In this first presidential election of the Citizens United era, spending by outside groups has gone through the roof, as expected. Less expected has been the rise of political 501(c) groups, super PACs' more secretive cousins. These groups organize under the nonprofit section of the federal tax code, which affords them tax-exempt status and the ability to hide millions of dollars of donations and political spending from the public.
How can they do this?
Political groups such as Karl Rove's Crossroads GPS and the President Obama-aligned Priorities USA fall under the "social welfare organizations" subsection of the nonprofit tax code. This section is reserved for groups that operate "exclusively for the common good," which "does not include direct or indirect participation or intervention in political campaigns," according to IRS guidance.
However, some political activity is permitted as long as it does not constitute the organization's primary purpose. This is the opening through which millions of advertising dollars from social welfare groups pour.
But isn't politics these groups' purpose?
Because social welfare groups are also allowed to "influence public opinion on issues," they can spend the majority of their resources on "issue advertising" and be considered apolitical. Instead of saying, "Candidate X is a bad politician, don't vote for him," these issue ads say, "Candidate X wants to cut your Medicare, don't let him." As long as these ads don't run within two months of Election Day or a month of a primary, they are in the dark.
Groups enjoy additional peace of mind from regulatory red tape — determining whether political ads constitute a group's primary activity requires an investigation approved by a majority of FEC commissioners (who are equally divided along partisan lines).
"A formal investigation requires the affirmative vote of at least four commissioners," says Rick Hasen, a campaign finance expert at the University of California-Irvine. "That usually takes six to eight months, and we don't get any information ... until the matter is completely resolved by the FEC."
Who are they?
Crossroads GPS — Founded by Karl Rove, this conservative group runs its own ads and funnels money to its super PAC partner, American Crossroads. The IRS began investigating GPS earlier this year.
Priorities USA — The liberal political nonprofit also funnels money, to Obama super PAC Priorities USA Action.
Americans for Prosperity — The Koch brothers' political weapon of choice, AFP supports conservative and Tea Party causes.
U.S. Chamber of Commerce — The business group is not a 501(c)(4) social welfare organization, but a similar 501(c)(6) organization, which affords it much of the same anonymity.
American Action Network — Helmed by former Sen. Norm Coleman of Minnesota, the conservative organization spent $26 million on the 2010 elections, according to the Center for Responsive Politics.
American Future Fund — Another conservative and free market advocate, the group spent $9 million opposing Democratic candidates during the 2010 election, according to CRP.
League of Conservation Voters — Environmental nonprofit spent $4.8 million on the 2010 elections.
How much are they spending?
A lot. It's impossible to know exactly, because the nonprofit status allows them to keep their spending (and donors) secret. Best estimates are gleaned from compiling advertising rates and monitoring TV stations for political ads. Some figures:
3-to-2 — The margin by which nonprofit groups outspent super PACs in 2010, according to CRP. The majority of all interest group ads (those not run by candidates or parties) this year have come from political nonprofits, Erika Fowler of the Wesleyan Media Project said at a National Press Club panel Wednesday.
$71 million — Amount spent on presidential TV ads by Crossroads GPS and Americans for Prosperity as of August 4, more than all super PACs combined, according to an analysis by ProPublica.