Nonprofits With Secret Donors Spend Millions in Key Senate Races

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By Kenneth P. Doyle

Oct. 31 — Nonprofits that keep donors secret but are closely linked to Democratic and Republican Senate leaders have spent more than $10 million on television, radio and mail ads in key races that may determine control of the Senate, according to reports filed with the Federal Election Commission.

The spending included nearly $3 million in recent weeks by the Democratic-linked nonprofit Majority Forward for television and radio ads in Senate races in Missouri, Nevada and Pennsylvania. The Republican-linked nonprofit One Nation spent nearly $3.2 million on mailings in the same races, as well as those in Indiana, New Hampshire and North Carolina.

The spending on “express advocacy"—calling for votes for or against candidates—came in addition to the groups’ unreported spending earlier in the campaign of about $25 million for “issue ads,” which referred to Senate candidates but didn’t explicitly call for votes.

The nonprofit groups on both sides have also contributed money from undisclosed sources to the super political action committees linked to the parties, including an $11 million last-minute infusion of funds from One Nation to the GOP super PAC Senate Leadership Fund.

501(c)(4) ‘Social Welfare’ Groups

Altogether, nonprofit groups on both sides have spent at least $46 million from undisclosed donors in the fierce battle for control of the Senate. Meanwhile, about $135 million in spending, so far, has come from the main Senate Democratic and Republican super PACs, which do disclose their donors to the FEC.

The nonprofits are organized under Section 501(c)(4) of the tax code, which allows “social welfare” entities to keep their donors secret but spend money to influence campaigns, so long as this isn’t their “major purpose.” The groups have worked cooperatively with the Democratic and Republican super PACs, which have come to dominate outside spending in the 2016 congressional elections.

Majority Forward spent nearly $7 million this year on explicit campaign messages, including the $3 million in October. One Nation spent $21 million on TV ads earlier in the campaign cycle before spending the $3.2 million on mailing, but has avoided FEC reporting on most of its spending.

Super PAC Spending

According to the most recent FEC disclosure reports covering money raised and spent through Oct. 19, the Republican super PAC Senate Leadership Fund has spent $73.4 million out of $75.6 million raised. The GOP super PAC reported it had $2.1 million in cash as of Oct. 19.

The Democrats’ main super PAC, the Senate Majority PAC, spent $61.7 million of $74.6 million raised through Oct. 19 and had just over $13 million in cash, according to its most recent FEC report.

Fred Wertheimer, a veteran supporter of strong campaign finance regulation who heads the nonprofit Democracy 21, said in an Oct. 31 statement that the super PACs linked to Democratic and Republican congressional leaders “may well represent the most effective vehicles for big money donors to buy influence.”

The party-linked super PACs “provide opportunities to influence congressional leaders on supporting or opposing bills, holding congressional hearings, scheduling bills for floor consideration, inserting riders, etc.,” Wertheimer added. “These super PACs have been for the most part operating under the radar, but their impact will no doubt be evident in the next Congress and are just one of the reasons why super PACs must be eliminated.”

Nonprofits Skirt Reporting Donors

While critics have focused on the impact of increased super PAC spending, the sources of most of this spending have at least been reported. The same is not true for political spending by nonprofits.

Amounts spent by nonprofits on messages aimed explicitly to influence elections must be reported to the FEC as “independent expenditures,” but the donors of this money are not reported. In addition, nonprofits can sometimes avoid any FEC reporting requirements for independent expenditures if they sponsor ads that favor or attack candidates but don’t explicitly call for votes.

Such ads, widely known as issue ads, usually are aired long enough before an election to avoid triggering separate FEC reporting requirements for “electioneering communications"—targeted ads that refer to a candidate in the weeks before an election but avoid a direct call for votes.

Both the Republican-linked One Nation and Democratic-linked Majority Forward engaged in such issue ad spending earlier in the 2016 election cycle, sponsoring millions of dollars worth of TV ads in some key Senate battleground states. A previous Bloomberg BNA analysis of ad spending data from Kantar Media/CMAG found One Nation sponsored an estimated $21 million worth of TV issue ads in the key Senate races, while Majority Forward spent almost $4 million.

To contact the reporter on this story: Kenneth P. Doyle in Washington at kdoyle@bna.com

To contact the editor responsible for this story: Paul Hendrie at phendrie@bna.com

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