virginia bank account of the National Right to Work Committee, which sent $360,000 in grants to Montana’s Right to Work committee in the past three years — an organization that, until recently, was headed by LeFer.

The nonprofits managed by Hackstaff to fund ATP and other groups have since faded from public view. In a letter to the Center, the IRS reported there is “no record of the tax-exempt status” for the organizations.

The IRS also has no record of the groups’ yearly tax returns. If no such filings are made for three consecutive years, their exempt status can be revoked. In 2010, the IRS revoked the tax-exempt status for a group called New Leadership USA, which is based at Hackstaff Law.

The IRS has no record of ATP’s tax reports since 2008.

“If the IRS has cause to believe that ATP’s filings were inaccurate in any meaningful way, they have the authority and duty to contact the organization and seek answers to any questions they may have,” wrote ATP’s LeFer in an email.

LeFer hosts an online video seminar called “Starting a Nonprofit Organization in 5 Easy Steps,” which offers “nonprofit ninja tactics” for establishing a nonprofit “in five days or less.”

In its 2008 application for exempt status, ATP also appears to have misled the IRS by claiming a $300,000 donation from Colorado furniture tycoon Jacob Jabs was at risk if its status as a nonprofit wasn’t expedited. Jabs denies giving the money, and newly released bank records for the group appear to confirm his denial.

However, Jabs was aligned with anti-union efforts by Coloradans for Economic Growth, a group that made a $300,000 donation to ATP in 2008.

When ATP applied for tax-exempt status in 2008, it stated that it would not “spend any money attempting to influence the selection, nomination, election or appointment” of political candidates.

The group is arguing in court that its spending on mailers and other activities around elections serves an “educational” purpose, and therefore is not political campaign activity and does not need to be reported to state election officials.

Evidence of coordination?

Internal documents for ATP, obtained by the Montana Commission on Political Practices and reported on by the investigative news show Frontline on PBS in October, seem to support charges that ATP has coordinated with several candidate campaigns since 2008.

One of those making such claims is Debra Bonogofsky, a Republican who has run unsuccessfully for Montana’s state House of Representatives three times.

During her 2008 run, Bonogofsky was puzzled by a call from former state legislator John Sinrud, one of ATP’s founders, offering to lend a hand.

“They wanted to know if they could help with my campaign,” said Bonogofsky. “I didn’t know what they meant by that.”

Bonogofsky found out two years later, when she faced Republican Dan Kennedy in a 2010 primary contest for the state’s 57th District house seat. And this time, ATP did not call to offer her help.

Instead, ATP sent out a letter warning voters that Bonogofsky, a moderate Republican, was part of a movement by “radical environmentalists and their anti-business allies” to take control of Montana.

Kennedy knocked off Bonogofsky in the primary, and Bonogofsky filed a complaint with the state’s election commission, alleging that ATP and her opponent had coordinated illegally.

“These groups are convoluted and intertwined and are clearly meant to confuse and deceive Montana voters and circumvent Montana law,” her August 2010 complaint read.

Last month a judge released ATP’s bank records, giving more evidence of coordination between Kennedy and ATP. A $557 check from Kennedy’s campaign was made out to a company called “Direct Mail,” and deposited into the Wells Fargo bank account of ATP.

In November, Kennedy told the Associated Press that he made the payment to a printing house called Direct Mail and Communications to send fliers for his campaign — not to ATP.

The print house is owned and operated by Allison LeFer, the wife of ATP’s Christian LeFer.

Mr. LeFer told the Center his wife’s business is a separate operation from ATP. He told the investigative reporting group ProPublica that they have “scrupulously endeavored” to avoid illegal coordination with candidates.

Allison LeFer told the Center she is not involved in ATP, and referred questions to her husband.

When a Montana judge released the organization’s bank records in early November, they revealed that Ms. LeFer has actually been deeply involved in ATP’s day-to-day operations as a signer on many of the organization’s checks.

Montana 2012

While ATP was dealt a loss in the governor’s race, it maintained a presence in other important, if smaller, contests in the state. One was the race for state school superintendent, in which incumbent Democrat Denise Juneau has a narrow edge over Republican Sandy Welch in a race that is headed for a recount.

ATP sent mailers calling Juneau a “#1 Radical Environmentalist” who is “against developing coal resources.”

The race has implications for future land and resource development in the state. The superintendent of schools occupies one of five positions on the state’s land board alongside the governor, attorney general, secretary of state and state auditor. The five-member board votes on decisions about land leasing to private developers and mining companies in the state.

ATP's efforts, however, were not enough to tip control of the Land Board to Republicans in 2012. Nor did ATP keep Montanans from overwhelmingly endorsing a non-binding referendum in response to the 2010 Citizens United U.S. Supreme Court decision that allowed corporations and unions to raise and spend unlimited sums on political campaigns.

