Tag Archives: dark money

Inside the Democracy Alliance, the Liberal Answer to the Koch Donor Network

Mother Jones

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Once or twice a year, Charles Koch, the billionaire industrialist and one-half of the “Koch brothers” duo, invites several hundred donors, big-name politicians, and conservative thinkers to a posh resort somewhere classy like Palm Springs or Aspen or Vail. The Kochs and their allies discuss how best to elect their favored politicians and spread their free-market ideas, and they hear pitches from conservative activists trying to carry out that strategy on the ground. Then the attendees make a pledge to fund the groups fighting for their causes. The Koch donor retreats are, by now, well known in political circles, and a magnet for reporters and protesters.

What’s often left unmentioned in coverage of the Kochs’ gatherings is that Democrats and progressives do the same thing. The Democracy Alliance is an exclusive group of about 100 funders, founded in 2005 by Democratic strategist Rob Stein. Members include billionaire financier George Soros and Facebook cofounder Chris Hughes, who owns the New Republic magazine. Matea Gold of the Los Angeles Times was recently given a rare glimpse inside the Alliance’s operations, and she came away with a useful, fascinating story.

Since 2005, the Alliance has directed roughly $500 million to left-leaning organizations, including the Center for American Progress think tank, the watchdog Media Matters for America, and the political data firm Catalist. The Democracy Alliance, as an organization, does not make donations; instead, leaders of left-leaning organizations pitch the group’s members, and the Alliance recommends which causes its wealthy members should support. Members must give at least $200,000 annually to Alliance-backed organizations, on top of a $30,000-a-year membership fee.

The Alliance recently met over five days at a hotel in Laguna Beach, Calif., not far from the Koch donor meeting at the Renaissance Esmeralda golf resort in Palm Springs. At the Laguna Beach retreat, Gold reports, Alliance members pledged $50 million to an array of organizations.

Two story lines emerged out of the latest Alliance event. One was an intense focus on immigration reform among Alliance members as Congress considers bipartisan legislation to overhaul the country’s immigration system. The other big news was the Alliance’s endorsement of Organizing for Action, the nonprofit devoted to enacting President Obama’s second-term agenda. OFA has said it wants to raise $50 million this year, but it raked in less than $5 million in the first three months of 2013. The Alliance’s decision to back OFA, then, couldn’t have come at a better time:

Among those on hand to pitch to the donors was Jon Carson, executive director of Organizing for Action, who stressed the ways in which his group is partnering with other liberal advocacy organizations.

“One thing we’ve made very clear to everyone is we’re going to work very collaboratively with everyone out there in the progressive infrastructure,” Carson said. “We’re going to focus on the pieces we bring to the table and not duplicate things.”

Alliance chairman (and former Mother Jones board member) Rob McKay said Carson assuaged worries that Organizing for Action, run by former Obama campaign officials, would compete with other groups. “The biggest concern would be if OFA was just going to try to re-create the wheel in a bunch of areas where we felt significant investments have been made,” he said.

The pro-Obama group, which had already received some donations from Democracy Alliance members, was recommended for funding for one year. It will be reconsidered next year but was not included in the three-year portfolio.

The hottest topic of the conference was immigration reform, as leaders of the Service Employees International Union and other advocates emphasized that comprehensive legislation could pass this year.

“The partners were really impressed with how close we are on this, and yet how tenuous it is, even at this stage,” McKay said. “We’ve got to get this done.”

The full story is one of the better detailed accounts I’ve seen of the Democracy Alliance, which will continue to play a crucial role on immigration, gun control, and other pressing issues on Congress’ to-do list.

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Inside the Democracy Alliance, the Liberal Answer to the Koch Donor Network

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Senators Take Another Swing at Dark Money Disclosure

Mother Jones

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Late last year, Sens. Lisa Murkowski (R-Alaska) and Ron Wyden (D-Ore.) penned a Washington Post op-ed taking aim at Citizens United, the 2010 Supreme Court ruling that helped open the floodgates for political nonprofits spending cash in the dark to influence elections. “At minimum, the American people deserve to know before they cast their ballots who is behind massive spending, who is funding people and organizations, and what their agendas are,” the senators wrote.

Now Murkowski and Wyden have followed up by introducing a bill that would require any group that spends at least $10,000 on an election to disclose all of its donors who donated $1,000 or more. Currently, tax-exempt 501(c) groups that engage in political spending have no legal obligation to reveal their donors. (That’s not the case with super-PACs, as the AP erroneously reported, although many super-PACs skirt disclosure by accepting donations funneled through affiliated nonprofits.) Super-PACs and dark-money groups spent more than $1 billion during the 2012 election.

