’s Resources on Politically Active Tax-Exempt Groups

The first congressional hearing triggered by the news that the Internal Revenue Service inappropriately targeted tea party groups for additional scrutiny begins Friday, and it’s clear the issue isn’t going away anytime soon.

The Center for Responsive Politics has been intensively researching and writing about politically active nonprofits — also known as 501(c)(4) organizations, or, more colloquially, “dark money” groups — for more than a year. Since the 2010 Citizens United Supreme Court decision freed them to participate more directly in electoral politics, they have been used to pour money into the system at an unprecedented rate.

There has been an explosion of spending by nonprofit groups over the last three election cycles, from less than $17 million in 2006 to well over $300 million in 2012.
nonprofit spending growth by type.JPG
These groups, unlike the more commonly known super PACs, are not required to divulge the names of their donors, and much of their spending is unreported, too. Their annual tax filings with the IRS list how much money they have, who their officers are and the recipients of any grants they may have made.

But when they spend their money directly in support of or opposition to a candidate, they must report to the Federal Election Commission. FEC data collected and analyzed by shows that in the 2012 election alone, politically active nonprofits reported spending more than $308 million. Many millions more were likely spent on “issue ads” that escaped reported rules.

If you follow that link, you’ll notice none of the organizations at the top of our list are tea party groups. In fact, they have remained relatively small players in the game.
What we do know is that many of these groups on the list are conservative in nature — though they come in many flavors of conservative. There are several important liberal groups active in this area, as well, but right-leaning groups dominate. About 85 percent of the money that was spent by nonprofits in the 2012 cycle, as reported to the FEC, was paid out by conservative groups.
nonprofit spending growth by viewpt.JPG
We’ve also applied old-fashioned reporting in our effort to bring these groups to the public’s attention, in particular with our Shadow Money Trail series. Despite the current concern about IRS employees applying too much scrutiny to certain groups because of their political slant, we’ve actually found many instances where political operatives from across the spectrum seem to be taking advantage of the fact that the IRS generally applies very little scrutiny to these entities.

By painstakingly going through public tax returns filed by tax-exempt groups, we have been able to trace how some of the money has flowed between them. We have posted that information (here’s an example) when we have it.

Some of the topics we’ve covered in this series:
  • How conservative group American Committment seemed to make $10 million disappear by churning money between its various related groups.
  • How Obama’s dark money allies make big payments to political consultants.
  • The phenomenon of dark money mailboxes — social welfare organizations that act as way stations for dark money and have few or no activities of their own.
  • How one prominent liberal group churns money through a confusing web of similarly named 501(c)(4)s and 527 groups.

There are a host of other stories on our Shadow Money Trail page, including “Shadow Money Magic,” our five-part report on how some of these groups game the IRS.


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