Almost three-fourths of voters in both Montana and Colorado approved initiatives rebuking the high court’s ruling on unlimited political speech by corporations.

“The electorate has been sensitized by an election that saw more money than ever,” said Bender. “That a lot of it was undisclosed only further enraged people.”

Californian spends $44 million, loses ballot initiative fight

2012-11-09T12:16:06-05:00

Marijuana legalization, gay marriage and a state version of the DREAM Act are this year’s ballot initiative winners. But those who gave the largest sums to state referenda poured tens of millions of dollars into their cause — and lost.

Molly Munger was the largest individual donor to a state ballot initiative, giving about $44 million to support a proposal to raise revenue for schools and early childhood education in California, according to the California Secretary of State.

Seventy-two percent of California voters rejected Proposal 38, which was backed by the Pasadena civil rights attorney.

Munger’s father is Charlie Munger, the billionaire vice chairman of Warren Buffett’s Berkshire Hathaway investment firm. She co-founded the Advancement Project with her husband Steven English (who chipped in $3.3 million for Prop 38). In 2000, the group won a billion-dollar lawsuit over inequitable school-construction practices in California.

Munger’s millions equal 5 percent of all federal Head Start money California received in 2009 for its early childhood education programs. A $44 million gift to Los Angeles’ Head Start agency would equal a fifth of the federal grant the city received last year.

Munger outspent her brother, Stanford physicist Charles Munger Jr., a Republican activist who shelled out $23 million on ballot proposals. Munger Jr. opposed Democratic Gov. Jerry Brown’s initiative that sought to raise revenue for schools by upping the sales tax and levies on the state’s wealthy residents.

The measure passed with 53 percent of the vote.

Munger Jr. also supported an effort to restrict unions from using members’ dues payments to fund political activities. It was rejected by 56 percent of voters.

In Michigan, the owner of North America’s busiest international crossing spent nearly $32 million to hinder construction of a second, government-funded bridge across the Detroit River, according to the Michigan Campaign Finance Network.

Billionaire Manuel Moroun’s DIBC Holdings Inc., which owns the Ambassador Bridge connecting Detroit and Windsor, Canada, was the sole funder of referendum Number 6 called “Let the People Decide.” When Michiganders went to the polls, 60 percent favored the new bridge.

Another subsidiary of Moroun’s financial empire, Liberty Bell Agency, Inc., spent $3.5 million to support a tea party-backed initiative that would have required a two-thirds vote in the Legislature to raise any taxes. Seventy percent of voters rejected the proposal.

Moroun and the Mungers spent roughly $100 million on state ballot initiatives. The total tops the combined output of the two top donors to federal super PACs for the 2012 election, casino magnate Sheldon Adelson and Texas billionaire Harold Simmons, who gave nearly $81 million through Oct. 17.

In Michigan, a ballot initiative to put collective bargaining rights in the state constitution drew $22 million from unions around the country. Roughly half came from the Detroit-based United Auto Workers, the National Education Association and its state affiliate. Voters rejected the initiative, which garnered $25 million in opposition spending from Chamber of Commerce-affiliated groups in the state.

Adelson and his wife, Simmons and the No. 4 federal super PAC donor, Joe Ricketts, sent $2.6 million combined to Michigan to stop public employee unions’ most aggressive attempt to secure bargaining rights this year.

Unions won on their other major priority, the repeal of the state’s far-reaching emergency manager law. The law allowed Republican Gov. Rick Snyder to appoint a “financial czar” in several cities and school districts to fire elected officials, privatize city services and abolish collective bargaining agreements.

The repeal passed by a 52-to-48 margin.

The ballot effort garnered roughly $2 million in spending, almost entirely from the American Federation of State, County and Municipal Employees union.

In Washington state, a successful effort to expand charter schools garnered $11 million in spending — $4.5 million from Microsoft founders Bill Gates and Paul Allen. Alice Walton, of the Wal-Mart family fortune, sent $1.7 million from Bentonville, Ark., according to the Washington Secretary of State.

Also in Washington, the successful effort to legalize marijuana raised a third of its $6 million from Peter Lewis, the CEO of Progressive Casualty Insurance Co. California-based Dr. Bronner’s Magic Soaps All-One-God-Faith Inc., also chipped in on the campaign.

In June, the company’s CEO, David Bronner, put his money where his mouth is. He locked himself inside a cage full of marijuana plants and parked it outside the White House to protest laws banning hemp production.

While the D.C. Fire Department sawed through the bars to apprehend Bronner, he sat inside preparing his usual breakfast: hemp oil slathered on French bread.

Voters in three states — Maryland, Maine and Washington — approved laws allowing same-sex marriage. In Minnesota, voters rejected a proposed amendment to the constitution to restrict it. The ballot victories mark a shift away from trends in the last few elections. In 2004, 11 states passed constitutional amendments banning same-sex marriage.