Murkowski first hinted she supported shining more sunlight on dark-money groups last summer when the Senate was debating the DISCLOSE Act, which is similar to her new bill. (She voted against DISCLOSE for not being strong or bipartisan enough.) Senate Minority Leader Mitch McConnell (R-Ky.) filibustered DISCLOSE twice, deriding it as “nothing more than member and donor harassment and intimidation.” His continued opposition to campaign finance reform means that the Wyden-Murkowski bill will also face a GOP filibuster.

If it managed to defy McConnell’s opposition and pass the Republican-led House, the Wyden-Murkowski bill would also enact some smaller campaign finance reforms: It would require Senate candidates to file disclosure reports directly with the Federal Election Commission so they can be posted online more quickly and replace the FEC’s quarterly reports with a real-time reporting system. And while it would require greater transparency for big donors, it would ease requirements for small donors by lifting the disclosure threshold for gifts to candidates from $200 to $1,000.

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Senators Take Another Swing at Dark Money Disclosure

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The Enduring Mystery of GOP Megadonor Bob Perry

Mother Jones

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Bob Perry, the wealthy Texas homebuilder and Republican mega-donor who helped bankroll the infamous Swift Boat Veterans for Truth group that attacked John Kerry’s presidential campaign, died on Saturday night. He was 80 years old.

In 2012, I wrote a story about the Republican Governors Association, one of the many Republican causes to which Perry gave generously. During my reporting on the RGA, I interviewed an Austin attorney named Buck Wood who’d once crossed paths with Perry. Wood told me a head-scratcher of a story that, while hardly definitive, struck me as useful to understanding Perry’s place in GOP politics.

In the mid-2000s, Wood represented Chris Bell, a trial lawyer who’d run as the Democratic candidate in Texas’ 2006 gubernatorial election. Late in the race, Bell’s opponent, Gov. Rick Perry, received a $1 million donation from the RGA—an infusion that may well have contributed to Perry’s nine-point win. Bell believed that the $1 million originated with Bob Perry (no relation to Rick), and that Perry funneled the money through the RGA to Rick Perry’s campaign to wipe his fingerprints and avoid causing a fuss about such a big donation. (The RGA denied all this.) Bell sued the RGA in November 2007 for allegedly violating state campaign finance law.

Wood, Bell’s attorney, visited Bob Perry in Houston to depose him in the case. The two met in a conference room next to Perry’s personal office. Perry was pleasant, seemingly unbothered. Before the questioning began, Wood pointed out an aerial photograph on the wall of a new development in Austin built by Perry Homes. Perry looked at the picture, Wood recalled, studying it for an uncomfortably long time. “Yeah, that looks like one of our developments,” Perry replied unconvincingly, according to Wood. In the deposition, Perry recalled little about his RGA donations. Yes, that was his signature on the checks, he said, but he didn’t remember writing them.

Wood ended the deposition convinced that Perry really didn’t remember his $1 million donation to the RGA. He suspected that someone in Perry’s office, not the man himself, was handling Perry’s large political portfolio, as it were. “I wanted to know who was running the show so I could depose them,” he said. Wood asked a few local reporters if they knew anything more about the political affairs over at Perry Homes; he got nothing.

Perry went on to give tens of millions more to Republicans after the 2006 gubernatorial election. The 2010 Citizens United case freed Perry to give even more, which he did, doling out more than $20 million to super-PACs in 2012. When I spoke to Buck Wood on Monday morning, he told me he still didn’t have a clue who handled Perry’s political affairs, if it wasn’t Perry himself. All these years later, Bob Perry was still something of an mystery.

Perry preferred it that way. Here’s an excerpt of an April 2007 Texas Monthly profile that offered a rare glimpse inside Perry’s world:

Unseen by the public, uninvolved with his candidates, the most powerful political donor in the nation has until now remained largely an enigma. Few apart from a small circle of close friends in Houston know much about him. What they do know may surprise some people. For instance, Perry favors affirmative action. He has given money to Democrats, particularly black and Latino Democrats. He opposes his party’s hard line on immigration rights. He is a large-scale donor to an inner-city Houston foundation sponsored by a liberal black minister and to an educational scholarship program for Hispanic students founded by a liberal professor. So who is Bob Perry? Is he the monolithic, unyielding, far-right ideologue he is often portrayed to be? A philanthropist who gives generously to causes he believes in? Some hybrid of the two? Almost nobody knows, and that’s the way he likes it.

