‘Dark money’ flowing back to issue ads

Some political non-profit groups that don't disclose their donors are redirecting their spending in the wake of a decision that has shaken up campaign finance law.

Outside groups such as Americans for Prosperity, Crossroads Grassroots Policy Strategies and the U.S. Chamber of Commerce are spending millions of dollars on ads this year, mostly in support of Republican candidates.

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The groups had moved away from issue ads, known as “electioneering communications,” after a court ruled in March that they would have to disclose their donors for the ads. The groups began spending instead on "independent expenditures," which expressly advocate for or against a candidate's election and don’t require donor disclosure.

But now, following a court decision on Sept. 18 that reversed the March ruling, some of the outside groups are beginning to move their “dark money” back into issue ads.

Other groups are sticking with independent expenditures, which could be a risky move.

Watchdog groups say the nonprofits could have a harder time convincing the IRS that they deserve their tax-exempt status — the key to keeping their donors out of the public eye — if they are spending heavily on ads that explicitly endorse and oppose political candidates.

Lisa Rosenberg, a government affairs consultant for the Sunlight Foundation, said the groups could see their tax-exempt status come under threat if they stick with independent expenditures.

“The primary purpose of these 501(c) social welfare groups is not supposed to be political. … By engaging in what is a clearly political action — vote for, vote against this candidate — that could raise a red flag at the IRS on whether they should have tax-exempt status or not,” Rosenberg said.

Americans for Prosperity (AFP), a group tied to the billionaire businessmen Charles and David Koch, is one group that has switched back to electioneering communications following the court decision.

Levi Russell, director of public affairs for AFP, said the group is more comfortable sponsoring issue ads.

“It fits the role that we want for Americans for Prosperity to be. We don't want to be supporting or opposing a candidate,” Russell said. “We want to steer their policies towards the free market.”

This week, AFP reported spending more than $200,000 on electioneering communications, according to Federal Election Commission (FEC) records. Russell said that effort is part of a larger $1.3 million radio issue ad buy that takes on President Obama’s agenda, including the healthcare reform law and the scandal over the bankrupt solar energy firm Solyndra.

This summer, AFP spent more than $30 million on independent expenditures, according to FEC records. Russell said it was the first time since the group’s founding in 2003 that it sponsored those types of ads.

“A lot of the groups made that change that you noticed because of that court ruling that required disclosure, more than we thought was necessary,” Russell said. “It was a choice between doing nothing and being off the air or getting our issues out there. … Now, we have switched back.”

But not all the groups are changing course. Since the Sept. 18 ruling, the Chamber has spent at least $9.3 million on independent expenditures, including television ads that oppose Democratic Senate candidates such as Rep. Tammy Baldwin in Wisconsin and Sen. Bill Nelson in Florida, according to FEC records.

Crossroads Grassroots Policy Strategies, which is linked to GOP strategist Karl Rove, announced a $3.7 million television ad buy that targeted Democrats in Senate races across the country, such as Rep. Joe Donnelly in Indiana, Rep. Shelley Berkley in Nevada, Sen. Sherrod Brown in Ohio and Tim Kaine in Virginia. Those are being reported as independent expenditures to the FEC so far.

A spokeswoman for the Chamber praised the court ruling that reversed the earlier decision about donor disclosure.

“The decision by the D.C. Circuit to reverse the lower court in the Van Hollen case is a welcomed victory for free speech. The decision deals a serious blow to those who endeavor to use the power of the government to intimidate and harass legitimate First Amendment activities,” said Blair Latoff, the Chamber spokeswoman.

Latoff said the Chamber wouldn't discuss whether it planned to return to electioneering communications or stick with independent expenditures permanently.

"We don't discuss our internal plans. The Chamber will continue to be aggressively involved," Latoff said.

Bruce Josten, the Chamber’s executive vice president for government affairs, hinted earlier this year that the business group would make the switch from issue ads.

Bob Biersack, a senior fellow at the Center for Responsive Politics, said it’s easier for the groups to credibly argue that they are simply talking about the issues when they don’t sponsor ads hitting candidates.

“It was a half-step removed from the real, aggressive, down-in-the mud campaigning that you see with TV messages these days,” said Biersack, a former long-time FEC official. “It allowed to them have a little distance from that. That's what you lose when you expressly advocate.”

Russell with AFP said he was not concerned about the group’s spending on independent expenditures.

“Because of that one-time buy in August, it's only a small portion of our budget and it isn't something that we are worried about our status being jeopardized. We are more comfortable with our strengths, which are on the issue side,” Russell said.

The group said it is focused more on contacting voters through volunteers and staff. On Sept. 22, AFP had more than 100 phone banks operating across the country, making over 400,000 phone calls that day, according to Russell.

“That is more where our effort is being directed than the big ad buys,” Russell said. “Our focus is much more on the grassroots, the ground component.”