Voters in Maryland affirmed a 2011 law modeled on the federal DREAM Act. Fifty-eight percent of voters supported the law, which allows undocumented immigrants to pay in-state tuition for college, provided they attend a Maryland high school and offer evidence that they or their families have paid taxes.

Chris Young contributed to this report.

Outside spending makes big difference in state-level races

2012-11-14T11:17:51-05:00

The explosion of outside spending unleashed at the federal level by the 2010 Citizens United Supreme Court ruling also rocked state races.

Contests for the top executive and judicial spots, in states whose bans on corporate outside spending were invalidated by the ruling, were newly shaped by unlimited cash from out-of-state corporate and union treasuries.

The D.C.-based governors’ associations led the way, nearly keeping pace with candidate spending in several close races. Governors’ races in Montana, Washington and New Hampshire were neck-and-neck as voters were besieged by ads financed by outside spending groups through Election Day.

Montana governor's race

Republican Rick Hill held a slim lead in his race against Democrat Steve Bullock for governor of Montana in a race that had not been determined at this writing. The Republican Governors Association used a super PAC, created in the wake of Citizens United, to support Hill.

RGA Right Direction PAC ran ads in Montana attacking Bullock, and also used its super PAC to funnel millions directly to candidates and parties on the state level.

The candidates both raised about $2 million according to Montana-based campaign finance watchdog the National Institute on Money in State Politics. But outside groups spent at least as much (and gave a rare half-million-dollar contribution directly to Hill in early October).

When a federal judge struck down Montana’s limits on giving directly to candidates in early October, the RGA sent $600,000 to the Montana Republican Party, which gave $500,000 to Hill the next day.

The previous limit on party giving to gubernatorial candidates was $22,600. Four days later, a federal appeals judge reinstated those limits, but not before Hill got the donation, which accounted for a quarter of his fundraising.

Meanwhile, Steve Bullock, who defended the state’s campaign finance laws as attorney general after a shadowy nonprofit sued the state over spending and contribution limits as well as disclosure requirements, benefited from outside spending by the D.C.-based Democratic Governors Association.

The DGA-funded JET PAC spent at least $1.7 million on ads, about the same amount that candidate Bullock raised. One of the ads featured current Gov. Brian Schweitzer endorsing Bullock for the job.

Nail-biter in Washington state

The RGA has made its mark on three states where it sought to take governors’ mansions inhabited by Democrats.

In Washington, Democrat Jay Inslee and Republican Rob McKenna were essentially tied late Tuesday — the governors associations played a large role right up until voting day. The race had yet to be called by this writing.

McKenna edged out Inslee in fundraising, but got an even larger boost from the RGA, which outspent its Democratic counterpart by $2 million, according to the Washington Secretary of State.

In the two weeks before the election, the RGA plastered the state with $1.3 million in ads calling Inslee a “D.C. congressman” who is “part of the problem.” The late ad spending was four times as much as a DGA-funded group, called Our Washington, could muster before Nov. 6.

In New Hampshire, Democrat Maggie Hassan crushed Republican Ovide Lamontagne on Tuesday, despite a major effort by the RGA-funded Live Free PAC. The RGA spent nearly $8 million on ads — a quarter of it since Oct. 18 — attacking her tax policies.

The DGA-funded New Hampshire Freedom Fund spent about $3 million on ads against Lamontagne, according to the state’s election division.

GOP wins big in North Carolina

The RGA’s major pickup on Election Day was in North Carolina. The state’s ban on corporate and union outside spending was nullified after the 2010 high court decision.

Republican Pat McCrory’s race with Democrat Lt. Gov. Walter Dalton was never close. Dalton suffered from attacks tying him to the unpopular tenure of current Gov. Bev Perdue, who chose not to run for re-election.

McCrory, the former mayor of Charlotte, trounced Dalton on the fundraising front, and also benefitted from a 2-to-1 edge from outside spending on his behalf — according to the North Carolina-based Institute for Southern Studies.

The RGA used corporate treasury money to kick off an early ad campaign against Dalton, tying him to Perdue’s unpopular record. Since May, it raised $5 million, compared to the DGA-funded group North Carolina Citizens for Progress’ $2.6 million.

In states with unlimited contribution limits to candidates, the governors associations made direct donations.

In Missouri, incumbent Democrat Jay Nixon held a solid fundraising advantage and a solid lead in the polls against Republican Dave Spence — which carried through to a 12-point Tuesday victory.

The RGA tried to keep Spence alive with $1.25 million in donations in October alone, and could have given more.

State supreme court results

Since Citizens United, last-minute outside spending has played a major role in state supreme court races. In 2010, about 43 percent of spending on TV ads in judicial races came the week before Election Day, according to the Brennan Center for Justice at New York University Law School.

This year, North Carolina’s incumbent conservative judge Paul Newby squeaked by in a heated contest with Sam Ervin IV that saw heavy outside spending.