As under the radar as he was, Perry loomed large in Republican politics, in Texas and nationwide. His passing leaves the GOP without one of its biggest financial supporters.

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The Enduring Mystery of GOP Megadonor Bob Perry

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How Walmart, ExxonMobil, and Coke Buy Latino Friends in Congress

Mother Jones

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In late February, some 70 guests arrived for dinner at a hotel near Washington, DC’s Union Station. Nine members of Congress were there, including Reps. Rubén Hinojosa (D-Tex.), Raul Ruiz (D-Calif.), and Gloria Negrete McLeod (D-Calif.), as was former Labor Secretary Hilda Solis. Also in attendance were lobbyists and executives for Fortune 500 companies and big industry trade groups. Lonnie Johnson, a lobbyist for ExxonMobil, sat next to Hinojosa at dinner; Walmart lobbyist Ivan Zapien gave the closing remarks. Exxon, American Gas Association, Darden Restaurants, and Coca-Cola had underwritten the event. That was how, seven weeks into the 113th Congress, as lawmakers began work on immigration reform and a tax code overhaul, powerful corporate lobbyists scored premium access to politicians.

The dinner was organized by the Congressional Hispanic Caucus Institute (CHCI), an obscure offshoot of the 27-member, all-Democratic Congressional Hispanic Caucus. (Caucuses are factions of lawmakers formed around an issue or ideology, such as the Progressive Caucus, the Black Caucus, and the Tea Party Caucus.) The CHCI, founded in 1978 by a small group of Hispanic lawmakers, says its mission is to “develop the next generation of Latino leaders” by underwriting scholarships and fellowship programs for young Latinos, funding college readiness courses for them, and placing them in jobs and internships on Capitol Hill. But like other nonprofits nominally affiliated with congressional caucuses, CHCI sells access to influential lawmakers in exchange for big donations.

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How Walmart, ExxonMobil, and Coke Buy Latino Friends in Congress

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Reformers: Publicly Funded Elections Will Tackle New York’s Corruption Problem

Mother Jones

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It was a ham-handed scheme straight out of an episode of “Law and Order.” Federal prosecutors revealed on Monday that New York State Sen. Malcolm Smith, a Democrat, allegedly tried to bribe his way onto the New York City mayoral ballot—as a Republican. Envelopes stuffed with cash changed hands in hotel rooms and restaurants. Local Republican officials talked about “money greasing the wheels” and “the fucking money” driving local politics. Smith’s plan depended on paying off two Republicans from Queens who could get his name on the ballot in time for the November election. Instead, an undercover FBI agent and a cooperating witness infiltrated the deal and laid bare just the latest seamy corruption scandal to rock New York politics.

Preet Bharara, the US attorney in Manhattan spearheading the Smith case, told reporters on Monday that “today’s charges demonstrate, once again, that a show-me-the-money culture seems to pervade every level of New York government.” New York City Councilman Daniel Halloran, one of the two Republicans allegedly implicated in Smith’s scheme, would seem to agree. In the complaint filed against Smith et al, Halloran offers this nugget of wisdom:

“That’s politics, that’s politics, it’s all about how much. Not about whether or will, it’s about how much, and that’s our politicians in New York, they’re all like that, all like that. And they get like that because of the drive that the money does for everything else. You can’t do anything without the fucking money.”

The Smith scandal comes as a well-funded coalition of progressive groups are pressuring Gov. Andrew Cuomo and other legislators to pass legislation replacing the state’s current elections regime with publicly financed campaigns. Now, those reformers are pointing to the Smith scandal as further evidence that New York’s political systems need a major overhaul. “This is the kind of conduct that we believe comes out of a culture that is a pay-to-play, money first, voters don’t count culture,” Susan Lerner, executive director of Common Cause New York, told the Journal News. “What we’re trying to change is the role money plays in our political system.”

The editorial page of the Albany Times Union, a supporter of public financing, asked on Tuesday: “What better evidence can there be of the need for such reform than this case, in which one of their own, the onetime Senate president and Democratic leader, stands accused of trying to bribe Republican leaders to get a place on the ballot as a GOP candidate for mayor of New York City?”

The Fair Elections for New York campaign, the main force behind the public financing bill, said in a statement that the Smith scandal will only harden New Yorkers’ belief that corruption pervades every corner of state politics. “We can all agree the system is broken,” the statement reads. “Now it’s time to stand shoulder to shoulder with Governor Cuomo and the growing bipartisan majority of New Yorkers who support comprehensive campaign finance reform, which must include a system of publicly financed elections at its core.”

