Problem: How to anonymously infuse millions of dollars into a political campaign to bias the outcome.
Answer: Social Welfare.
Prior to the Citizens United and the lesser-known SpeechNow rulings in 2010, individuals, corporations and unions were limited to donations of $5,000 or less to groups that ran “independent” political campaigns. Following those rulings, all caps on donations were removed supposedly to preserve the right of free speech. The rulings also upheld the notion that groups running Independent Expenditure political campaigns need not register as a political committee or follow PAC reporting requirements and are not required to reveal the identity of their donors if they register as a tax deductible organization.
Social Welfare organizations are registered under the Internal Revenue Code as tax-exempt 501(c)(4) organizations. These organizations must “operate primarily to further the common good and general welfare of the people of the community”. That does not mean however, that they cannot operate in the partisan political arena. A “501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity.”
Therefore, a “social welfare” organization may fund and distribute attack ads, fund opposition research, mail issue propaganda, or organize other political activities as long as it is not their “primary activity”. How that works in the real world is that a social welfare organization (think Americans for Prosperity) creates a vast and nearly untraceable, web of social welfare organizations that can raise millions of tax deductible dollars anonymously from wealthy individuals and corporations interested influencing a particular issue, or candidate. They are then allowed to spend up to 49% of that money on a publicity campaign to influence the outcome of legislation or an election all the while protecting the First Amendment rights of their donors by not revealing where the money came from and simultaneously claiming that they are doing “social welfare” work for the good of the electorate.
But, what happens to the other 51% that cannot be legally spent on political activity? Simple, you donate that money to other social welfare organizations who hold the same views. Those organizations, sometimes sharing the same address and/or phone number with the donor, are then free to use up to 49% of the remaining money for political advocacy on the same issue or candidate. After those organizations have spent their 49% they pass along the remaining money to other organizations ad infinitum until all of the tax deductible millions in anonymous money is spent to further the aims of the donor network and this is all done allegedly “to further the common good and general welfare of the people of the community” whether they like it or not.
Americans for Prosperity, founded and directed by the oil-rich Koch brothers, has spent more than $2 million so far in this elections cycle much of it on “social welfare”, and intends to spend more than $100 million to further the aims of its semi-anonymous wealthy donors. Both Steve Daines (89%) and Ryan Zinke (82%) have received high lifetime ratings from Americans for Prosperity while Jon Tester got a paltry rating of only 11%. While AFP was not allowed to actively campaign against Jon Tester, in 2012 “AFP deployed a traveling call center for what it dubbed the “Tester truth tour.” At parking lot rallies across the state, AFP would inform audiences about Tester’s voting record.” AFP’s Montana state director was formerly a staffer for Steve Daines. Greg Gianforte was the keynote speaker at the Americans for Prosperity Foundation’s “Passion to Profit” workshop in Bozeman last year and his family trust donates to AFP. That’s not active campaigning, it’s Social Welfare work.