Both judges participated in the state’s public financing program, which capped spending after awarding each candidate $240,000.

Outside groups not encumbered by limits, poured money into the race on behalf of Newby. Two groups used corporate and out-of-state funds to run nearly a half-million dollars’ worth of ads in the final week alone, including a $50,000 outlay for an ad called “Noise” on Nov. 5, sponsored by the North Carolina Judicial Coalition.

The other pro-Newby group, North Carolina Justice for All, ran an ad on Nov. 1 that asked “can we trust Sam Ervin?”

Justices retained

Three Florida justices easily won bids to keep their jobs Tuesday, and an Iowa justice hung onto his seat on the bench. The races were subjected to massive outside spending on ads and even dueling bus tours.

Eighteen states require appointed Supreme Court justices to periodically face voters in “merit retention elections.” If a majority votes against a judge, the governor appoints new justices from a list of names submitted by a nonpartisan nominating commission.

Florida justices R. Fred Lewis, Barbara Pariente and Peggy Quince will remain on the bench after roughly 67 percent of voters chose to retain them despite a wave of ads paid for by two tea party organizations.

Restore Justice and the Koch-funded Americans for Prosperity targeted the justices mainly for their involvement in a 2010 Supreme Court ruling that invalidated a ballot initiative challenging President Barack Obama’s health-care law.

The three justices, who collectively raised more than $1.3 million, received substantial support from Defend Justice from Politics, an outside group which spent roughly $1.5 million on a campaign dedicated to retaining the justices.

Nearly 54 percent of Iowans voted to retain Justice David Wiggins, who survived Republican attacks for his part in a 2009 Supreme Court vote that affirmed same-sex marriage. Two years ago, three of Wiggins’ former colleagues were ousted thanks to a similar campaign waged by conservatives upset with the ruling.

Conservative groups, joined by former GOP presidential candidate Rick Santorum, collectively spent roughly $450,000 on their “No Wiggins” campaign, which included television ads and a statewide bus tour.

Update, (Nov. 13, 12:00 pm): Democrats won two close races for governor. Montana's Steve Bullock edged out Republican Rick Hill, and in Washington, Jay Inslee narrowly defeated Republican Rob McKenna.

'Right-to-work' group gave Montana nonprofit $300,000

2012-11-02T15:34:49-04:00

A secretive nonprofit group that wants to nullify Montana’s campaign finance laws received a $300,000 donation from an anti-union organization aligned with a Colorado furniture executive, an Internal Revenue Service document shows.

American Tradition Partnership, a pro-energy group known for successfully suing Montana to force it to abide by the U.S. Supreme Court’s Citizens United ruling, has also sued the state to protect the identity of its donors — who have funded the ATP’s attack mailers in state races.

An IRS document obtained by the Center for Public Integrity indicates one of its early donors was a nonprofit 501(c)(4) called Coloradans for Economic Growth, which spent millions of dollars from undisclosed sources to support a failed 2008 ballot initiative that would have made Colorado a “right-to-work” state.

Among the initiative’s supporters was Jacob Jabs, president and CEO of American Furniture Warehouse. A 2008 letter to the IRS signed by former ATP employee Athena Dalton said Jabs was the “primary donor” and had promised to give $300,000 to ATP, but only if the IRS expedited its approval of ATP’s application for tax-exempt status.

Jabs has denied knowing anything about the group or giving it any money.

The appeal apparently worked. Three days later, the IRS approved the application.

ATP’s 2008 donors list shows a $300,000 contribution from Coloradans for Economic Growth, but makes no mention of any donation from Jabs.

Dalton did not return numerous calls. According to a report by ProPublica, a nonprofit news organization, Jabs said he contacted Dalton earlier this October and she told him that ATP officials had instructed her to use Jabs’ name in the letter.

One of those officials was Christian LeFer, who was also director of Montana Citizens for Right to Work at the time. LeFer declined to comment on whether he told Dalton to use Jabs’ name or not.

In a previous interview with the Center, he said that "ATP and RTW [Right to Work] have nothing to do with each other," and that "I know of no shared funds" between the groups.

Donald Ferguson, ATP’s spokesman, did not respond to a request for comment.

Coloradans for Economic Growth was a major force behind the state’s anti-union ballot initiative, shelling out almost $3.4 million in 2008 to groups that campaigned for the law’s passage.

Such laws, which exist in 23 states, allow employees at union shops to forego paying union dues.

Jabs appeared in TV commercials as an unofficial spokesman for the cause, and gave at least $20,000 to groups mobilizing support for the ballot issue.

Jabs did not immediately return calls for comment.

At a 2008 press conference, Jabs announced he would be backing the anti-union referendum to “frankly hurt the pocketbooks of the unions so they don’t have the millions and millions and millions and millions and millions of dollars to spend.”

