The New Soft Money by Bill Allison

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Bill Allison, Sunlight Foundation editorial director, explains the rise of super PACs during the free, daylong workshop, "Follow the Money -- Tracking Companies' Influence on Politics."

For more information about free training for business journalists, please visit businessjournalism.org.

Published in: Career, News & Politics
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  • Any of those activities—running ads that favor the
  • http://www.fec.gov/press/press2006/20061213murs.html
  • Photo from WikiCommons
  • http://www.fec.gov/press/press2011/ie_type.shtml
  • http://reporting.sunlightfoundation.com/outside-spending/letters
  • http://www.opensecrets.org/indivs/index.php
  • http://www.opensecrets.org/outsidespending/index.php?cycle=2010&view=A&chart=N
  • http://reporting.sunlightfoundation.com/2010/dead-end-disclosure-super-pacs-biggest-giver-shadowy-nonprofit-l/
  • http://publicintegrity.org/527/ http://www.cfinst.org/pr/prRelease.aspx?ReleaseID=188 http://opensecrets.org/527s/index.asp
  • Guidestar: http://www.guidestar.org Foundation Center 990 finder: http://foundationcenter.org/findfunders/foundfinder/
  • http://cfinst.org/federal/interest_groups.aspx
  • The New Soft Money by Bill Allison

