Political money flowed freely in the world of conservative billionaires David and Charles Koch in 2012.
With most of the annual tax filings for nondisclosing nonprofits now in, it’s clear that no other conservative or liberal dark money network matched, in combined size and complexity, the constellation of Koch-linked groups that churned hundreds of millions of dollars into elections around the country last year.
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In 2012 alone, $301 million poured into this system — $196 million of which was given, in the form of grants, to dark money groups that engaged in federal electioneering. The network includes such well-known groups as Americans for Prosperity, 60 Plus and Americans for Job Security — copiously funded 501(c)(4) social welfare organizations and 501(c)(6) trade associations, none of which are required to disclose their donors to the public. Some of the entities in the web are simply way stations for cash that is doled out to other, more politically active groups in the system.
On the other side of the ledger, political spending reported by this system’s members to the Federal Election Commission (FEC) came to $170 million in 2012. The Center for Responsive Politics estimates that roughly $86 million of that — or more than one-fourth of all dark money spending reported in 2012 — came in the form of grants from other Koch-linked groups.
The politically active nonprofits with the closest ties to the Kochs are some of the biggest spenders in the dark money world. Three of them are in the top 10, and six are in the top 20.
Americans for Prosperity’s political spending in 2012, as reported to the FEC, was second only to that of Crossroads GPS, which was co-founded by GOP strategist Karl Rove.
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One group got almost all of its 2012 revenues from organizations linked to the Kochs. Ninety-four percent of the $11.7 million brought in by
American Commitment came from just two grants given by Koch-linked groups, Freedom Partners and CPPR.
The 2012 revenues of other groups, whose IRS filings have yet to be made publicly available despite several requests by the
Center for Responsive Politics, far outpaced their incomes of previous years, with vast amounts coming from within the Koch network.
American Future Fund, for example, brought in a total of nearly $63 million from just two groups last year — CPPR and Freedom Partners. That’s close to double the total revenues of the group from all sources during the first four years of its existence combined: $35 million from 2008 through 2011.
The Center to Protect Patient Rights
CPPR has become a symbol of the post-Citizens United politics of dark money. Headed by Sean Noble, a Republican consultant in Arizona who has been described in legal documents as the “
wizard behind the screen” of the Koch network, CPPR for years was the largest known dark money conduit giving to nonprofits involved in federal elections.
The group’s 2012 tax filings, viewed by OpenSecrets Blog, show that the dark money giant raised far more money that year than it raised in all its previous years combined, $147 million. Almost all of it came from just two 501(c)(6) trade associations, Freedom Partners and Americans for Job Security.
Noble was heartily compensated for his work. Though he claimed no salary from the group, three of his firms — Noble & Associates, Angler LLC, and DC London — received $23.4 million from CPPR for “consulting and management services” and “survey and phone programs.” The sum includes almost $15.8 million in reimbursements “for the Center’s program expenses.”
Because 501(c)(4) social welfare groups like CPPR don’t have to disclose their donors, it’s not known what individuals or corporations are bankrolling the group. According to Russo, Noble was so averse to scrutiny of his organization’s finances that he outed Americans for Job Security as a donor to his group in the
California campaign finance case because he “
couldn’t tolerate an audit of CPPR.”
The case involved $25 million that flowed from Americans for Job Security to CPPR, which then passed $15 million to two groups with close ties to Noble and the Kochs: American Future Fund and Americans for Responsible Leadership. Those nonprofits then
sent funds to two state-level PACs in California, and they spent the money on direct advocacy related to two ballot initiatives. The state’s Fair Political Practices Commission called it a “money laundering” scheme and slapped CPPR and Americans for Responsible Leadership with historic fines.
In a bank-shot tactic that has become a hallmark of the Koch network, the TC4 grants didn’t go directly to CPPR, but to two separate entities, each of which changed names each year. In both cases, the recipients were, in IRS terms, “disregarded entities” — that is, wholly owned subsidiaries — of CPPR.
TC4 was shuttered on June 30, 2012, after making $27.9 million grants — $14.3 of which went to a disregarded entity of CPPR called “Corner Table LLC.”
Though TC4 was gone, Corner Table found a new donor in the massive 501(c)(6) trade association known as Freedom Partners Chamber of Commerce, founded in late 2011 with the blessing of the Koch brothers and run by former employees of Koch Industries. The group became one of the largest in existence, and it gave almost all of its funds to an alphabet soup of other well-known conservative nonprofits — including nearly $115 million to Corner Table, otherwise known as CPPR, which then passed the money along to other groups.
At some point in 2012, true to form, Corner Table’s name was changed to Cactus Wren LLC, according to CPPR’s tax filing for 2012.
Money In, Money Out
CPPR’s 2012 grantees included 26 groups that reported political spending to the FEC last year, including Iowa-based American Future Fund ($49.2 million); Americans for Prosperity ($11.5 million); CitizenLink, whose parent 501(c)(3) organization is Focus on the Family ($4.2 million); and the National Rifle Association ($3.2 million).
| Political Nonprofits Receiving More than $500,000 from CPPR |
Amounts |
| American Future Fund |
$49,182,409 |
| Americans for Responsible Leadership |
$24,650,800 |
| Americans for Prosperity |
$11,513,079 |
| American Commitment |
$4,781,559 |
| CitizenLink |
$4,195,218 |
| National Rifle Assn for Legislative Action |
$3,150,000 |
| 60 Plus Assn |
$2,630,723 |
| American Energy Alliance |
$864,960 |
| RightChange.com II |
$850,000 |
| Hispanic Leadership Fund |
$645,000 |
There is no other known network that operates on the scale of the Koch-linked groups, in terms of both funding and complexity — though some data suggests Democratic-leaning groups are coming on strong this cycle. With no incumbent running for president in 2016, and big liberal donors like George Soros already giving big, the same sorts of networks could arise on the left in the coming years.
Last week the IRS put out proposed regulations to establish clearer markers for how politically active nonprofits can spend their money. One of the proposed guidelines says that grants from 501(c)(4) groups to other nonprofits that engaged in political activity would not be considered “social welfare” — which is supposed to account for a majority of such a group’s spending — unless the donor obtained a “written representation” from the recipient that the money wouldn’t be used for politics. But it’s unclear how that would be enforced, especially with a network as complex as that of the Kochs.
Whatever the wording, though, the new regs almost certainly won’t be in place for the 2014 midterm elections.
Follow Robert on Twitter: @RobertMaguire_
In 2012 alone, $301 million poured into this system — $196 million of which was given, in the form of grants, to dark money groups that engaged in federal electioneering. The network includes such well-known groups as Americans for Prosperity, 60 Plus and Americans for Job Security — copiously funded 501(c)(4) social welfare organizations and 501(c)(6) trade associations, none of which are required to disclose their donors to the public. Some of the entities in the web are simply way stations for cash that is doled out to other, more politically active groups in the system.
One group got almost all of its 2012 revenues from organizations linked to the Kochs. Ninety-four percent of the $11.7 million brought in by American Commitment came from just two grants given by Koch-linked groups, Freedom Partners and CPPR.