Journalism in the Public Interest

Watchdogs to IRS: Reject Rove Group’s Tax Application

Recognition by the IRS would allow Crossroads GPS, one of the biggest outside spenders of the 2012 elections, to keep its donors secret


(Chip Somodevilla/Getty Images)

Two watchdog groups are calling on the IRS to reject Crossroads GPS’ request to be recognized as a social welfare nonprofit.

Democracy 21 and the Campaign Legal Center, nonpartisan outfits that favor tighter campaign finance regulations, wrote a letter to the tax agency today citing ProPublica’s recent reporting on Crossroads’ 2010 IRS application. The application said that the group’s activities seeking to influence elections would be “limited in amount, and will not constitute the organization's primary purpose.”

In today’s letter, Democracy 21 and the Campaign Legal Center called those statements by Crossroads GPS “simply not credible, in light of the actual practices of the organization and the tens of millions of dollars Crossroads GPS spent on campaign ads since then.”

Conceived by Karl Rove, Crossroads GPS was one of the biggest outside spenders in the 2012 elections, reporting more than $70 million in expenditures to the Federal Election Commission.

Recognition as a social welfare nonprofit is important for Crossroads because it allows the group to shield the identity of its donors. Under tax rules, such groups are allowed to spend money on political campaigns but must be primarily engaged in promoting social welfare.

Campaign Legal Center Executive Director Gerald Hebert said in a statement accompanying today’s letter, “The application filed with the IRS by Crossroads GPS is laughable in the face of the growing body of evidence against the pretense that Crossroads GPS is a ‘social welfare’ organization.”

Crossroads GPS spokesman Jonathan Collegio responded: “This sounds like the 25th identical letter that the partisans and ideologues at the Campaign Legal Center have sent to the IRS, and it doesn’t merit anyone’s attention.”

We’ve inquired with the IRS as to whether Crossroads’ has been recognized as a social welfare nonprofit — as of mid-December it had not — and we will update this post if we hear back.

If you want to make large political donations be tax free, therefore essentially subsidized by the government, why not just pass a clean election law and get all the dark money (bribery) out of politics. I can’t imagine anyone in there right mind who doesn’t think that would improve the governance of the country.

I agree with “longtail.”  Cherry-picking who can and can’t aggregate donations on an individual basis is a losing battle unless the only motivation is a completely understandable dislike of Karl Rove.

The goal should be to get money out of politics, period.  No more exclusionary, fake “media event” debates where the candidates create questions that cue their campaign speeches.  No more spending a billion dollars for a job that nets a few million (with pension).  No more foreigners and companies using chains of shell corporations, trusts, and other intermediaries to hide their involvement.

If, with the reach of the Internet and free airtime on public airwaves (and space in the papers), you need to spend more than a few hundred dollars to get your message out, you’re doing something horribly wrong.

With all due respect to these two commentators, both are naive.

Passing a so-called “clean” election law sounds great, but first you have to define what a clean election is and what the rules would be.  Then you have to pass the legislation for clean elections.  Unfortunately, special interest money will be lined up to defeat the legislation.  Changing the status quo is no simple task.

As far as the second comment: I’m not sure you can ever attempt to get “all money out of politics”. There’s just too much at stake for there not to be money involved…and LOTS OF IT.  Given the Supreme Court’s long history of protecting political contributions as a form of protected speech under the first amendment, getting money out of politics all together is impossible.  The goal should be to make the process more transparent and improve accountability.  This is the United States of America and if someone wishes to spend a fortune to push a political agenda, then they should be able to do so. The goal should be to make the process transparent so that the public knows who is pushing that political agenda and how much they are spending to do so.

Your concern about Crossroads GPS non-profit application interests me.  Isn’t it a fact that you are a liberal organization that is primarily sponsored by the ultra-liberal non-profit Sandler Foundation.  Thus, your objection to GPS non-profit status seems highly partisan.  Don’t you find your position highly hypocritical?

“As of December 31, 2012, Sandler Foundation had made charitable grants exceeding $600 million, with the majority of the funds distributed since 2006.”

Comparing apples to oranges. CrossRoads GPS spends money on elections or on groups whose sole purpose is elections, The Sandler Foundation gives it away to organizations and causes.

Matt, you can feel that way if you like, but many other things have been impossible to stop—slavery, for instance—until it was stopped.

It’s also worth considering those Supreme Court decisions in context.  the Citizens United decision (a decent read) was clear in saying that Congress should deal with this.  Other decisions have said that if anyone can contribute, then everyone must be allowed to contribute; of course, that’s false, since foreigners may not contribute to a campaign.  So, there’s leverage, here, for a hypothetical activist.

However, transparency?  Money buys a lot of opacity, as any decent accountant will tell you.  Unless you demand that the government track every dollar each of us spends (which would be a horrible abuse of civil liberties and cause chilling effects), a shell company managing a trust that donates to a non-profit is never going to be transparent in a reasonable time frame.

And you’ll never foil the classic (local) finance scam for secrecy.  The candidate brings it’s young male volunteers to a party.  The secret donors invite young women.  When the volunteers walk off the dance floor, their suit pockets are stuffed with office supplies.

Now, if instead, you could make all spending illegal and bounce offenders from the race, and you can watch the candidates police themselves.

clarence swinney

Jan. 7, 2013, 12:41 p.m.

Attacked and did not respond
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