Report: Forty-Six Donors Dominate Super PAC Funding
Millions of dollars flowing to independent political groups dominating this year's presidential and congressional contests have come from mystery and hard-to-find donors, newly filed campaign reports show.
More than $8 out of every $10 collected during the first three months of this year by two conservative groups associated with Republican strategist Karl Rove, for instance, went to a non-profit branch that does not have to reveal its donors. The two groups have surpassed the fundraising of the candidate their spending will help the most — Republican presidential front-runner Mitt Romney.
FreedomWorks for America, a super PAC that has spent more than $700,000 working to oust veteran Sen. Orrin Hatch, R-Utah, relied on undisclosed money from its non-profit arm for nearly a third of its receipts this year, federal records show. Hatch, a six-term senator, now faces a June 26 primary after failing to win the support of at least 60 percent of delegates Saturday at Utah's GOP convention.
Another non-profit group, Freedom Path, has spent $300,000 on ads touting Hatch's conservative credentials, but has not disclosed its funders.
"We have a dysfunctional system for financing our elections," when anonymous donations can fund political activity, said Richard Hasen, a campaign-finance expert at the University of California-Irvine. "It's bad for our democracy when people refuse to be held accountable."
Using undisclosed or hard-to-track money in politics is legal, under the patchwork of court decisions, campaign-disclosure regulations and IRS rules that govern federal elections.
Recent court rulings, including the Supreme Court's 2010 decision in the Citizens United case, cleared the path for unlimited corporate and union money to go to super PACs. Super PACs must report contributors' names and addresses to the Federal Election Commission and can run ads directly advocating for the election or defeat of a federal candidate. But dozens of contributions to the largest super PACs have come from privately held corporations, whose ownership often is difficult to discern.
At the same time, groups backing Democrats and Republicans have established non-profit arms under long-standing IRS rules. These groups, operating as social-welfare organizations under the tax code, can take anonymous contributions of any size. They are required to spend less than half their money on politics. Their advertising must center on so-called "issue advocacy," but they can and do attack politicians by name.
During the first three months of the year, donors gave $49 million to American Crossroads and Crossroads GPS, two conservative groups spending heavily on advertising opposing President Obama, Crossroads officials announced last week.
But campaign-finance reports filed late Friday show that less than 20 percent of that figure — $9.7 million — went to American Crossroads, the super PAC that must publicly disclose the sources of its money. The rest went to its non-profit branch, Crossroads GPS, which this month spent $1.7 million on "issue" ads in several battleground states that slam Obama on high gas prices.
The groups, founded with help from Rove, plan to spend a combined $300 million in this election cycle.
Crossroads spokesman Jonathan Collegio said the non-profit group is focusing on issues, such as Obama's energy policies. "We provide our supporters with the option to advocate on issues or to advocate on elections," he said.
Publicly disclosed donors to American Crossroads super PAC include Dallas billionaire Harold Simmons who has contributed $12 million since Jan. 1, 2011 personally and through his holding company, Contran.
In all, 46 individuals and groups have donated at least $1 million to super PACs in this election cycle, totaling nearly $110 million, a USA TODAY analysis show. That's more than half the money given to all Super PACs since Jan. 1, 2011.
Wealthy Republicans dominate the list, led by casino magnate Sheldon Adelson and his wife, Miriam, who have contributed $25 million. Most of the Adelsons' money went to a super PAC aiding former House speaker Newt Gingrich's campaign for the GOP presidential nomination.
About $12 million of the megadonations came from labor unions, gearing up to support Obama and congressional Democrats this fall.
FreedomWorks For America, took in more than $300,000 from its non-profit arm this year, including in-kind donations of staffers' time, records show. "Everything we are doing is within the law," the super PAC's national political director Russ Walker said.
The group, which sent 60 volunteers to Saturday's Utah convention to help defeat Hatch, plans to remain active in the state and support his rival Dan Liljenquist in the June GOP primary, Walker said.
Freedom Path, meanwhile, has produced TV ads and mailers praising Hatch and fellow Utah GOP Sen. Mike Lee in recent months. But it is a non-profit that does not have to say who funds its activity. Attempts to reach its organizers Sunday were unsuccessful.
New reports filed with the FEC late last week also show that some contributions reported by super PACs can be hard to trace.
Restore Our Future, a pro-Romney super PAC, plans to correct its filings after providing an incorrect address for SeaSpray Partners, a limited liability corporation that gave $400,000 last month, spokeswoman Brittany Gross said. The original Palm Beach, Fla., address listed on the group's disclosure forms linked the contribution to a firm that has been inactive in the state since March 2011, according to Florida corporate records available on the Internet.
Gross attributed the mistake to a clerical error and declined to provide more information about that donor or others who have given to the super PAC. It received nearly $1.7 million from three limited liability corporations last month, about 19% of its March total.
Campaign-finance watchdogs argue that limited liability corporations, which are not required to publicly reveal their owners in some states, offer a way to obscure political givers' identities.
"There are well-known, legitimate LLCs," said Bill Allison of the non-partisan Sunlight Foundation, which tracks campaign money. "But we know very little about many of them. They are almost black holes in terms of campaign-finance disclosure."
More than 8 percent of Restore Our Future's contributions since Jan. 1, 2011 came from privately held limited liability corporations — the highest share of those donations flowing to the five super PACs that have raised the most money in the 2012 election.
About 2 percent of contributions to Priorities USA Action, a super PAC supporting Obama came from limited liability corporations during the same period, a USA TODAY tally shows.