One week ago, immediately prior to the votes on the tax cut deal reached between President Barack Obama and congressional Republicans, the independent group Crossroads GPS ran $400,000 worth of issue advertisements in twelve congressional districts calling for the Democrats who occupied them to support full extension of all of the Bush-era tax cuts. Crossroads GPS, a nonprofit created by Republican operatives in the wake of the Citizens United Supreme Court ruling, was giving the American public a sneak peek at the next torrent of political ads.
After the landmark Citizens United decision allowed corporations and unions to spend freely on electoral advertisements a series of groups popped up to take advantage of these new rules. There were new independent expenditure groups--taking advantage of the post-Citizens United ruling in SpeechNow.org v. FEC--and a few nonprofit groups that sought to raise unlimited money for unlimited advertisements. The nonprofit groups appeared to have the upper hand in terms of fundraising. Not only could they raise unlimited sums, but thanks to rules protecting the identities of nonprofit donors they did not have to disclose their donors to the public.
There was one feature of these nonprofit electoral groups, of which Crossroads GPS is one, that went largely unmentioned at the time. Nonprofits organized under the 501(c)(4) section of the tax code must provide educational or direct service to the public as their primary function. This excludes the political advertising that Crossroads GPS was known for in 2010.
Defenders of the Citizens United ruling have pointed out that Crossroads GPS spent less than half of the money they raised in 2010 on electoral activities. A Washington Post report states that the group raised $43 million in 2010. Federal Election Commission reports show that the group spent $17 million on independent expenditures and electioneering communications during the midterm elections.
Citizens United opponents, including Democracy 21 and the Campaign Legal Center, petitioned the IRS to investigate Crossroads GPS for violating this primary purpose clause of nonprofit operation.
While the electoral advertisements run by Crossroads GPS in 2010 do not count towards a primary purpose of public education, the spending on issue advertisements, like those the group ran during the tax cut debate, do. With the ability to raise $43 million in short notice and the inability to spend it all on electoral ads, we can expect outside groups organizing as nonprofits to take advantage of Citizens United to spend an increasing amount on issue advertisements.
This creates a problem for the system that legitimizes nonprofits. Since Citizens United aimed to increase the ability of groups organized outside of the political realm to participate openly in the political realm, those groups who seek to take advantage become more explicitly political. The issue ads appear to follow political considerations above all else.
The vast majority of the targets of Crossroads GPS' recent tax-cut ads weren't Democrats on the fence on the tax cut deal, but rather Democrats who either barely won reelection in 2010 or Democrats who occupy swing districts. Only one of the Democrats targeted by Crossroads GPS, Rep. Maurice Hinchey, voted against the tax cut deal. Hinchey's 2010 reelection was the closest of his career.
Further complicating matters for Crossroads GPS is their formation. The group was created as a spin-off of the independent expenditure committee American Crossroads because some donors wanted to help Republicans win the 2010 midterms, but wanted their identities kept secret. American Crossroads, an explicitly political group, and Crossroads GPS are run by the same group of political operatives and share the same P.O. Box as a contact address. The recent tax cut issue ad targets included five Democrats who were targeted by American Crossroads in the 2010 midterm elections.
With new groups expected to pop up on the Democratic side of the aisle in time for the 2012 elections there is likely to be even more uncertainty of the purposes of nonprofits taking advantage of Citizens United.