"... the nonprofit vehicle has proved to be a very attractive tool for wealthy individuals and corporations that want to mask their contributions to the political process."

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It's Time To Name The 2014 Midterms The Dark Money Election
By Paul Blumenthal, September 12, 2014

If 2012 was the super PAC election, the 2014 midterms look to be the dark money election. Spending on ads that named federal candidates by nonprofit organizations, which are not required to disclose their donors, has soared in the months leading up to November.

Dark money groups have spent at least $142 million on advertising campaigns naming specific senators, representatives and congressional candidates over the past 20 months, according to a Huffington Post analysis of news reports, press releases and political advertising reports collected by the Sunlight Foundation. This total now surpasses the $122 million spent by independent groups that do disclose their donors and only stands to grow.

The major source of this undisclosed money is no surprise -- the political network run by billionaire oligarchs Charles and David Koch. Their network raised and distributed $400 million in the 2012 elections. This time around, the six groups at the center of the Koch operation have already combined to spend at least $53.5 million just on candidate-specific ads.

Nearly all of the spending by Koch groups has come in the form of so-called issue advocacy. Buying issue ads, which level attacks on candidates while stopping short of calling for their electoral victory or defeat, is a useful loophole for nonprofit groups that must abide by tax laws restricting the time and money they can spend on elections. Further, none of this spending is required to be disclosed publicly to the Federal Election Commission.

Despite this legal maneuvering, it's clear that the groups spending big on issue advocacy are directing their efforts toward electoral outcomes. In a recording of a June 16 conference hosted by the Koch-funded Freedom Partners Chamber of Commerce, which was obtained by The Undercurrent and provided to HuffPost, a top Koch network official explained to donors how issue ads help decrease the popularity of its targets.

Freedom Partners President Marc Short told the crowd of wealthy donors how issue advocacy directed at Sen. Kay Hagan (D-N.C.), on which the Koch network has so far spent $13 million, had worked out as of mid-summer.

"After several months of ads that you helped to fund to remind citizens about her record in support of big spending and support of Obamacare, her disapproval rating climbed from 34 percent to where it stands today at 54 percent," said Short in June. "Now, that’s not a good place for her to be running for re-election as an incumbent."

Short also pointed to issue advocacy targeting Sen. Mary Landrieu (D-La.). "[O]ver the course of a couple of months, her approval rating went from 54 percent to 39 percent," he said

"So we want you to know that this network has helped to shift the landscape," Short said. (Both Hagan and Landrieu are engaged in tough Senate races that are currently too close to call.)

The principal arm of the Koch political operation, Americans for Prosperity, leads all dark money groups in spending this electoral cycle with $33.1 million, according to the HuffPost analysis. The other Koch groups spending big money include Freedom Partners with $7.9 million, Concerned Veterans for America with $5.8 million, American Energy Alliance and Generation Opportunity each with $2.3 million, and Libre Initiative with $2.1 million. All of these totals are just minimum estimates as the groups do not disclose this spending in a uniform fashion.

Overall, nonprofits in this election have spent $89.2 million on undisclosed issue advocacy and $52.8 million on electoral efforts disclosed to the FEC.

The top dark money spender outside the Koch universe is the U.S. Chamber of Commerce, the nation's top business lobby, with $15.5 million. In a departure from previous cycles, the chamber entered the 2014 election early and aggressively to support pro-business Republicans and beat back tea party primary challenges. All of its spending has been electoral in focus and disclosed to the FEC, although its donors remain anonymous.

In Kentucky, Senate Minority Leader Mitch McConnell (R), hoping to fend off a tough opponent in Secretary of State Alison Lundergan Grimes (D), has been boosted by the nonprofit Kentucky Opportunity Coalition. The organization, closely linked to the Karl Rove-founded Crossroads groups, has spent more than $5 million on issue advocacy and $4.7 million on electoral ads to boost the six-term Republican.

Crossroads GPS, the nonprofit arm of the Rove empire, has dropped $9.1 million on issue ads in 2014 after a quiet 2013. The group and its affiliated super PAC, American Crossroads, spent $300 million in the 2012 election, but they have reportedly had difficulty with fundraising since then due to the failures of Republicans in that election.

The dark money world is not the sole province of conservatives. Nonprofit groups aligned with the Democratic Party have combined to spend $27 million so far in the 2014 elections.

Leading the pack of Democratic dark money groups is the League of Conservation Voters with $9.7 million spent on issue and electoral advertising combined. The environmental group has targeted Reps. Mike Coffman (R-Colo.), Rodney Davis (R-Ill.) and Dan Benishek (R-Mich.) in an issue ad campaign, as well as New Hampshire Senate candidate Scott Brown (R). It has also boosted Reps. Pete Gallego (D-Texas) and Scott Peters (D-Calif.) and Sens. Hagan and Susan Collins (R-Maine).

Another big Democratic dark money player is Patriot Majority USA, a group linked to Senate Majority Leader Harry Reid (D-Nev.) and the Senate Majority PAC. The group has spent at least $8.5 million on issue and electoral ads boosting a handful of Democratic representatives and attacking Republican Senate candidates. Its main targets have been Rep. Tom Cotton (R-Ark.), who is running against Sen. Mark Pryor (D-Ark.), and McConnell.

Spending by nonprofits like these jumped after the Supreme Court loosened restrictions on issue ads in its 2007 Wisconsin Right to Life decision and then surged following the court's 2010 Citizens United ruling.

The latter decision, along with a subsequent lower court ruling, is known for its connection to the creation of the super PAC, which can raise unlimited funds from corporations, unions or individuals. Super PACs, however, are required to disclose their donors to the FEC. The Supreme Court's 5-4 ruling in favor of the conservative nonprofit Citizens United also freed nonprofits to use corporate funds to run ads and campaigns targeting specific candidates. Since then, the nonprofit vehicle has proved to be a very attractive tool for wealthy individuals and corporations that want to mask their contributions to the political process.

At the end of the 2012 campaigns, HuffPost reported that dark money groups had spent at least $400 million on issue and electoral advertising at the federal level. The total amount disclosed to the FEC topped $300 million, which was a large jump from the $130 million disclosed in the 2010 election.

This year, the amount of dark money is only expected to rise exponentially as the campaigns move into the last two crucial months. The Center for Responsive Politics, a nonprofit tracking campaign finance, estimates that the total amount disclosed to the FEC will surpass the last election's $300 million. How much will finally be spent on issue ads praising or excoriating candidates is anybody's guess.
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