ATP’s other early funders listed on the IRS document include New Leadership Colorado. The nonprofit also contributed to anti-union groups in 2008, and gave $45,000 to ATP.

Coloradans for Economic Growth and New Leadership Colorado are both listed as “delinquent” for failing to file annual reports with the Colorado secretary of state and have faded from public view. They were both registered in 2008 at Hackstaff Law of Denver, Colo. The law firm’s address is the same one listed on ATP’s corporate registration.

Hackstaff is the former firm of Colorado Secretary of State Scott Gessler, who represented ATP in a lawsuit challenging campaign finance laws in the Colorado city of Longmont in 2009 before he won public office.

A third nonprofit, Virginia-based Conservative Action League gave $40,000 to ATP, and has given smaller grants to Montana’s right-to-work group, which until recently was headed by ATP’s LeFer.

LeFer said he’s a “consultant” to ATP, but documents obtained by PBS Frontline show that he wrote fundraising strategy memos to ATP staff under the title of “Director Strategic Programming.”

In a 2009 memo, LeFer writes that ATP’s fundraising program “was designed by the same people who designed the multimillion-dollar personal-visit style” strategy used by “Club for Growth, the National Right to Work Committee, and other pro-business / limited government interests.”

The group garnered support from two corporate executives early on: Montana’s Ray Thompson gave $10,000 and Tulsa millionaire Norm Asbjornson gave $50,000.

Thompson is a tea party supporter who lent his corporate jet to a group called Tea Party Patriots in 2010 for their “grassroots” tours, according to Mother Jones. He sold his small manufacturing company for $364 million in 2009, and now runs a diner and grocery store in Kalispell, Mont.

Asbjornson is the founder of AAON Inc., a heating and air conditioning company based in Tulsa, Okla. He is from Montana and remains a major donor to Republican candidates in the state this year.

He gave $10,000 to the state Republican Party and $5,000 to Denny Rehberg’s U.S. Senate bid. He gave a smaller amount to Steve Daines’ run for Montana’s lone U.S. House seat.

Last summer, he gave $55,000 to the Romney Victory Fund, a joint fundraising committee that supports GOP presidential nominee Mitt Romney.

He has also supported the tea party candidacy of Ted Cruz, the GOP’s nominee for U.S. Senate from Texas. In 2010, he gave money to tea party-endorsed Sharron Angle’s unsuccessful bid for U.S. Senate in Nevada.

A list of ATP’s targeted donors from 2009 obtained by Frontline includes representatives of oil, gas, and mining interests. It also lists Asbjornson as a “top priority” to return to after his 2008 contribution.

Neither donor could be reached for comment.

This year, ATP has launched mailers attacking Montana Attorney General Steve Bullock’s bid for governor. Bullock has represented the state in court during ATP’s campaign finance challenges in Montana.

He is neck-and-neck in state polls with Republican Rick Hill, who supports right-to-work laws. Bullock says he would veto any such measure passed by the Legislature.

Mystery deepens over origins of nonprofit battling Montana spending limits

2012-10-26T14:20:26-04:00

The origin story of the secretive nonprofit that is leading efforts to invalidate Montana’s campaign finance laws keeps getting murkier.

In a document filed with the Internal Revenue Service, the group claimed Jacob Jabs as its “primary donor” who had “agreed to provide $300,000” to get the group rolling in 2008.

It appears the group was referring to Jacob Jabs, the president and CEO of American Furniture Warehouse, based in Colorado, where ATP was created.

But a spokeswoman for Jabs said he's never heard of the group. ATP’s current executive director says he wasn’t with the organization at the time. The woman who signed the document would not return calls from the Center for Public Integrity.

“Someone is not coming clean,” said Marcus Owens, the former director of the division that handles nonprofit corporations at the IRS. “A knowing effort to mislead the IRS is a crime and people go to jail for that.”

Jabs has been a major supporter of Republican candidates and causes. He gave heavily to an anti-union ballot initiative in Colorado in 2008, and is a donor to Mitt Romney.

As for the gift to ATP, Jabs claims it didn’t happen.

“Mr. Jabs has not heard of this group, nor did he give them money,” said Charlie Saulis, Jabs’ spokeswoman.

Athena Dalton signed the September 2008 letter to the IRS which referenced a communication with the furniture magnate, during which Jabs “assured us that he will no longer contribute” if ATP did not receive its exempt status in the next two weeks.

A public records search reveals 17 listings for Jacob Jabs nationwide. Most of the listings refer to retail locations for Jabs’ American Furniture Warehouse. Two of the Jabs listed are deceased. Another Jacob Jabs resides in an Ohio home valued at a quarter of the alleged donation to ATP.

Then there is the Montana-born owner of American Furniture Warehouse, whose current residence is listed as a 5,000-square-foot mansion in Colorado valued at $1.8 million.

Dalton pressed the IRS, claiming that ATP would “be virtually unable to operate any of our programs,” and would “cease to exist” without the Jabs contribution.

