By now, the Republicans’ rout of Democrats in the midterm elections has been well documented. Republicans likely will hold 54 seats in the Senate beginning in January, securing a commanding majority in both chambers of Congress.
But Democrats did not come up short just at the polls. In campaign finance, too, Democratic groups lagged Republican ones, leaving their candidates at an even greater disadvantage.
Democrats were slow to adapt to the rise of super PACs, but in recent elections have closed that gap. This time, Democratic and Republican super PACs operated on a similar plane. However, with nonprofit political groups, designated in the tax code and known colloquially as 501(c)(4)s, Republican groups continue to obliterate their Democratic counterparts.
“We felt the weight of that outside spending,” one senior Democratic strategist said following the elections rout.
The nonprofit model is appealing to many political donors because, unlike super PACs, there is no legal requirement to disclose names of donors or even the full weight of a group’s election spending. Many ads produced by the groups are categorized as issue ads, not made in support or opposition to a particular candidate or ballot measure and thus not subject to the Federal Election Commission’s independent expenditure reporting procedures. But the ads are barely distinguishable from those produced by super PACs.
For some of the spending behemoths, only half of the money they used to influence the election was reflected in FEC reports.
The U.S. Chamber of Commerce reported $35.5 million in independent expenditures to the FEC, but confirmed spending $70 million this year. Roughly $34.5 million of that was spent on issue ads, and it was not reported to the FEC.
Likewise, the Karl Rove-founded group American Crossroads and its nonprofit counterpart Crossroads GPS reported spending $50.9 million in 2014, of which $29.2 million never appeared in FEC reports.
Engagement by nonprofit political groups in an election setting might have become even more popular among Republicans in the wake of revelations last year that the IRS was investigating some pro-GOP nonprofits for political activity, which would disqualify a group from nonprofit status.
“Given the record of this administration in using regulatory agencies like the IRS in a retaliatory fashion, then it’s understandable that there’s concern about disclosure from a lot of individuals,” Tim Phillips, president of Americans for Prosperity, told the New York Times recently. “Donors on the Left don’t have to have that concern.”
Democrats have begun to donate to nonprofit political groups, among them Patriot Majority USA, the nonprofit arm of Harry Reid’s Senate Majority PAC. But many Democrats still want to reform the system to more clearly define political activity and restrict nonprofits from engaging in it — slowing the party’s ability to catch up to the GOP.
“That’s not likely something Democrats are able to turn around as long as Citizens United allows for it,” the strategist added. “I doubt in 2016 we will have more [501(c)(4)] money than Republicans will.”
