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How Nonprofits Spend Millions on Elections and Call it Public Welfare

Forget super PACs, their much-hyped cousins, which can take unlimited contributions but must name their donors.

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According to its tax return, the nonprofit  CitizenLink gave a grant of  $120,000 to the Susan B. Anthony List to "assist with purchase of TV promotional spots & election help." CitizenLink did not count this money as  political spending, the return said. The Susan B. Anthony List then used the money to help buy ads criticizing  two Democratsfor betraying voters by supporting health care reform, according to FEC reports. (The ads credited CitizenLink for helping pay for them.) Another group,  CSS Action Fundgave a grant of $175,865 to Economy Forward for "promoting health care reform." Economy Forward spent almost all of this on ads promoting Sen. Harry Reid's help for the economy; health care reform wasn't mentioned.

Sometimes, ProPublica found, money passed back and forth between pairs or clusters of nonprofits with similar political agendas. It's not clear if the IRS compares tax filings and observes these patterns.

According to tax returns for 2010, the WMC Issues Mobilization Council gave  $865,000to the American Justice Partnership, which in turn gave  $205,000 to the WMC Issues Mobilization Council. Both groups backed conservative causes and candidates.

The Republican Jewish Coalition reported making  grants to Crossroads GPS and the American Action Network in 2010, giving each group $4 million. Both groups returned the favor, reporting grants to the Republican Jewish Coalition in their 2010 tax years. Crossroads GPS gave the coalition  $250,000, while the American Action Network chipped in  $200,000. Some nonprofits claim to stay out of politics but funnel money to other nonprofits that spend heavily on elections.

The Center to Protect Patient Rights, a group led by GOP strategist Sean Noble, reported on its 2010 tax return that it spent  no money on politics.

As the  Center for Responsive Politics first reported, however, almost three-quarters of the group's income — a total of more than  $44 million — went to other  social welfare groups that were politically active, such as the American Future Fund and the  60 Plus Association.

Brooks, the Republican Jewish Coalition's executive director, said grants to other groups should "absolutely count" toward meeting a group's primary social welfare purpose. "It's not obscuring the source of the money because it's fully reported and disclosed," he said. "We happily support other organizations that share our goals and our work."Jonathan Collegio, a spokesman for Crossroads GPS, said forming a network of like-minded groups was the only way to change policy. He said Crossroads GPS sent the Republican Jewish Coalition a contribution because it "had a great program of work."

Some experts, however, compared the transactions to Russian nesting dolls, with each layer opening to reveal another, equally inscrutable one underneath. Even if a social welfare nonprofit had to reveal the donors behind an ad, it would be another nonprofit. There would be no way to trace the money to the original source.

For instance, the Independent Women's Voice and Citizens for the Republic, two nonprofits that made disclosures to the FEC about political ads purchased in 2010, identified a new social welfare group, The Annual Fund, as a major contributor.

And where did  The Annual Fund get its money? Mostly from yet another social welfare nonprofit, the  Wellspring Committee, run by the wife of The Annual Fund's founder.

Efforts for More Transparency Fall Short

The new breed of political nonprofits may operate differently from traditional social welfare organizations, but some say they serve a vital purpose in an era of increasingly bitter political partisanship.

Dan Backer, a lawyer who represents several conservative nonprofits, pointed to the Obama team's decision to single out donors like the Koch brothers.

 
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