The IRS approved the group’s application four days later. Shortly after, it sent out mailers in a dozen Montana legislative races attacking candidates. Voters don’t know who paid for the ads, which prompted an investigation into the group by Montana officials.

Athena Dalton is currently a staff member with the Colorado Senate Republican office. She did not respond to multiple calls and emails requesting comment on the 2008 letter she signed.

ATP’s executive director Donald Ferguson said he was “not around” the organization when the letter was sent to the IRS, and declined to respond to further questions.

Scott Shires, the Colorado consultant who signed ATP’s 2008 application for exempt status, said he “doesn’t remember” Dalton or the letter she signed listing Jabs as a donor.

ATP, with help from lawyer Jim Bopp, who has made a name for himself challenging campaign finance rules in court, compelled Montana to abide by the U.S. Supreme Court’s Citizens United ruling and give up its century-old ban on corporate spending on elections.

It has also sued over the state’s disclosure rules and its low dollar limits on contributions to candidates. In its legal challenges, ATP has faced off with Montana Attorney General Steve Bullock, who is locked in a tight race for governor.

The group has launched direct mail campaigns attacking environmentalist forces it calls “Gang Green,” and now it’s going after Bullock.

In addition to the questions surrounding the Jabs donation, ATP’s filings with the IRS in subsequent years are difficult to track, and raise further legal questions.

In its 2008 application for exempt status, the IRS asked ATP if it planned to “spend any money attempting to influence the selection, nomination, election or appointment” of candidates for public office. It also asked if ATP published pamphlets, brochures, newsletters “or similar material.”

ATP answered “no” to both questions.

This application, says Owens, “was signed under penalty of perjury.”

Its spending activity is hard to track. ATP’s Form 990 tax filings for 2009, 2010 and 2011 are not accessible online and there appears to be no record of them. ATP failed to respond to a Center for Public Integrity request for those filings.

IRS rules require nonprofit organizations to make their three most recent annual returns publicly available.

The Center did obtain a copy of the group’s 2009 return prepared by Shires, but unsigned. In it, the group reports receiving about $100,000 in revenue, of which it says it spent $67,000 on “mailings concerning public issues.”

Nonprofits like ATP cannot make political activities their primary function, according to IRS rules.

Obscure nonprofit threatens campaign finance limits beyond Montana

Montana,United States — 2012-10-26T12:42:01-04:00

Voters haven’t had a clue who is behind American Tradition Partnership — the Colorado-based group pushing to rewrite Montana’s campaign finance laws — and that’s just the way the secretive nonprofit wants it.

A 2010 fundraising pitch to its donors promised that “no politician, no bureaucrat, and no radical environmentalist will ever know you helped,” and “the only thing we plan on reporting is our success to contributors like you.”

“Montana has very strict limits on contributions to candidates,” reads the document, obtained by The Center for Public Integrity. “but there is no limit to how much you give to this program.”

As for the state’s ban on corporate money in elections?

“Corporate contributions are completely legal,” the pitch assures potential funders. “This is one of the rare programs you will find where that’s the case.”

“You can get some traction with that pitch,” says Dennis Unsworth, who led the state’s investigation of the group in 2010 that unearthed the document. “If you can offer to influence the elections outside the law, that’s a great calling card.”

For three election cycles, ATP has plastered the state with mailers attacking "radical environmental groups" and moderate Republicans.

While ATP’s funders are still mostly a mystery, the Center for Public Integrity has identified what records indicate is the secretive organization’s founding donor — an anti-union owner of Colorado’s largest furniture chain — and discovered a long list of affiliations with national tea party groups funded by the conservative billionaire Koch brothers.

This election, ATP has vowed to keep Attorney General Steve Bullock out of the governor’s mansion. In October, voters received a brazen multi-page newspaper-style flier placing the Democratic candidate in a photo lineup with three registered sex offenders.

But the group hit the national spotlight thanks to three landmark court battles with Bullock and the state of Montana.

The U.S. Supreme Court in the Citizens United decision invalidated a federal ban on corporate spending similar to what 24 states had on their books, but Montana held fast to its law. ATP sued to overturn it, losing to Bullock in the state’s high court. But in June, the nonprofit prevailed on appeal to the nation’s highest court.

ATP is pushing past its Citizens United challenge with two more suits to eliminate Montana’s low contribution limits and disclosure rules, setting up a potential challenge to contribution limits nationwide.

Tea party ties

One of ATP’s founders is former Montana Congressman Ron Marlenee, who served from 1977 until the state dropped from two House seats to one in 1992. Marlenee used his D.C. Rolodex to raise money for the fledgling pro-energy group, which registered in Colorado in 2008.

Marlenee rallied a tea party crowd in Bozeman in 2010, appearing on stage with a half-burned American flag, which he said he wrestled away from a “liberal Marxist” protester.

