One of the most talked-about "dark money" groups of the election released its tax returns yesterday, showing it raised almost $77 million from fewer than 100 donors over 19 months. Most of the money spent in its first year went directly to political ads or grants to other groups.
The returns are the first glimpse showing how much money has been raised by Crossroads GPS, launched by GOP strategist Karl Rove in mid-2010.
By choosing to include the number of donors and the amounts of some of its larger donations, including one of $10.1 million in the first year and another of $10.1 million in the last seven months of 2011, the group was somewhat more transparent than the IRS requires.
Still, Crossroads GPS, also known as Crossroads Grassroots Policy Strategies, retained plenty of mystery — namely, their donors' identities.
There are no donor names, no clues as to whether they are individuals, companies or trade groups, and no hint as to whether there are repeated donors from year to year.
Nonprofits like Crossroads GPS, classified by the IRS as "social welfare" organizations, are not required to disclose their donors, even if those organizations spend money on political ads. That is why they are sometimes referred to as "dark money" groups.
Yesterday, two campaign-finance watchdog groups again called for the IRS to investigate the tax status of Crossroads GPS. Critics have complained that the group and others like it use the IRS social-welfare status as a fig leaf to be able to hide the names of donors. The IRS says a social-welfare nonprofit, or 501(c)4, must have social welfare as a "primary purpose" but has never defined what that means. Most groups interpret this to mean social-welfare nonprofits can spend up to 49 percent of their money on politics.
Crossroads GPS spokesman Jonathan Collegio responded to critics by sending an email message with the subject line "Snarky comments" that pointed out that some of the group's critics are nonprofits that also don't disclose their donors. In another email, he compared what the group does to how environmental and labor groups have operated for decades.
Although similar nonprofits engaged in politics in past elections, their use exploded in 2010, particularly in tandem with super PACs, taking advantage of federal court rulings that paved the way for a new role for outside-spending groups in elections.
The IRS doesn't comment on individual groups but is expected to give more scrutiny to politicking social-welfare nonprofits this year, considering the major role the groups are expected to play in the election. Together with its affiliated super PAC, American Crossroads, Crossroads GPS hopes to raise $300 million, primarily to help defeat President Barack Obama and to elect Republicans to Congress.
Crossroads GPS reported 64 donors in its first year, between June 2010 and May 2011, including four who gave $10.1 million, $5 million, $4.5 million and $4 million. There were 32 donors in the last seven months of 2011, including two who gave $10 million and $4.3 million. It's unknown whether any of them were repeat donors.
Between June 2010 and May 2011, Crossroads GPS spent about $42.3 million, including about $15.9 million directly for political ads and another $15.9 million on grants to 12 like-minded nonprofits and trade groups.
The $15.9 million that Crossroads GPS gave in grants coincided with the midterm 2010 elections. The money included $500,000 to the American Action Network, the conservative nonprofit that once shared an office with Crossroads GPS and American Crossroads, and $4 million to Americans for Tax Reform, formed by anti-tax activist and GOP heavy hitter Grover Norquist.
Federal Election Commission records show that these groups, as well as five other grant recipients of Crossroads GPS, spent money on political ads, directly or indirectly, in the 2010 election cycle. The grant money that groups received from Crossroads was earmarked for non-political activities.
In its 2011 filing, which covers the last seven months of the year, Crossroads GPS reported spending almost $22.4 million, including $1.7 million on political ads, including this anti-Obama ad. It gave only one grant, of $50,000, to a charity called the Ethics and Public Policy Center. The organization describes itself as "D.C.'s premier institute dedicated to applying the Judeo-Christian moral tradition to critical issues of public policy."