BY: ROBERT MAGUIRE
One of the most active groups in the 2016 cycle wasn't a super PAC -- though those were plenty busy -- but a 501(c)(4) social welfare organization, One Nation. From mid-2015 through 2016, the group spent about $40 million in a largely successful push to protect the GOP's fragile majority in the Senate. And it did so without disclosing a single donor to the public.
This was One Nation's first election in its current form, but the group is not new. Founded in 2010 as the Alliance for America's Future, it had been dormant for years until operatives from another dark money powerhouse, Crossroads GPS, took over last year.
Under new management and a new name, One Nation's revenues went from nothing to more than $10 million, according to newly filed tax documents obtained by the Center for Responsive Politics that cover 2015. (One Nation's tax filing covering its 2016 activities isn't due until November 2017.)
More than 61 percent of those revenues came from just four anonymous donors who gave $1 million or more; one topped out at $2.5 million.
Politically active nonprofits like One Nation are not supposed to be primarily focused on political activity. But a mixture of lax oversight, unclear rules and the best lawyers in the country have allowed some of these groups to spend much of their time and money politicking without significant risk of penalty.
One Nation's ad buys through August 2016 alone were enough to rank it 27th on a list of the top 50 outside spending groups (including super PACs) that have aired the most ads since 2000, according to a report published by the Wesleyan Media Project and CRP in August.
Despite having millions of dollars in the bank, One Nation has no employees and no volunteers. Of the $7 million it spent in 2015, 78 percent went to two media firms that specialize in political ads. The vendor that received the bulk of those payments, Main Street Media Group, counted among its top clients this year two super PACs -- Senate Leadership Fund and Granite State Solutions -- that are run by the same people who operate One Nation.
While both super PACs were required to report their spending to the Federal Election Commission throughout the election cycle, One Nation was not. Its ads in 2015 all referenced Republican senators in tight races, but they were framed as so-called "issue ads" -- supposedly advertisements aimed at educating the public or mobilizing grassroots support for an issue. Those don't have to be reported to the FEC except when they air shortly before an election -- 30 days or less in the case of a primary, 60 or fewer prior to a general. Politically active nonprofits increasingly spend the bulk of their money before those reporting windows open, and in 2016, that trend continued.
During the period covered by its latest form 990, One Nation spent nearly $6 million on ads mentioning endangered senators, according to a CRP analysis of One Nation's press releases.
One Nation spokesperson Ian Prior confirmed in an email that, in all, One Nation spent about $40 million in the 2016 cycle, enough to put it in the top 10 of all groups active this cycle, had it reported the spending to the FEC. As it stands, though, the group only reported $3.4 million.
Prior noted that two pieces of legislation advanced in the wake of being featured in One Nation's ads. The first was the Comprehensive Addiction Recovery Act which passed overwhelmingly in the Senate with bipartisan support. It hardly seemed in danger of failing even if it had lacked the support of Sen. Kelly Ayotte (R-N.H.), who was featured in the $1.1 million ad buy. The second was the Military Family Stability Act, which was passed by the Senate as a part of the National Defense Authorization Act.
Other ads, however, didn't reference a particular bill, but called on listeners and readers to contact Sen. Richard Burr (R-N.C.) or Sen. Pat Toomey (R-Pa.) with a vague request "to keep working across party lines to preserve Medicare and Medicare Advantage-- and support legislation to replace the Affordable Care Act with pro-patient reforms."
In the seven races in which One Nation was active early in the cycle, four of the candidates it supported won. And even where it lost, the margins were slim -- with the exception of Democratic Rep. Tammy Duckworth's resounding defeat of GOP incumbent Sen. Mark Kirk in Illinois.
In its new filing with the IRS, One Nation didn't report any of the $6 million it spent on ads in 2015 (out of about $40 million for the two-year cycle). On the section of the form that asks whether the group engaged in "direct or indirect political campaign activities on behalf of or in opposition to candidates for public office," it answered no.
Former head of the IRS exempt organization division Marc Owens says that, had some or all of this spending been reported to the IRS as campaign-related, "it would certainly be a 'red flag.'"
Owens added that media spots can be "carefully constructed" to fit the argument that the group's intent was to engage only in permissible "lobbying or educational communications," but "whether those arguments could withstand scrutiny in an IRS audit is another matter as the IRS would review internal documents for evidence of campaign intervention."
Luckily for One Nation, there's very little chance the group's filings will be audited. In 2015, the IRS closed 2,831 audits in a year when more than 787,000 annual returns were filed by exempt organizations, according to the IRS 2015 Data Book. Roughly speaking, that's about 1 in every 278 filings.
The third largest payment One Nation made in 2015, after the outlays to media firms, was to Crossroads GPS: $674,808 for "administrative services" linked to the groups' shared staff and office space.
Started in 2010, GPS quickly became one of the largest and most powerful political organizations in the country. In its first four years, it reported nearly $114 million in spending to the Federal Election Commission, and tens of millions more that the group spent, particularly in 2014, were framed as "issue ads" and run during periods when such ads don't have to be reported to the FEC.
Tax documents obtained by CRP show that Crossroads GPS was largely dormant in 2015. Its revenues dropped from $69 million in 2014, when it was very active in helping Republicans take the Senate, to just $3.5 million in 2015. Some of its largest payments in 2015 -- aside from $775,000 it paid to the opposition research firm America Rising LLC -- went to high powered law firms that were helping the group battle, and beat, the IRS for tax exempt status.
In 2016, Crossroads GPS did not report any spending to the FEC, sitting out an election for the first time since it was created in the immediate wake of the Citizens United decision.