ATP has joined tea party lobbying efforts, signing at least two letters to Congress in the last year urging an end to an end to tax credits for wind power and natural gas-fueled vehicles. The letters were signed by Koch-funded groups including Americans for Prosperity and tea party boosters FreedomWorks, Club for Growth and Art Pope’s John Locke Foundation.

In its 2008 application for tax-exempt status as a 501(c)(4) “social welfare” organization, ATP listed its “primary donor” as Jacob Jabs, Colorado’s largest furniture retailer and a donor to Republican candidates and causes. Jabs pledged a $300,000 contribution to get ATP on its feet, according to IRS records obtained by the Center for Public Integrity.

Jabs, through a spokeswoman, on Monday said he did not make a donation and has "never heard of" ATP or the group's previous incarnation.

"He did not commit to the funds indicated by Athena Dalton in the filing so clearly he did not give them funds," wrote Charlie Shaulis, director of communications for American Furniture Warehouse, Jabs' company, in an email to I-News Network in Colorado.

Dalton wrote a letter to the IRS asking the agency to speed up the process for awarding it nonprofit status. The letter states that the approval was needed quickly, otherwise Jabs would not make a contribution. The agency gave it the thumbs up four days later.

The amount of the gift would be double Jabs’ total federal campaign contributions since 1997, which have gone exclusively to Republican candidates and party organizations, according to FEC records.

Jabs also poured money into a failed “right to work” ballot initiative in Colorado, becoming a television spokesman for the 2008 anti-union effort.

ATP shares resources and a D.C. mailing address with an affiliated 501(c)(3) educational nonprofit called the American Tradition Institute, which works in tandem with a network of Koch-funded think tanks to oppose wind energy and dispute the reality of climate change. It has launched lawsuits against state mandates for renewable energy usage and targeted climate scientists in academia.

The libertarian Koch brothers, Charles and David, have become better known in recent years with the rise of the tea party. They are principal owners of Koch Industries Inc., the second-largest privately owned company in the U.S., with major investments in the energy industry.

ATI has accepted donations from the Atlas Economic Research Foundation, a free-market think tank underwritten by Exxon Mobil and Koch foundation money, according to a report by the Institute for Southern Studies.

Its director of litigation Chris Horner is also a fellow at the Competitive Enterprise Institute, a free-market think tank that has taken a half-million dollars from Koch foundations since 1998, according to the report.

‘We won’t be shut up, or shut down’

In 2008, American Tradition Partnership flooded the state with mailers attacking ten state legislators, but reported only $12,000 in spending for the entire election.

An investigation by the state’s Commission on Political Practices concluded that the group had broken state law requiring outside spending groups to register as political action committees and disclose all donors and spending.

Commissioner Unsworth concluded in October 2010 that ATP had registered a “sham organization” called the Coalition for Energy and Environment and vastly under-reported its activity. The PAC’s reported spending, said the state, would have barely covered the cost of postage for the raft of glossy, full-color mailers ATP sent out.

ATP filed forms with the IRS the same year, reporting more than $660,000 in spending.

ATP maintains that its spending on mailers, most targeting moderate Republicans running for state legislative seats, is “educational” and therefore falls outside the state’s definition of “express advocacy” that would require it to disclose its funders and its spending on the mailers.

ATP did not face penalties and did not disband. Instead, it changed its name from Western Tradition Partnership and sued to strike down Montana’s disclosure laws.

The case is set for trial in March 2013.

“We won’t be shut up or shut down,” ATP said in a press release in June.

Ironically, ATP’s years-long court battles have pushed the group into the public spotlight, threatening the secrecy of its donors. The group has vigorously resisted discovery proceedings in court, missing several deadlines to produce evidence requested by the state.

Lawyers in Bullock’s office filed a motion to compel ATP to present evidence, including bank records, or drop their lawsuit. It has not complied. According to a court filing, ATP’s lawyer Jim Brown emailed the state’s lawyers in late August, explaining, “I have a difficult client."

Nonetheless, the state has won access to bank records for the organization. If a judge makes them public, they could offer voters a glimpse at the group’s funders.

‘I was the screen’

The group rarely communicates with the press and it hires unknowing lawyers to sign campaign finance reports and its 2008 nonprofit incorporation documents in Colorado.

Scott Shires has been sued and fined for his election activities, but the Colorado-based political consultant says his reputation really took a hit after he signed ATP’s forms. When Montana released the results of its 2010 investigation, Shires’ name began showing up in the press, and he says he cut ties to the organization.

“The operatives writing these stupid ads and mailings don’t want to be identified,” said Shires. “I was the screen that allowed them to hide — plausible deniability is something a lot of these groups are interested in.”

Shires listed himself as “President” of ATP when he signed the group’s request for exempt status with the IRS in 2008.