    1. 1. THE NEW SOFT MONEYCitizens United, 527s, 501(c)s and the Rise ofSuper PACs
    2. 2. PRIOR TO CITIZENS UNITED…  Outside groups certainly spent money  Some had as much or more impact than Super PACs  Swift Boat Vets  Ashley’s Story  Willie Horton  First three done through “527 committees”
    3. 3. WHAT IS A 527?  This is Section 527 of the Internal Revenue Code.  Defines tax treatment of political org income  not taxed: contributions  taxed: capital gains on investments  Hasvery little to do with election law
    4. 4. HOW THE IRS DEFINES“POLITICAL ORGANIZATION” “influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any Federal, State, or local public office or office in a political organization…”
    5. 5.  Federal, state and local campaign and party committees and PACs are organized under Section 527 of the Internal Revenue Code Most are also regulated, and must disclose information, to their relevant governing body  FEC  State election overseers
    6. 6. THE OLD 527S DIDN’T TRIGGERREPORTING REQUIREMENTS They did not run express advocacy ads  No “Vote for Jones”  No “Vote against Smith”  Instead: Will Smith ever stop beating his wife? They did not donate to federal candidates They did not donate to political parties or PACs Under federal rules, they were not federal committees
    7. 7. WHICH IS NOT TO SAY THAT THISIS WHAT THEY REALLY WERE…  FEC fines three 527s for  Taking excessive contributions  Taking corporate contributions  Express advocacy  This was 2006  Sounds a lot like what Super PACs do  Post Citizens United, these aren’t violations
    8. 8. ENTER CITIZENS UNITED  501(c)4 organization (i.e., not a 527 political organization)  Doesn’t disclose donors  Made a documentary about Hillary Clinton  Critics called it a hit piece  Wanted to air 30 second ads for it in Jan. 2008  Asked FEC if this were permissible
    9. 9. FEC SAID NO  CU’s ads mentioned a federal candidate  Would run within 30 days of a primary  In effect, both the ads and documentary...  Expressly advocated defeat of Clinton  Paid for straight from a corporate treasury  Donors not disclosed  CU not a political organization  FEC applies law, says no to CU
    10. 10. ENTER JAMES BOPP JR.  Represents Citizens United  Two tack strategy  Narrow: These aren’t political ads  Broad: FEC violated First Amendment  Is asking the FEC if speech is permissible prior restraint?  Loses in lower court
    11. 11. ON TO THE SUPREME COURT  Ted Olson takes over case for CU  Supreme Court rules in favor of CU  Disclosure doesn’t interfere with speech  Independent ads don’t corrupt
    12. 12. MEANWHILE, IN A LOWER COURT… 527 that raised money only from individuals Wanted to exceed $5,000 limits Wanted to make “express advocacy” (vote for, vote against) independent expenditures FEC said it couldn’t accept more than $5,000 Sued After Citizens United, District Court ruled it could exceed limits, had to register with FEC
    13. 13. THIS LEADS TO…  Super PACs  File letter with FEC  Take unlimited money from…  Individual  Corporations, including C4s  Labor Unions
    14. 14. CAN ALSO COORDINATEFUNDRAISING WITH CANDIDATES…  Remember James Bopp Jr.?  He starts Republican Super PAC  Plans to coordinate fundraising  Won’t coordinate spending  Democratic groups ask FEC if it’s ok  FEC says yes
    15. 15. MEMBERS OF CONGRESS SOLICITFUNDS FOR THEM  Can only solicit limited donations from individuals, PACs  Majority PAC did this ahead of the FEC ruling  Romney has attended super PAC fundraisers  Top Gingrich donors give to “his” super PAC  Obama has one too— Priorities USA Inc.
    16. 16. HOW TO RESEARCH SUPER PACS Most people are looking at the PACs themselves Who are their donors? Who do they support? Who works for them? Your interest is a little different…
    17. 17. SUNLIGHT MAINTAINS A LIST OFALL SUPER PAC FILERS  Groups file letter with FEC  Say they won’t contribute to or coordinate with candidates  Can raise unlimited funds from any source  Useful resource for figuring out who’s a super PAC
    18. 18. THEY REPORT DONORS TO THE FEC  So far, we’re seeing individuals  Note that employers are listed  Big contributions
    19. 19. HOW TO SEARCH ACROSS SUPERPACS FOR DONORS  Only place to do this now is OpenSecrets.org  Donor Lookup is clunky  But they have data  If you’re looking for company donors, enter them in the donor field  Pain in the neck, but worth the effort  So far, we’re not seeing too many donors spread across multiple super PACs
    20. 20. NOT ALL CONTRIBUTIONS EASY TOFOLLOW  F8 LLC  Gave $1 million to Romney’s super PAC, Restore Our Future  Address is in Provo, Utah  That’s all the information you get  So who is F8 LLC?
    21. 21. SECRETARY OF STATE FILINGS CANHELP
    22. 22. KSTU-TV WENT TO THE ADDRESS  Eli Publishing run by Steven Lund  Lund works for Nu Skin  F8 LLC’s agent is Jeremy Blickenstaff  Not clear that Blickenstaff is source of funds  Blickenstaff used to be at Nu Skin  Lund’s son-in-law
    23. 23. AND WHAT IS NU SKIN?  Top donor to Mitt Romney’s campaigns & PACs  Mail order cosmetics firm  Not clear what their interest in Romney is  They haven’t lobbied since 2002
    24. 24. BUSINESSES CAN ALSO DONATE TO501(C)4 & (C)6 ORGANIZATIONS
    25. 25. THESE GROUPS DO NOT HAVE TODISCLOSE DONORS  They can also contribute to super PACs  Businesses look for anonymity  Work through largest group possible  Chamber of Commerce, industry associations  Don’t want to alienate customers
    26. 26. THE IRS HAS INFO ON 527S…
    27. 27.  Somewhat surprisingly, IRS is now the best source for 527 data. Center for Public Integrity had a better database, but it’s good only through part of 2005 OpenSecrets.org has one as well, but not as thorough as CPI Campaign Finance Institute also has some info, but not a database…
    28. 28.  After clicking on “Charities &Non-Profits” click “Political Orgs” Lots more clicks to come…
    29. 29. HERE WE ARE  Busy, user-unfriendly search page  It defaults to searches of form 8871, which are the initial registrations  Sometimes (especially when a 527 just surfaces) that’s all you have  Let’s look though at 8872…
    30. 30.  Click on the “Search 8872” under the advanced search tab… From Nov 2000 to present, you can search for all sorts fo data…
    31. 31. NOTES ON USING 527 SEARCHON IRS Good news – you’ve got digital data that you can search Bad news – it’s a stupid search engine. If you type “Soros, George” you’ll get no results. There’s no name standardization, or even spellchecking
    32. 32.  Because IRS does not check spelling, or standardize names, it’s always a good idea to look at the forms of the 527s you’re following
    33. 33. NOTE THAT 527S DONATE TOLOCAL CANDIDATES…
    34. 34. WHEN 527S FIRST APPEAR,YOU WON’T KNOW WHO’SCONTRIBUTING TO THEM
    35. 35. WHEN TO LOOK FOR 527 FILINGS Under IRS regulations, 527s are required to file their form 8871 (the initial filing declaring tax exempt status) 30 days after they’ve raised $25,000 for their exempt activities The first form 8872 isn’t filed until an organization has raised $50,000; it can be filed quarterly (April 15, July 15, etc.) or monthly in election years, and monthly or semi-annually (twice a year) in non- election years
    36. 36. RESOURCES FOR DIGGING INTOTHEM  Guidestar.org and the Foundation Center both have 990s online  IRS has 990s as well in the same place they have 527 reports  If you don’t know that an organization has donated, hard to to know which C4 to look at  Does a business share lobbyists with a C4?
    37. 37. THERE SHOULD BE A LITTLEDISCLOSURE AROUND C6S  In 2007, Congress passed HLOGA  Changed rules for disclosure  Groups list active participants in lobbying on their websites  Links are buried in lobbying forms and hard to find  Call C6s to find out if they have a list
    38. 38.  Campaign Finance Institute and Center for Responsive Politics track some 501(c)4 activities Worth noting that not every active C4 group triggers federal disclosures Also, new C4s can be particularly hard to trace State incorporation records can help
    39. 39. WE KNOW THATCORPORATIONS DO DONATETO THEM…
    40. 40. BUT THERE’S NO REAL DISCLOSURE That doesn’t mean reporters can’t insist on it Ask the organization for a list of its donors Always point out, when covering them, that they do not release the names of their donors (unless, of course, they do so voluntarily)

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