Donor names stay secret as nonprofits politick

By Matt Viser
Globe Staff / October 7, 2010

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WASHINGTON — Sandy Greiner is a 64-year-old grandmother of six, farming corn and soybeans in Iowa while running for the state Senate. She’s also steering one of the biggest efforts to inject unrestricted and anonymous funding into the midterm elections, financing ads around the country in an attempt to win Republican majorities.

Greiner is president of the American Future Fund, which has poured money into at least 20 congressional races this year, spending $7.5 million — and which reportedly has plans to spend three times more. Outside of the traditional political parties and campaign committees, it is among the most active groups trying to influence the elections.

But because it is registered as a nonprofit, it does not have to reveal its contributors. That exemption from traditional bounds of reporting requirements makes it virtually impossible to determine who is funding the group, and why. Yet groups such as Greiner’s — launched onto the national scene earlier this year, with $650,000 in attack ads against Massachusetts Attorney General Martha Coakley during her unsuccessful bid for US Senate — could determine the balance of power in the House and Senate.

“It’s a bit of a free-for-all this election cycle, made all the more complicated by the plain fact that many of the groups engaging in political messaging or advertising don’t have to disclose who’s funding those ads,’’ said Dave Levinthal, communications director for the Center for Responsive Politics, a nonpartisan organization that studies money in politics. “You have these nonprofit groups that are not supposed to have a primary purpose of engaging in politics, yet many of them are engaging in politics with great regularity.’’

The American Future Fund is among dozens of interest groups whose influence on campaigns has surged following a Supreme Court ruling that relaxed restrictions on corporate and union donations. Greiner and representatives for her group did not return several messages this week seeking comment about where the group gets its money and who is involved.

So far this year, at least $5.6 million has been spent in Massachusetts by outside groups, almost all of it during Scott Brown’s special-election win for the US Senate in January, according to Federal Election Commission data compiled by the Sunlight Foundation.

Also, a Nevada-based political action committee called Western Representative paid $10,000 for an e-mail campaign opposing Representative Barney Frank; the group also took out $1,560 in radio ads supporting Marty Lamb, the Republican nominee challenging Representative James McGovern. Several outside groups also supported Mac D’Alessandro in his unsuccessful Democratic primary campaign against Representative Stephen Lynch.

At least $3.6 million has been spent in New Hampshire, most of it on the US Senate race between Representative Paul Hodes, the Democrat, and former attorney general Kelly Ayotte, the Republican. No outside money has been spent this year in Maine, Vermont, Connecticut, or Rhode Island.

All told, $95.5 million has been spent this year by groups not affiliated with a campaign or national party organizations. In contrast, the top campaign committees for the parties have spent $41.2 million on independent expenditures, which are made to advocate for specific candidates but are not coordinated with their campaigns.

There are various types of outside groups, including organizations such as the Chamber of Commerce or trade unions such as the AFL-CIO. But increasingly, there are also well-funded groups whose donors are harder to trace. This year, for example, GOP strategist Karl Rove helped form a nonprofit organization called Crossroads GPS that has been purchasing ads across the country.

To avoid some of the stricter disclosure requirements of the tax code, groups have been registering as nonprofits under the 501(c) section of the tax code — which applies to social welfare groups, unions, and trade associations — rather than section 527, which is reserved for political organizations and requires disclosure of donors. The nonprofit groups are allowed to engage in political campaigns, but only if that constitutes less than half of their spending.

Two nonpartisan organizations, Democracy 21 and the Campaign Legal Center, asked the Internal Revenue Service this week to investigate whether Rove’s group is violating its tax status as a nonprofit. The IRS does not comment on specific cases. A spokesman for Rove’s group stood by its activities.

“Our organization carefully and methodically follows the law, as do the center left who play in this space,’’ said Jonathan Collegio, a spokesman for Crossroads GPS. “There’s nothing new here. It’s a model that was copied by the Democrat and left-wing playbook and now that the right is raising more money, everyone is up in arms.’’

Senator Max Baucus, a Democrat of Montana and chairman of the Senate Finance Committee, sent a letter last week to the IRS commissioner asking the agency to examine whether nonprofit organizations are complying with the tax laws. Currently, the IRS is the primary overseer of such nonprofit groups.

The use of undisclosed funds has skyrocketed. During the 2006 midterms, for example, 97 percent of groups taking out a broadcast ad just before an election disclosed the donors funding the ads. This year, fewer than a third have made such disclosures, according to a study by Public Citizen, a voters rights group.

Democrats enter the final four weeks before the midterm election with significant financial advantages. The average House Democratic candidate has $600,000 in the bank, compared with $370,000 for the Republican counterpart, according to the Center for Responsive Politics.

The outside groups are mostly expected to bolster Republicans and offset weak fund-raising from the Republican National Committee.

A handful of groups backing Democrats are trying to counter the efforts, including Patriot Majority, which has spent $751,500, and Commonsense Ten, which has spent $535,500.

Close observers of congressional races around the country say the groups are mostly funding television ads that differ little from the typical spots run by campaigns. In some cases, the groups directly advocate for the election or defeat of a candidate, while in others they are running ads specific to a certain issue.

“They’re saying a lot of the same things candidates are saying, in a harsher tone,’’ said David Wasserman, who studies House races for the nonpartisan Cook Political Report. “But in places where candidates have no money, they can prove a useful boost to the party’s chance of picking up a seat.’’

The American Future Fund was formed in 2007, but did not become a force on the national scene until earlier this year when it took out ads against Coakley. The spot took a comment out of context from Coakley saying, “We need to get taxes up.’’

At the time, Brown disavowed the group, but the ads accomplished the goal of casting Coakley as a tax-raising liberal.

Greiner served for 16 years as a state representative in the Iowa Legislature. She was initially treasurer of the American Future Fund but became the group’s president last year. Its stated mission is “to promote conservative free market principles to the citizens of America.’’ None of the officers are compensated.

A spokesman told the Center for Public Integrity last month that the group planned to spend up to $25 million this year.

“This is the fun part of politics,’’ Greiner told the Sacramento Bee, shortly after the group’s ads ran in the Massachusetts election. “It is fun to sit and dream up stuff that is going to have to make somebody stop what they’re doing and figure out how to respond.’’

Some of the group’s ads were made by Larry McCarthy, who worked for Governor Mitt Romney’s 2008 presidential campaign and produced the 1988 Willie Horton ad that damaged Michael Dukakis’s presidential campaign that year.

The past president, Nicole Schlinger, was Romney’s Iowa straw poll coordinator during his presidential campaign. The young conservative liaison, Cord Overton, was a field consultant for Romney’s presidential campaign. His political director, Jill Latham, also has a role with American Future Fund.

“Mitt Romney has nothing to do with the American Future Fund and has no knowledge of who works there or what races they are involved in,’’ said Eric Fehrnstrom, a spokesman for Romney.

Matt Viser can be reached at