Money and Democracy

Published — March 11, 2012 Updated — May 19, 2014 at 12:19 pm ET

Donors to conservative super PAC masked by nonprofit

Super PAC shares offices with nonprofit benefactor


Super PACs are the perceived demons of the 2012 campaign, with the law allowing them to raise and spend unlimited amounts of dough. But a shadowy sideshow that’s gone largely unnoticed is the set of nonprofits affiliated with them, which often provide money to the cash cows — and they don’t have to publicly disclose their donors (as super PACs must).

“The undisclosed money is far more troubling for the system,” says campaign finance lawyer Kenneth Gross.

FreedomWorks for America is a case in point. The group, which has attacked GOP pols it finds insufficiently conservative, is located three blocks north of the Capitol. At the same address, sharing the same suite and even some staff, is the headquarters of the similarly named FreedomWorks Inc., a nonprofit (or 501[c][4] group).

In 2011 the super PAC received almost half of its $2.7 million from the nonprofit, a legal transfer that skirts disclosure requirements. Whose cash is it? We aren’t allowed to know. Matt Kibbe, who oversees the activities of both groups, says that “to adhere to what the law stipulates” there is a “firewall” between the two.

But even by the loose standards of money in politics these days, the arrangement seems rather cozy.

Other groups are doing it, too. The pro-President Obama super PAC, Priorities USA Action, has received $215,234 from its sister non-profit, Priorities USA. Karl Rove’s American Crossroads super PAC and its nonprofit sibling, Crossroads GPS, are also expected to be big ad buyers in the general election.

Is it all too cozy? Last month, the Internal Revenue Service launched an investigation into the election advocacy of (c)(4) groups that, as nonpolitical entities, enjoy a comfortable tax status.

This story was co-published with Newsweek. Daniel Stone is the magazine’s White House correspondent.

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