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Reformers: Publicly Funded Elections Will Tackle New York’s Corruption Problem

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The Taxman Turns the Screws on Dark-Money Nonprofits

Mother Jones

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The Internal Revenue Service is taking a closer look at the finances of some 1,300 nonprofit organizations, including unions, trade associations, and the type of dark-money groups that controversially spent hundreds of millions of dollars in the 2012 elections. That includes Karl Rove’s Crossroads GPS, the Koch-backed Americans for Prosperity, the US Chamber of Commerce, and the pro-Obama outfit Priorities USA, all of which keep their donors secret.

The IRS’ is asking these groups to answer a questionnaire (PDF) explaining how they spent their money, how their top staffers were paid, if they flew first-class or charter, any perks they received, and more. The taxman’s request for more information comes as campaign finance reformers, disclosure advocates, and at least one angry lawmaker, Sen. Carl Levin (D-Mich.), pressure the IRS to crack down on big-spending nonprofits like Crossroads GPS, which spent at least $67 million on politics during the 2012 campaign. Levin, who is retiring after his current term, said that a priority of his remaining time in Congress is investigating “the failure of the IRS to enforce our tax laws and stem the flood of hundreds of millions of secret dollars flowing into our elections, eroding public confidence in our democracy.”

Here’s more from NPR on the IRS’ latest move on dark money:

The IRS calls the move a “compliance check.” It asks a wide range of questions about a group’s finances and internal structure. Some of the information will turn up, eventually, in a group’s tax return on the Form 990. But other intriguing information will not. For instance, how did the group set the compensation for its most highly paid officers? Did it give them first-class or charter travel? How about country-club memberships? Any other perks?

The agency has targeted groups that are “self-declared.” That is, they claim they qualify for 501(c) tax-exempt status, but they’ve never filed the application with the IRS. That lets them avoid the application form asking the group to describe its proposed tax-exempt activities.

The IRS says the questionnaire is meant “to help us understand” the self-declared groups and to learn “how they satisfy their exemption requirements.”

But the IRS may be weighing other factors, too. The questionnaire’s most explicit questions are about 501(c)(4) political activity, and the document follows months of critics’ complaints that the IRS has treated 501(c)(4) groups too gently.

Unfortunately, the IRS won’t disclose respondents’ answers to the questionnaire. But with this questionnaire—and with one IRS official’s pledge last fall that the agency would scrutinize dark-money nonprofits—it’s obvious that the agency is digging into the issue of dark money.

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The Taxman Turns the Screws on Dark-Money Nonprofits

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4 Meetings With Obama? That’ll Cost You Half a Million

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Common Cause, the good-government group founded in 1970, has a loud-and-clear message for President Obama: He should tell his former campaign aides to shut down Organizing for Action, the nonprofit group created to promote Obama’s second-term legislative agenda.

As the New York Times reported on Sunday, Organizing for Action hopes to raise $50 million, and its leaders—including former Obama campaign manager Jim Messina—are courting wealthy givers to fill the group’s war chest. An elite group of donors giving or raising $500,000 or more is expected to cough up at least half of OFA’s budget. Those top-tier donors, whose names OFA says it will voluntarily disclose quarterly (which goes beyond what most nonprofits disclose), will earn a spot on OFA’s “national advisory board” and, more importantly, get to meet with Obama four times a year, according to the Times.

Bob Edgar, the president of Common Cause, said in a statement blasted out to reporters on Tuesday that Obama should push to have OFA shut down and should “disavow any plan” to meet with OFA’s bankrollers. “With its reported promise of quarterly presidential meetings for donors and ‘bundlers’ who raise $500,000, Organizing for Action apparently intends to extend and deepen the pay-to-play Washington culture that Barack Obama came to prominence pledging to end,” Edgar said. “Access to the president should never be for sale.”

Organizing for Action is a reincarnation of Obama’s reelection campaign, the most technologically sophisticated in history. OFA will have access to the databases and massive supporter network—2 million volunteers, 17 million email subscribers, and 22 million Twitter followers—built up by Team Obama in the run-up to last year’s presidential election. Although it is now running ads hitting lawmakers on the issue of gun control, OFA says it will not get involved in elections, focusing solely on building support for Obama’s legislative priorities, which include immigration reform, gun control, and revamping the tax code. OFA is allowed to coordinate its efforts with the Obama White House, which it wouldn’t have been able to do as a super-PAC.

