Amid attacks on Kochs, GOP donors turn to groups that keep names secret

Matea Gold / The Washington Post

Published May 30, 2014 at 01:21PM

WASHINGTON - Senate Majority Leader Harry Reid’s relentless attacks on the billionaire Koch brothers are having an unforeseen impact - spurring other wealthy GOP donors to give more money to groups that keep their supporters’ names secret.

Several prominent pro-Republican advocacy groups say they are benefiting from a burst of cash as some donors - fearful of harsh public attacks such as those aimed at the Kochs - turn away from political committees required under federal law to reveal their contributors.

The trend can be seen at the prominent GOP super PAC co-founded by strategist Karl Rove, American Crossroads, which discloses its donors to the Federal Election Commission (FEC).

The group, which hauled in $117 million during the 2012 election, has raised $9 million so far this cycle - including just $266,000 in April.

At the same time, group officials said, donors are more interested than ever in supporting Crossroads GPS, a sister organization with a tax-exempt status that allows it to keep its donor list private. The two groups recently kicked off a $10 million television advertising campaign against vulnerable Senate Democrats - $8 million of which was paid for by Crossroads GPS.

Paul Lindsay, a Crossroads spokesman, said the spotlight Reid and others have put on major political funders on the right has driven more contributors to the nonprofit. Democrats are “dragging private citizens through the mud, and that’s led to a shift of sorts for donors,” Lindsay said.

Politically active tax-exempt groups are on track to play a larger role this cycle than in 2012, which saw $310 million in reported election spending by non-disclosing groups.

These organizations are set up as “social welfare” groups or business lobbies under the tax code, designations that give them wide leeway to engage in campaigns without having to register as political committees and disclose donors to the FEC.

Political nonprofits have become major players in elections since the Supreme Court’s 2010 Citizens United decision paved the way for unlimited political spending by corporations and unions.

The Obama administration moved late last year to crack down on political nonprofits, proposing a new Internal Revenue Service rule that could have limited their election-related activities.

But after the draft rule triggered protests from both the left and the right, the agency confirmed last week that it plans to rework the regulation, delaying the process indefinitely.

The delay allows the clout of these politically oriented nonprofits to grow, at least in the near term.

“We’ll see more groups abusing the tax laws, calling themselves social welfare groups, when they really are political groups,” said Miles Rapoport, president of Common Cause, a nonpartisan group seeking to reduce the influence of money on politics.

Industrialists Charles and David Koch are the backers of an extensive network of political nonprofits, which raised at least $400 million in 2012 from unknown donors. This year, groups in the Koch network such as Americans for Prosperity (AFP) and Freedom Partners are spending millions of dollars on ads against vulnerable Senate Democrats, a barrage that could help the GOP retake the chamber.

The Kochs have defended the right to spend money anonymously, noting that many donors across the political spectrum seek privacy. They point to the threats they have weathered since gaining a public profile.

Reid has escalated his criticisms of the Kochs and their influence within the GOP in recent months, lodging sharply personal attacks against the brothers and questioning their motives, often from the Senate floor. Other Democrats have amplified that message, seeking to connect the Kochs to individual Republican candidates.

The barrage appears to be driving some conservative financiers to the shadows.

“We’ve heard from donors that they don’t want to get ‘Koched,’ “ said one top Republican operative who works with outside groups and who spoke on the condition of anonymity to describe private conversations.

In a twist, the trend is bolstering some groups in the Koch network, which are fielding interest from new donors seeking ways to avoid public disclosure.

“There are a fair number of new contributions from people who say, ‘Hey, no one is going to know, right?’ “ said an operative who works with organizations in the network.

Reid spokesman Adam Jentleson declined to comment directly on how the Senate majority leader’s attacks are leading more donors to avoid disclosure, but he said that the increased giving to nonprofit groups underscores “why we need a constitutional amendment to state clearly that money does not equal speech.”

The heavy influence of politically active nonprofits has been clear for months as this year’s midterm campaigns have heated up.

Two of the biggest players driving outside political spending on the right this cycle do not reveal their financial backers: the U.S. Chamber of Commerce, which is likely to put in close to $70 million, and Americans for Prosperity, which is expected to spend more than $125 million, according to people familiar with the plans.

On the Democratic side, much of the outside spending is being done by disclosing super PACs, but Senate Democrats have been boosted by one major nonprofit, Patriot Majority, which has reported spending $3.4 million on races so far. The organization is run by Craig Varoga, a party strategist who served as Reid’s communications director in the early 1990s.

In all, nonprofits that sponsor overtly political ads have reported spending $24 million on such election-related activity this cycle - nearly four times more than at this point in 2012, a presidential election year, according to the nonpartisan Center for Responsive Politics. That doesn’t include the amount spent by AFP, which is running ads that stop short of advocating for the election or defeat of a candidate, allowing it to avoid making reports to the FEC.

The drive among donors to mask their political giving is not universal. Robert Kelner, a Washington campaign finance lawyer, said some of his major donor clients have grown increasingly comfortable with the public scrutiny that comes with giving to super PACs, which are required to disclose their financial backers.

“There may be newcomers to the political world who are more shocked by it,” Kelner said. “But for the veterans, it doesn’t change the equation, because they have always assumed that disclosed contributions by wealthy donors are going to draw fire.”

Many political operatives encourage donors to give to super PACs for pure efficiency: All their money can be spent directly on politics without running afoul of tax laws.

But many conservative donors have gravitated in recent elections to politically active nonprofits because of the anonymity they provide. Crossroads GPS, for instance, outraised American Crossroads in the 2012 cycle - a disparity that now appears to be growing in the wake of the attacks on the Kochs.

Such nonprofit groups have found ways to make sharp political points with “issue ads.”

Take the latest television spot from Crossroads GPS, which accuses Sen. Mark Begich, D-Alaska, of being sanguine about the unfolding scandal about delayed care at the Department of Veterans Affairs. The group is spending $450,000 to run the ad across the state this week.

“Tell Senator Begich, when veterans are dying, it is a problem,” says a female narrator in an urgent tone. The spot ends with a photo of Begich and his congressional office phone number, and the words, all in caps: “TELL HIM TO STAND UP FOR VETERANS.”

Susanne Fleek-Green, Begich’s campaign manager, rejected the charge, noting in a statement that the senator quickly called the allegations “disgraceful” and peppered VA Secretary Eric Shinseki with sharp questions at a congressional hearing. She called the ad part of a wave of “political attacks that disgust Alaskans.”

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Washington Post researcher Alice Crites and staff writers Tom Hamburger and Reid Wilson contributed to this report.