“Shadow Money: Unraveling Political Nonprofits’ Spending” was originally held on May 14, 2014. Politics is a big business. Not only is big money publicly shelled out to get candidates elected, but hundreds of millions are spent on a secret political game – the shadow money world dominated by mysterious, politically active nonprofits. These groups take advantage of loopholes in the Internal Revenue Service’s rule book to build complex webs of entities – linked together by money – to win political races and keep the source of the money secret. During this free, one-hour session from the Reynolds Center and the Center for Responsive Politics, you’ll learn where to find how this money is being spent on the issues important to your beat and how to begin unraveling the web of organizations behind it all. This training will touch on the basics of IRS and Federal Election Commission oversight and how these nonprofits stay under the radar. YOU WILL LEARN: How the Citizens United decision in 2010 by the U.S. Supreme Court allowed not only for-profit corporations and labor unions, but also politically active nonprofits, to flood unlimited amounts of money into the political system. How politically active nonprofits, which spent $336 million on federal campaigns alone in 2012, operate under and outside the radar of the IRS and FEC, spending secret donor money from the federal to the local level. What clues to look for when tracking a politically active nonprofit. This includes what key information on 990 forms, incorporation documents and disclosure forms will be most helpful in your reporting. YOUR INSTRUCTOR Russ Choma is the money-in-politics reporter at the Center for Responsive Politics’ OpenSecrets.org. His work has appeared in several publications including the Investigative Reporting Workshop, Nieman Watchdog, Politics Daily, Grist.org and MSNBC.com. His series, “Blown Away: Tracking stimulus grants for renewable energy,” found that more than 80 percent of the first $1 billion in grants to wind-energy companies went to foreign firms, and many renewable-energy projects that received stimulus cash were built well before President Obama was even inaugurated. For more information about business journalism training, please visit http://businessjournalism.org.

1. The Shadow Money
Game
Unraveling Political Nonprofit Funding
Russ Choma
Money-In-Politics Reporter
OpenSecrets.org

2. CRP/OpenSecrets.org

3. A business story?

4. A business story?
● Federal government’s actions are a major
factor in every businesses bottom line --
understanding how businesses manipulate
Washington is crucial.
● Business reporters have some unique skills
to work on this.
● Cutting edge is corporations -- the dark
money LLC.

5. What we’ll talk about
● What is dark money?
● What does OpenSecrets.org do to help you
understand dark money?
● How to look for dark money stories and
make them relevant.
● What’s the next big story to look for?
● Resources

6. What is dark money?
● Hard money vs. soft money
● Citizens United
o What did it not do?
▪ Make corporations people.
▪ Allow corporations to give politicians money.
o What did it do?
▪ Enabled corporations (which were already people)
to spend money on campaigns -- indirectly.
▪ Unleashed the nonprofits.

7. Independent expenditures vs. issue ads
● Independent
EXpenditures
are EXplicit
● Anyone can
make them
● Reported to
the FEC
https://www.youtube.com/watch?v=frzHJlsUmdE
ADVERTISEMENT:

8. Independent expenditures vs. issue ads
● Issue ads can be
explicit
● Theoretically
about issues
● NOT reported to
the FEC*
● Reported to the
FCC*
https://www.youtube.com/watch?v=t7qoOYC-QE0
ADVERTISEMENT:

9. Super PACs vs. 501(c)(4)
● Super PACs
o Independent expenditure only
o Report donors
o Report ALL spending
● 501(c)(4)
o nonprofit corporation
o One of many types of 501(c) groups
o Don’t disclose donors
o Don’t usually disclose spending

10. Why do you/your editor care?
$1.05
Billion

11. Why do you/your editor care?
• Citizens United allowed corporations to
spend on political campaigns – but they’re
not doing it publicly.
• Aetna accidentally disclosed $7.8 million to anti-
Obamacare groups, while publicly backing it.
• Reynolds American, cigarette maker, gave to
Americans for Tax Reform and others
• Lobbying:
• Intuit’s opposition to simple tax filings.

12. What does OpenSecrets.org do?
• Cory Booker: $12.2 million, over 5,000
pages of campaign filings, tens of
thousands of donors.

13. What does OpenSecrets.org do?

14. What does OpenSecrets.org do?

15. What does OpenSecrets.org do?

16. What does OpenSecrets.org do?
• Campaign finance
• Candidates, PACs (corporate, labor, etc.) and parties
• 14,200+ organizations
• Lobbying
• 4,100+ organizations
• Personal finances
• Outside spending

17. What does OpenSecrets.org do?

18. OpenSecrets.org and dark money
http://www.opensecrets.org/outsidespending/

19. OpenSecrets.org and dark money
http://www.opensecrets.org/outsidespending/

20. OpenSecrets.org and dark money
]

21. OpenSecrets.org and dark money

22. Finding dark money stories – 990s
• Sources:
• Guidestar
• CitizenAudit
• OpenSecrets.org
• Key Information:
• Revenues
• Contacts
• Directors
• Top vendors
• Grants

23. Finding dark money stories – FCC

24. Finding dark money stories – FCC
● All stations must keep this public file, all
political spending must be included -- local,
state, federal and “issue” ads.

25. Finding dark money stories – FCC

26. Finding dark money stories – FCC

27. Finding dark money stories – FCC
● TV lobby is powerful, so currently only
available for the top 50 markets -- that’s
changing this summer.
● Does not include cable ads.
● Does include local races.
● Every filing is different, and different stations
may require different information, but it’s a
start.

28. Finding dark money stories –
SOS Filings
● Non-profits ARE corporations -- not only do
they file 990s, they file annual reports with
states.
● Increasingly, dark money groups are
reporting links with LLCs (more on this later).
○ Most political reporters have no idea what to
do about this.
○ Disregarded entities/loans/consultants, etc.

29. What’s the next big story?
● 2012 was the year of the super PAC, with
501(c) groups making an appearance.
● 2014 will have heavy activity by 501(c)
groups, but…
● The smart money has already moved on to
“new fangled vehicles” -- LLCs.
● The for-profit political company?

30. Questions?
Russ Choma
rchoma@crp.org
202.354.0108
opensecrets.org

31. Resources
● OpenSecrets.org
● Sunlight Foundation.com
● CitizenAudit.org -- 990s
● FCC -- political files
● SEC filings
● State filings