He is widely known for registering hundreds of political committees in Colorado, mostly Republican groups. The work involves some risk. He pleaded guilty to filing false tax returns for a client in 2008, a misdemeanor charge. He was also caught up in a scandal that linked former U.S. Rep. and 2008 Senate candidate Bob Schaffer with the beneficiary of a questionable congressional earmark.

ATP Executive Director Donald Ferguson did not return numerous calls for comment.

‘Not really sure who is in charge’

The left-leaning Montana Conservation Voters claims ATP was unfazed by the 2010 investigation and is “right back to doing the same thing,” according to the group’s board member Ben Graybill, who filed the original complaint.

This year, ATP has registered a PAC in the state. It sent mailers prior to the June primary election, but has reported zero spending to the state.

Its filings are signed by Montana attorney Chris Gallus, who was “surprised” to receive a call from the Center regarding ATP. He claims no leadership role in the organization, and said he’s “not really sure who is in charge.”

Gallus said he has not been contacted by ATP since being hired to sign their PAC reports, and does not anticipate filing any spending reports on their behalf. “Until that changes, my involvement is the same as the date I signed their forms.”

The organization sent out a questionnaire to candidates in early October, asking about their stance on land development and environmental regulations in resource-rich Montana.

“Will you oppose legislation which would categorically limit development of any specific energy resource?” reads one. “Will you oppose legislation that would rescind, reduce or shorten the tax holiday on oil & gas wells?” reads another.

Candidates who don’t respond, or don’t respond with answers favorable to ATP’s interests, are often targeted by a direct mail campaign similar to those launched at Bullock.

Its adversary, the Montana conservation group, endorses candidates for the state legislature who align with its mission to “protect clean water, public health, and our incredible outdoor heritage.” Its mid-October mailers praise Bullock for leading “the fight against corporate control of our elections.”

Unlike ATP, the group reports its direct and independent spending to the state and lists its donors.

“They’re scofflaws,” said Theresa Keaveny, executive director of the Montana conservation group.

Keaveny says ATP is not only in violation of Montana law, but also IRS rules for c(4) groups that dictate ATP must not spend a majority of its funds on political activity.

According to its 2008 application for exempt status, obtained by the Center, ATP promised not to “spend any money attempting to influence” elections. It also promised not to “directly or indirectly participate or intervene on behalf of or in opposition to a candidate for public office.”

It would, however spend “70 percent” of its time and resources to “educate citizens” about “land and resource development issues.”

It also revealed the Jabs contribution.

Governor’s race a toss up

Bullock, a Democrat, is running against Republican Rick Hill. It’s expected to be a close race despite Montana’s majority-Republican voting population.

“We want citizens deciding elections, not corporations,” said Bullock in an October debate during which he touted his record as a campaign finance crusader.

While outside spending groups, including the Republican and Democratic governors associations, have swarmed the state with ads, the two candidates have had to abide by Montana’s low contribution limits — for most of the campaign.

In October, ATP made national news when a federal judge agreed with the organization and its high-profile campaign finance lawyer, James Bopp, and struck down contribution limits on individuals, PACs, and parties — including the $630 cap on individual giving to Bullock and Hill.

"The political establishment can no longer tell citizens to shut up because they've reached their speech limit," said ATP Montana Director Doug Lair in a press release.

Montana joined the ranks of 12 other states with no limits on contributions to candidates, but only temporarily. A week later, a federal appeals court stayed the lower court decision pending a full appeal, putting the state’s contribution limits back in force.

Bullock’s opponent took advantage of the six-day free-for-all between the ruling and the stay, accepting a $500,000 contribution from the state’s Republican Party. The gift dwarfed Montana’s $22,600 limit on party giving to candidates.

‘Who’s saying these crazy things’

A month before the vote, Montana residents woke up to a fake newspaper on their doorstep called “The Montana Statesman.”

The publication calls itself “the largest and most trusted news source” but is actually a series of ATP-funded attacks on Bullock. It leads with a giant headline that reads “Bullock Admits Failure.”

The “news” story below claims that the attorney general has let “1 in 4 sex offenders go unregistered.” It includes four photos: three registered sex offenders and Bullock.

The group can continue to raise money on the promise that “no politician, no bureaucrat, and no radical environmentalist will ever know you helped make this program possible,” as its 2010 briefing to donors reads. “You can just sit back on election night and see what a difference you’ve made.”

Unsworth says his 2010 investigation did not stop ATP, and outside spending that has already flooded the state is sure to intensify, particularly in light of the Citizens United decision. He calls the advertising a “mess of trash that lays at the feet of the public,” paid for by “funny money with no legal constraints.”

“We don’t know who’s saying these crazy things,” he added, “so the public has to suffer and our political system suffers as a result.”

Update (Oct . 22, 7:00 p.m.): This story was updated to reflect that Jabs, through a spokeswoman, denied making a contribution to ATP.

John Dunbar contributed to this report.