But by organizing as a nonprofit, and agreeing to accept unlimited funds from corporations, unions, and individuals, OFA has been pilloried by Republicans and Democrats. They see OFA as a direct contradiction to Obama’s opposition to big-money politics and his pledge to clean up Washington’s cash-driven political culture. “It’s the right vehicle from a legal perspective, but it is breathtakingly hypocritical,” Charles Spies, a Republican lawyer who ran the pro-Romney super-PAC Restore Our Future, told me last month.

Common Cause’s Edgar doesn’t begrudge the president for wanting outside help in his second term, but he says it should not come from an access-peddling outfit like OFA. “President Obama’s backers should go back to the drawing board. The president may feel that he needs help from an advocacy organization outside the White House and the Democratic Party, but any group he creates should be fundamentally different from what we now see in Organizing for Action.”

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4 Meetings With Obama? That’ll Cost You Half a Million

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Lawsuit Tries to Ban Dark Money Groups From Funding Political Ads

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This story first appeared on the ProPublica website.

A former Illinois congressional candidate and a government watchdog organization have teamed up to sue the Internal Revenue Service, claiming the agency should bar dark money groups from funding political ads.

The lawsuit, filed on Tuesday by David Gill, his campaign committee and Citizens for Responsibility and Ethics in Washington, or CREW, is the first to challenge how the IRS regulates political spending by social welfare nonprofits, campaign-finance experts say.

As ProPublica has reported, these nonprofits, often called dark money groups because they don’t have to identify their donors, have increasingly become major players in politics since the Supreme Court’s Citizens United ruling in early 2010.

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Lawsuit Tries to Ban Dark Money Groups From Funding Political Ads

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SCOTUS to Consider Challenge to Campaign Donation Limits

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This morning, the Supreme Court agreed to hear McCutcheon v. Federal Election Commission (PDF), a case challenging the nearly 40-year-old cap on aggregate contributions to federal candidates, parties, and political action committees (PACs) as a violation of donors’ right to free speech.

Thanks to the court’s Citizens United decision in January 2010, donors can already give unlimited funds to super-PACs and 501(c)(4) groups, which are ostensibly prohibited from coordinating directly with the candidates they support. However, under federal law, donors are limited to giving no more than a total of $46,200 to federal candidates and $70,800 to parties and PACs during any two-year election cycle. Overturning those limits would not affect how much a donor could give an individual candidate (currently $2,600 per year), but a donor would potentially be able to cut a single multimillion-dollar check to a joint fundraising committee set up to distribute funds to multiple House and Senate candidates and state party committees. That committee could technically funnel the entire donation to a single candidate through a series of transfers.

When the Supreme Court ruled in Citizens United that restricting outside contributions violated the First Amendment, it overturned 100 years of legal precedents. If it takes a similar track in McCutcheon, laws limiting campaign contributions that date back to 1974—and affirmed by the court in 1976 in Buckley v. Valeo—would be overturned.

“If the Supreme Court reverses its past ruling in Buckley, the Court would do extraordinary damage to the nation’s ability to prevent the corruption of federal officeholders and government decisions,” Fred Wertheimer, president of the reform group Democracy 21, said in a statement. “It would also represent the first time in history that the Court declared a federal contribution limit unconstitutional.” Democracy 21 has been involved in the McCutcheon case since it was dismissed by a DC district court and subsequently appealed; the group is preparing an amicus brief defending the constitutionality of the current donation limits.

Rick Hasen, a law professor at the University of California-Irvine, told Politico that the outside spending groups that arose from Citizens United made aggregate limits less important but wrote that the “broader significance” of the McCutcheon case is that it could make future constitutional challenges against contribution limits much harder to defeat.

Yet the current justices have shown that they are sympathetic to some limits on campaign fundraising. Justice Anthony Kennedy, the swing vote in Citizens United, argued in 2003 that donor caps on loosely regulated “soft money” were constitutional “under Buckley‘s anticorruption rationale.”

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SCOTUS to Consider Challenge to Campaign Donation Limits

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Big Corporations Like Exxon Put Up Seed Funding for Dark Money Group

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This article originally appeared on the ProPublica website.

Some of the nation’s biggest corporations donated more than a million dollars to launch a Republican nonprofit that went on to play a key role in recent political fights.

Like the nonprofit groups that poured money into last year’s elections, the decade-old State Government Leadership Foundation has been able to keep the identities of its funders secret. Until now.

A records request by ProPublica to the IRS turned up a list of the original funders of the group: Exxon, Pfizer, Time Warner, and other corporations put up at least 85 percent of the $1.3 million the foundation raised in the first year and a half of its existence, starting in 2003.

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Big Corporations Like Exxon Put Up Seed Funding for Dark Money Group

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