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Conservative fundraising group raises $77 million in first 19 months


This news story was published on April 18, 2012.
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By Matea Gold, Tribune Washington Bureau –

WASHINGTON — Crossroads GPS, a conservative nonprofit group that is one of the most prominent critics of President Barack Obama, raised nearly $77 million in its first 19 months from a small cadre of secret donors, pocketing two single donations worth $10 million each.

In all, 87 percent of the money the group raised between June 1, 2010, and the end of 2011 came from just two dozen donors who wrote checks of $1 million and more, according to newly filed tax documents released by Crossroads on Tuesday.

It is not known who gave the money, as the organization simply listed each individual contribution on the forms and left blank the areas provided for donors’ names and addresses.

Crossroads GPS reported their identities to the Internal Revenue Service, as required, but does not have to reveal them publicly.

As a 501©(4) social welfare organization, Crossroads GPS cannot make political activity its primary purpose, unlike its sister “super PAC,” American Crossroads. Together, the two groups have emerged as the most muscular new players in the political landscape, aiming to spend $300 million this year to promote conservatives and defeat Obama. Both organizations, which were co-founded by Republican strategist Karl Rove, are able to accept unlimited donations from individuals and corporations.

As a tax-exempt group, Crossroads GPS ostensibly faces more limits in its political activity, but it is free to run “issue ads” that stop short of calling for the election or the defeat of a candidate.

Earlier this month, Crossroads GPS spent $1.7 million to run one such ad in six presidential swing states attacking Obama’s energy policy.

Campaign finance reform advocates argue that the organization is essentially a political player hiding behind its tax status. Democracy 21 and the Campaign Legal Center on Tuesday repeated their calls to the IRS to investigate Crossroads GPS’ tax status, as well as that of several others, including the conservative group American Action Network and Priorities USA, a tax-exempt group affiliated with a pro-Obama super PAC.

“It is essential that the IRS act to stop the farce that Crossroads GPS is a ‘social welfare’ organization,” Fred Wertheimer, president of Democracy 21, said in a statement. “Karl Rove and Crossroads GPS are thumbing their nose at the American people.”

Crossroads GPS spokesman Jonathan Collegio said the group carefully hewed to its nonprofit role, saying it only spends “a portion of its resources on political activity that furthers its social welfare mission.”

He said its donors “are individuals and businesses that support its vision of lower taxes and smaller government.”

“Environmental groups and labor groups have been airing ads promoting their causes and targeting politicians for years, but the brunt of Wertheimer’s criticism focuses on conservative groups engaging in the same activity,” Collegio said.

In 2010 and 2011, Crossroads GPS doled out nearly $16 million in grants to an array of conservative organizations, including $4 million to Grover Norquist’s Americans for Tax Reform and $2.75 million for the Center for Individual Freedom, a group that was originally launched more than a decade ago by former tobacco industry executives who sought to counter government restrictions on smoking. The center took up an array of eclectic causes and emerged as a player in the 2010 midterm elections, running ads against Democratic members of Congress.

The fundraising success of Crossroads and its super PAC counterpart was reflected in the robust compensation paid to the groups’ president, Steven Law, former general counsel for the U.S. Chamber of Commerce and one-time deputy secretary of the Department of Labor. Over the 19-month period, Law earned $1.09 million in salary and bonuses from the two groups, the tax records show.

The Tribune Washington Bureau/Los Angeles Times reported in February that many political operatives are reaping financial rewards as super PACs and their nonprofit kin have proliferated with little oversight.

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